Trials@uspto.gov
`571.272.7822
`
`
`Paper No. 41
` Filed: August 12, 2020
`
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`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS
`AMERICA, INC., SAMSUNG RESEARCH AMERICA, INC.,
`Petitioner,
`
`v.
`
`DYNAMICS INC.,
`Patent Owner.
`_______________
`
`IPR2020-00499
`Patent 8,827,153
`_______________
`
`
`Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
`JON M. JURGOVAN, Administrative Patent Judges.
`
`BRADEN, Administrative Patent Judge.
`
`
`
`
`DECISION
`Institution of Inter Partes Review
`37 C.F.R. § 314(a)
`
`
`
`
`571.272.7822
`
`
`Paper No. 41
` Filed: August 12, 2020
`
`
`
`
`
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS
`AMERICA, INC., SAMSUNG RESEARCH AMERICA, INC.,
`Petitioner,
`
`v.
`
`DYNAMICS INC.,
`Patent Owner.
`_______________
`
`IPR2020-00499
`Patent 8,827,153
`_______________
`
`
`Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
`JON M. JURGOVAN, Administrative Patent Judges.
`
`BRADEN, Administrative Patent Judge.
`
`
`
`
`DECISION
`Institution of Inter Partes Review
`37 C.F.R. § 314(a)
`
`
`
`
`
`IPR2020-00499
`Patent 8,827,153
`
`INTRODUCTION
`I.
`Samsung Electronics Co., Ltd., Samsung Electronics America, Inc.,
`and Samsung Research America, Inc.1 (collectively “Petitioner”) filed a
`Petition requesting an inter partes review of claims 1 and 5–8 of U.S. Patent
`No. 8, 827,153 B2 (Ex. 1001, “the ’153 patent”). Paper 1 (“Pet.”).
`Dynamics Inc.2 (“Patent Owner”) filed a Preliminary Response. Paper 8
`(“Prelim. Resp.”).
`Under the statute, an inter partes review may not be instituted unless
`the information presented in the petition and the preliminary response shows
`“there is a reasonable likelihood that the petitioner would prevail with respect
`to at least 1 of the claims challenged in the petition.” 35 U.S.C. § 314(a).
`Moreover, the Supreme Court has held that a decision under § 314 may not
`institute review on fewer than all claims challenged in the petition. SAS Inst.,
`Inc. v. Iancu, 138 S. Ct. 1348, 1355–56 (2018); see also PGS Geophysical AS
`v. Iancu, 891 F.3d 1354, 1360 (Fed. Cir. 2018) (interpreting the statute to
`require “a simple yes-or-no institution choice respecting a petition,
`embracing all challenges included in the petition”).
`After considering the Petition, the Preliminary Response, and
`associated evidence, we determine Petitioner has satisfied the threshold
`requirement set forth in 35 U.S.C. § 314(a). Thus, based on the information
`
`
`1 Petitioner identifies itself (Samsung Electronics Co., Ltd., Samsung
`Electronics America, Inc., and Samsung Research America, Inc.) as the real
`parties-in-interest pursuant to 37 C.F.R. § 42.8. Pet. 62.
`2 Patent Owner identifies only itself as the real party-in-interest pursuant to
`37 C.F.R. § 42.8. Paper 6, 1.
`
`2
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`IPR2020-00499
`Patent 8,827,153
`presented, and under SAS and PGS Geophysical AS, we institute an inter
`partes review of claims 1 and 5–8 of the ’153 patent.
`
`BACKGROUND
`II.
`Related Proceedings
`A.
`Petitioner informs us of one pending district court proceedings based
`on the ’153 patent that involves Petitioner, Dynamics Inc. v. Samsung Elecs.
`Co., Ltd. et al., Case No. 1:19-cv-6479 (S.D.N.Y.), filed July 12, 2019, which
`was stayed on September 4, 2019. Pet. 62. Petitioner also informs us of one
`proceeding pending before the International Trade Commission (“ITC”), In
`re Certain Mobile Devices With Multifunction Emulators, Inv. No. 337-TA-
`1170 (U.S.I.T.C.), filed July 12, 2019. Id. According to Petitioner, an initial
`determination in the ITC case is expected on or around August 14, 2020. Id.
`Petitioner further informs us it is concurrently filing IPR petitions for three
`other patents asserted in the above-referenced District Court and ITC cases.
`Id.
`
`Patent Owner informs us of the same pending proceedings listed
`above. Paper 6 (Patent Owner’s Mandatory Notices), 2–3.
`Background of Technology and the ’153 Patent
`B.
`The ’153 patent was filed on July 17, 2012, issued on September 9,
`2014, and is titled “Systems and Methods for Waveform Generation for
`Dynamic Magnetic Stripe Communications Devices.” Ex. 1001, codes (22),
`(45), (54). The ’153 patent relates to “[d]ynamic magnetic stripe
`communications devices” capable of communicating with payment terminals
`for carrying out purchase transactions without having to be in physical
`contact with the payment terminals through the use of magnetic emulation,
`rather than using data found on the magnetic stripe of payment cards.
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`Ex. 1001, Abstract. According to the ’153 patent, a dynamic magnetic
`communication device includes two main components: (a) a magnetic
`emulator; and (b) a waveform generator. Id. at claim 1.
`The ’153 patent discloses that a magnetic emulator is a device that
`emulates the magnetic stripe of a traditional payment card. Ex. 1001, 1:22–
`37. By “emulating” a magnetic stripe, the magnetic stripe emulator is
`capable of interfacing with a magnetic stripe reader of a payment terminal.
`Id. According to the ’153 patent, the magnetic stripe emulator can be “an
`inductor (e.g., a coil)” that “[c]urrent may be provided through . . . to create
`an electromagnetic field operable to communicate with the read-head of a
`magnetic stripe reader.” Id., 2:14–18.
`The ’153 patent describes one embodiment of a card with a magnetic
`strip emulator, which is illustrated in Figure 1, reproduced below.
`
`
`Figure 1 “is an illustration of a card constructed in accordance with the
`principles of the present invention.” Ex. 1001, 4:40–41. The ’153 patent
`discloses that card 100 may include button 149. Id. at 5:46. According to
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`IPR2020-00499
`Patent 8,827,153
`the ’153 patent, button 149 may be used, to communicate a waveform via
`waveform generator 124 through dynamic magnetic stripe communications
`device 102 indicative of a user’s desire to communicate a single track of
`magnetic stripe information. Ex. 1001, 5:46–50.
`The ’153 patent describes another embodiment of a card with a
`magnetic strip emulator, which is illustrated in Figure 2, reproduced below.
`
`
`Figure. 2 is an illustration of a card, which may include component 202 (e.g.,
`an ASIC, a mixed-signal FPGA, a data acquisition microcontroller or system
`on a chip), processor 218, and dynamic magnetic stripe communications
`device 216. Id. at 8:21–24. Component 202 may include, for example,
`memory 204, symbol processor 206, DAC 208, clock generator 210,
`filter 212, amplifier 214, and waveform processor 222. Id. at 8:24–27.
`The ’153 patent further discloses that waveform generator 222
`retrieves data from memory and allows the device to generate waveforms
`from the retrieved data to be communicated by the magnetic stripe emulator
`and received by a magnetic strip reader. Id. at Abstract, 2:18–22. The ’153
`patent discloses that the format of that retrieved data is similar to the format
`of data that is stored in a traditional payment card (e.g., “at least one track of
`
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`Patent 8,827,153
`magnetic stripe data”). Id. at 2:18–22. The ’153 patent explains that the
`waveform generator “may fluctuate the amount of current travelling through
`the coil such that one or more tracks of magnetic stripe data encoded within
`the analog waveform may be communicated to a read-head of a magnetic
`stripe reader.” Id. The ’153 patent teaches that the analog waveform is
`generated from “a numeric (e.g., digital) representation of a waveform (e.g.,
`an F2F encoded waveform) [that] may be stored within a memory of a card”
`(id. at 2:23–25), and then provided to the magnetic emulator, which outputs a
`magnetic field corresponding to the analog waveform (id. at 1:28–29, 2:14–
`18). According to the ’153 patent, the card may also have a digital to analog
`converter (or DAC) that converts the digital waveform from the memory into
`an analog waveform. Id. at 2:40–46. The ’153 patent teaches that the analog
`waveform is “amplified and filtered before being provided to a coil of a
`magnetic emulator,” which produces the magnetic field to be read by the
`magnetic card reader. Id. at 2:44–46; see id. at 1:28–29, 2:14–18.
`The ’153 patent teaches that “[d]ifferent waveforms may be recalled
`from memory based upon a detected mode of operation by a processor of a
`card.” Id. at 3:27–28. In one example in the ’153 patent, “a processor of a
`card may detect a presence of a dual-head magnetic stripe reader and may
`further detect a direction that the card is being swiped through the dual-head
`magnetic stripe reader.” Id. at 3:29–32. According to the ’153 patent, “a
`processor or other device on the card may recall a waveform from a memory
`of the card that corresponds to a forward swipe direction and may
`communicate a forward-swipe waveform when a forward swipe direction is
`detected.” Id. at 3:32–36. Another example in the ’153 patent teaches that “a
`processor or other device on the card may recall a waveform from a memory
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`of the card that corresponds to a reverse swipe direction and may
`communicate a reverse swipe waveform when a reverse swipe direction is
`detected.” Id. at 3:36–40. As per another example in ’153 patent, “each
`digital waveform stored within a memory of a card may contain the same
`magnetic stripe information, but may exhibit different characteristics when
`communicated to a read-head of a magnetic stripe reader.” Id. at 3:41–45.
`The ’153 patent also teaches that “[e]ach digital waveform stored
`within memory 204 may be indicative of the same, or different, magnetic
`stripe information.” Id. at 8:63–65, Fig. 2. In one example in the ’153
`patent, “a first waveform stored within memory 204 may, for example, be
`representative of a first track of magnetic stripe information that may be
`communicated by dynamic magnetic stripe communications device 216.” Id.
`at 8:65–9:1. According to the ’153 patent, “[d]igital waveforms stored within
`memory 204 may, for example, represent the same magnetic stripe
`information, but may exhibit different characteristics.” Id. at 9:25–27. As
`per another example in the ’153 patent, “a first waveform may define signal
`characteristics that are known to be optimal based upon a particular type of
`magnetic stripe reader that card 200 is being presented to.” Id. at 9:27–30.
`As per another example in the ’153 patent, “processor 218 may detect that
`card 200 is being presented to, for example, a dual-head magnetic stripe
`reader.” Id. at 9:36–38. In addition, “processor 218 may detect a swipe
`direction that card 200 is being swiped through the dual-head magnetic stripe
`reader.” Id. at 9:38–40. The’153 patent teaches that “a waveform having
`symbols arranged in a forward direction may be retrieved by symbol
`processor 206, converted to an analog waveform, and communicated by
`dynamic magnetic stripe communications device 216 in response to a
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`IPR2020-00499
`Patent 8,827,153
`forward direction swipe being detected by processor 218.” Id. at 9:41–45. In
`an alternate example in the ’153 patent, “a waveform having symbols
`arranged in a reverse direction may be retrieved by symbol processor 206,
`converted to an analog waveform, and communicated by dynamic magnetic
`stripe communications device 216 in response to a reverse-direction swipe
`being detected by processor 218.” Id. at 9:46–51.
`Another embodiment disclosed in the ’153 patent indicates that a
`dynamic magnetic communication device may take the form of a mobile
`phone or personal computing device. Id. at 6:4–9, 14:20. The ’153 patent
`also discloses that a dynamic magnetic communication device may store
`information such as a cardholder’s name, username, card issue date, care
`expiration date, and a dynamic security code as well as graphical information
`such as logos and barcodes. Id. at 5:3–27.
`
`Illustrative Claim
`C.
`As noted above, Petitioner challenges claims 1, 5–8, with claim 1
`being independent. Challenged independent claim 1 is illustrative of the
`challenged claims and is reproduced below:
`1. A device comprising:
`a magnetic stripe emulator operable to communicate an analog
`waveform encoded with at least one track of magnetic stripe data
`to a magnetic stripe reader; and
`a waveform generator operable to generate said analog waveform
`from a digital representation of said at least one track of magnetic
`stripe data,
`wherein said device is operable to retrieve said digital
`representation from a plurality of digital representations of said
`at least one track of magnetic stripe data.
`Ex. 1001, 15:14–23.
`
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`IPR2020-00499
`Patent 8,827,153
`The Asserted Challenges to Patentability and Evidence of Record
`D.
`The information presented in the Petition sets forth proposed
`challenges to the patentability of claims 1 and 5–8 of the ’153 patent under
`35 U.S.C. § 103 as follows (see Pet. 11, 5–8):3
`
`Reference(s)/Basis
`
`35 U.S.C. §4 Challenged Claim(s)
`
`Gutman5, Shoemaker6
`
`Lessin7, Shoemaker
`
`§ 103
`
`§ 103
`
`1, 5–8
`
`1, 5–8
`
`III. PRELIMINARY MATTERS
`A. Analysis of Discretionary Denial Under 35 U.S.C. § 314(a)
`Patent Owner states that the ’153 patent is the subject of a pending ITC
`proceeding and a stayed district court litigation. Prelim. Resp. 7–8. Patent
`Owner argues we should exercise discretion under 35 U.S.C. § 314(a) and
`deny institution based on the ITC proceeding because it involves the same
`parties, independent claim and prior art, and is at an advanced stage. Prelim.
`Resp. 3–10; PO Sur-Reply 1–10. To the contrary, Petitioner argues that
`
`
`3 Petitioner supports its challenges with the Declaration of Stephen G.
`Halliday, Ph.D. (“Mr. Halliday”). Ex. 1002.
`4 The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284
`(September 16, 2011) (“AIA”), included revisions to 35 U.S.C. §103 that
`became effective on March 16, 2013. Because the ’153 patent issued from an
`application filed before March 16, 2013, we apply the pre-AIA version of the
`statutory basis for unpatentability.
`5 U.S. Patent No. 6,206,293, issued Mar. 27, 2001 (Ex. 1005, “Gutman”).
`6 U.S. Patent No. 7,2690,580, issued Apr. 6, 2010 (Ex. 1010, “Shoemaker”).
`7 U.S. Patent No. 4,868,376, issued Sep. 19, 1989 (Ex. 1011, “Lessin”).
`
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`Patent 8,827,153
`evaluation of the Apple v. Fintiv factors demonstrates we should not exercise
`discretion to deny institution of inter partes review. Reply 1–10.
`Petitioner filed a Reply to address this issue from Patent Owner’s
`Preliminary Response (“Pet. Reply,” Paper 39) and, per our email
`authorization (Ex. 3001), Patent Owner filed a Sur-Reply to Petitioner’s
`Reply (“PO Sur-Reply,” Paper 40). For the reasons stated below we are not
`persuaded to exercise discretion to deny institution.
`Institution of an inter partes review is discretionary. See 35 U.S.C.
`§ 314(a) (authorizing institution of an inter partes review under particular
`circumstances, but not requiring institution under any circumstances);
`37 C.F.R. § 42.108(a) (“[T]he Board may authorize the review to proceed”).
`Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016) (“[T]he
`agency’s decision to deny a petition is a matter committed to the Patent
`Office’s discretion.”); SAS, 138 S. Ct. at 1356 (“[Section] 314(a) invests the
`Director with discretion on the question whether to institute review . . . .”
`(emphasis omitted)); Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1367
`(Fed. Cir. 2016) (“[T]he PTO is permitted, but never compelled, to institute
`an IPR proceeding.”).
`In the NHK case, the Board denied institution relying, in part, on
`§ 314(a), because a parallel district court proceeding was scheduled to finish
`before the Board reached a final decision. NHK Spring Co. v. Intri-Plex
`Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential).
`“Thus, NHK applies to the situation where the district court has set a trial
`date to occur earlier than the Board’s deadline to issue a final written
`decision in an instituted proceeding.” Apple Inc. v. Fintiv, Inc., IPR2020-
`00019, Paper 11, 3 (PTAB March 20, 2020) (precedential) (Order). When
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`Patent 8,827,153
`determining whether to exercise discretion to deny institution due to an
`earlier trial date in a parallel proceeding, we consider the following factors
`(“Fintiv factors”):
`
`1. whether the court granted a stay or evidence exists that
`one may be granted if a proceeding is instituted;
`2. proximity of the court’s trial date to the Board’s
`projected statutory deadline for a final written decision;
`3. investment in the parallel proceeding by the court and
`the parties;
`4. overlap between issues raised in the petition and in the
`parallel proceeding;
`5. whether the petitioner and the defendant in the parallel
`proceeding are the same party; and
`6. other circumstances that impact the Board’s exercise of
`discretion, including the merits.
`Id. at 6. “These factors relate to whether efficiency, fairness, and the merits
`support the exercise of authority to deny institution in view of an earlier trial
`date in the parallel proceeding.” Id. In evaluating these factors, we take “a
`holistic view of whether efficiency and integrity of the system are best served
`by denying or instituting review.” Id. (citing Patent Trial and Appeal Board
`Consolidated Trial Practice Guide 58 (November 2019),
`https://www.uspto.gov/TrialPracticeGuideConsolidated). We address the
`Fintiv factors in seriatim and discuss in detail our reasons for not exercising
`discretion to deny institution based on § 314(a).
`1. Whether a Stay Exists or Is Likely to Be Granted if a Proceeding Is
`Instituted
`The district court has stayed its proceeding since September 4, 2019,
`pending an outcome of the ITC proceeding. PO Sur-Reply 2 (citing
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`Patent 8,827,153
`Ex. 2024). This factor weighs against exercising discretion to deny
`institution. The stay of the proceeding allays concerns about inefficiency and
`duplication of efforts as it relates to this proceeding. See Fintiv, Paper 11 at
`6. In the event that there may be duplicative efforts with the ITC proceeding,
`we continue our analysis and inquire further as to whether the ITC would
`render a decision before this proceeding as examined below under Fintiv
`factor 2, and the degree of overlap of the proceedings under Fintiv factor 4.
`Fintiv at 6 (explaining that there is some overlap among the factors).
`2. Proximity of the Court’s Trial Date to the Board’s Projected
`Statutory Deadline
`In the ITC proceeding, trial was set to be held on June 22–26, 2020 but
`was adjourned until further notice due to COVID-19 concerns. PO Sur-
`Resp. 8 (citing Ex. 2001; Ex. 2002; Ex. 2025). Additionally, the ITC issued a
`new document timeline on June 29, 2020, that includes a witness statement
`deadline of August 14, 2020, and an objection deadline of August 21, 2020.
`See Ex. 3002, In re Certain Mobile Devices With Multifunction Emulators,
`Inv. No. 337-TA-1170, Order No. 21 at 2 (June 29, 2020). The Board’s
`Institution Decision is due by August 15, 2020, which is before the ITC’s
`initial determination (ID) that has been postponed indefinitely. Pet. Reply 2;
`see Ex. 3002. Yet, even given the uncertainties involved with COVID-19, it
`is unlikely that the ITC trial would be postponed by 14 months such that our
`final written decision would issue prior to the ITC trial. Accordingly, we
`weigh this factor in favor of discretionary denial.
`3. Investment in the Parallel Proceeding by the Court and Parties
`The parties have significant investments in both this proceeding and
`the ITC proceeding. Specifically, in the ITC proceeding, a Markman hearing
`was held November 26, 2019; an order construing only some of claims issued
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`on January 31, 2020; fact discovery was completed January 17, 2020; expert
`reports were exchanged and experts deposed; and motions for summary
`determination were filed on March 11, 2020. Prelim. Resp. 8.
`In this proceeding, the parties have submitted a Petition (Paper 1), an
`Expert Declaration (Exhibit 1002), a Preliminary Response (Paper 8), a
`Reply (Paper 39), and a Sur-Reply (Paper 40) in addition to numerous other
`papers and exhibits. We note the instant proceeding here is further along
`than those in either the Fintiv case or the Sand Revolution case, where the
`parties in both cases had filed only one substantive paper each (i.e., the
`Petition and the Preliminary Response). See Fintiv, at 6; Sand Revolution II
`LLC v. Continental Intermodal Group, IPR 2019-01393, Paper 24, 10-11
`(PTAB June 16, 2020) (informative, designated July 13, 2020). Thus, these
`case are distinguishable.
`It is clear the parties’ investments in both proceedings are substantial.
`Thus, we find this factor is neutral in our analysis regarding institution.
`4. Overlap Between Issues Raised in the Petition and in the Parallel
`Proceeding
`The ITC proceeding involves only claims 1 and 7 of the ’153 Patent
`whereas Petitioner’s challenges here involve claims 1, 5–8 of the ’153 Patent.
`Therefore, resolution of the ITC proceeding would not resolve the parties’
`dispute concerning patentability of claims 5–8 of the ’153 Patent.8 Looking
`at the challenges before us, the dependent claims at issue in Petitioner’s
`challenge to the ’153 Patent addresses limitations not present in the ITC
`
`
`8 We further note that the ITC does not have authority to invalidate patent
`claims in a manner that is binding upon the Board or district courts. See
`Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed.
`Cir. 1996).
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`proceeding. In particular, the claims are directed to (1) retrieval of the digital
`representation from member based on a signal from a button, (2) a digital
`representation associated with a payment account numbers, (3) an analog
`waveform encoded with two tracks of magnetic strip data, or (4) an analog
`waveform encoded with three tracks of magnetic strip data. See
`Ex. 1001, 15:35–46. These limitations are at issue in Petitioner’s challenges
`before the Board, but are not at issue in the ITC proceeding.
`Although there is overlap between the prior art challenges asserted
`before the Board and the ITC proceeding, the challenge to claims that do not
`overlap combined with the lack of definitive resolution of these claims before
`the stayed district court, in balance, weigh in favor of institution.
`5. Whether the Petitioner and the Defendant in the Parallel
`Proceeding Are the Same Party
`The parties in the ITC proceeding, the district court proceeding, and
`this proceeding are the same. Prelim. Resp. 8. Petitioner does not dispute
`this fact. Reply 9. This factor weighs against institution.
`6. Other Circumstances that Impact the Board’s Exercise of
`Discretion, Including the Merits
`We find the merits of this case weigh in favor of Petitioner on the
`evidence presented thus far. For example, Petitioner presents evidence and
`argument regarding claim 5, 6, and 8 that are not at issue in the ITC
`proceeding. Pet. 41–44. Claim 5 is directed to retrieval of the digital
`representation from member based on a signal from a button.
`Ex. 1001, 15:35–37. On the present record, Petitioner contends Gutman
`alone, or in view of Shoemaker, teaches a button coupled to the controller to
`accept input from a user of card 200 (as shown in Gutman’s Figure 2). See
`Pet. 37–38 (citing Ex. 1005, 4:66–5:11, Fig. 2). Claim 6 is a digital
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`representation associated with a payment account numbers. Ex. 1001, 15:38–
`42. Petitioner also contends Gutman alone, or in view of Shoemaker, teaches
`associating the digital representation with a payment account. Pet. 40–41
`(citing Ex. 1005, 13:64–14:35, 10:27–34; Ex. 1010, 9:49–60; Ex. 1002
`¶¶ 93–94). Claim 8 is directed to an analog waveform from claim 1 encoded
`with multiple tracks of magnetic strip data. Ex. 1001, 15:43–46. Petitioner
`contends Gutman alone, or in view of Shoemaker, teaches a data signal
`encoded with multiple tracks of magnetic stripe data. Pet. 41–44 (citing
`Ex. 1002 ¶¶ 96–98. At this stage of the proceeding and based on the record
`before us currently, we find Petitioner’s arguments and evidence on the
`merits persuasive.
`Petitioner further contends a person of ordinary skill in the art would
`have combined the teachings of Gutman and Shoemaker, given their
`similarities in design and purpose, to improve the functionality and flexibility
`of Gutman’s card. Pet. 22–23. On the evidence produced thus far, Petitioner
`shows a rationale to combine Gutman and Shoemaker with reasonable
`expectation of success, and the combination of Gutman and Shoemaker
`teaches all elements of claims 7 and 8.
`Accordingly, we find this factor weighs in favor of institution.
`7. Balancing the Fintiv Factors
`The only case that Patent Owner relies upon that involves denial of
`institution of inter partes review based on a parallel ITC proceeding is Bio-
`Rad Labs., Inc. v. 10X Genomics, Inc., IPR2019-00568, Paper 22 at 2 (PTAB
`Aug. 8, 2019). See, e.g., Sur-Reply 3. In Bio-Rad, the Board denied
`institution based on the ITC’s initial determination (ID) that the challenged
`patent claims were not invalid. Bio-Rad, Paper 22 at 22–24. The ID issued
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`before the Board rendered its institution decision. Id. In this case, our
`institution decision will precede the ITC’s ID, so Bio-Rad’s holding is
`inapposite to the facts of this case.
`We have considered the circumstances and facts before us in view of
`the Apple v. Fintiv factors. Because our analysis is fact driven, no single
`factor is determinative of whether we exercise our discretion to deny
`institution under § 314(a). Evaluating the Apple v. Fintiv factors with a
`holistic view of whether the efficiency and integrity of the system are best
`served by denying or instituting review, we determine that the specific facts
`of this case weigh against exercising discretion under § 314(a) to deny
`institution of inter partes review.
`
`B. Claim Construction
`In an inter partes review for a petition filed on or after November 13,
`2018, a claim “shall be construed using the same claim construction standard
`that would be used to construe the claim in a civil action under
`35 U.S.C. 282(b).” 37 C.F.R. § 42.100(b) (2019); see Changes to the Claim
`Construction Standard for Interpreting Claims in Trial Proceedings Before
`the Patent Trial and Appeal Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018)
`(amending 37 C.F.R. § 42.100(b) effective November 13, 2018). In applying
`this claim construction standard, we are guided by the principle that the
`words of a claim “are generally given their ordinary and customary
`meaning,” as understood by a person of ordinary skill in the art in question at
`the time of the invention. Phillips v. AWH Corp., 415 F.3d 1303, 1312−13
`(Fed. Cir. 2005) (en banc) (citation omitted). “In determining the meaning of
`the disputed claim limitation, we look principally to the intrinsic evidence of
`record, examining the claim language itself, the written description, and the
`
`16
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`
`IPR2020-00499
`Patent 8,827,153
`prosecution history, if in evidence.” DePuy Spine, Inc. v. Medtronic Sofamor
`Danek, Inc., 469 F.3d 1005, 1010 (Fed. Cir. 2006) (citing Phillips, 415 F.3d
`at 1312–17). There is a “heavy presumption,” however, that a claim term
`carries its ordinary and customary meaning. CCS Fitness, Inc. v. Brunswick
`Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002) (citation omitted).
`Petitioner states that it does not believe any terms need be construed to
`resolve the prior art issues presented in this Petition. Pet. 20. Petitioner
`notes there were claim construction issues in the ITC proceeding. Id. at 20–
`21 (citing Ex. 1016, 4–5). Petitioner further states the challenged claims are
`rendered obvious by the cited prior art references under either party’s
`proposed construction in the ITC proceeding. Id. at 21. Patent Owner does
`not indicate whether it believes any terms require construction to resolve any
`dispute it has with the Petition. Prelim. Resp. 21. Nonetheless, Patent Owner
`presents the claims constructions proposed by the parties in the ITC and the
`constructions rendered by the ITC’s presiding ALC. Id. at 22–23.
`Because no express construction is needed to resolve any dispute in
`this proceeding, we do not construe any of the claim limitations. See, e.g.,
`Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co., 868 F.3d 1005,
`1017 (Fed. Cir. 2017); Vivid Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200
`F.3d 795, 803 (Fed. Cir. 1999) (“[O]nly those terms need be construed that
`are in controversy, and only to the extent necessary to resolve the
`controversy.”). A final determination as to claim construction will be made
`at the close of the proceeding, after any hearing, based on all the evidence of
`record. The parties are expected to assert all their claim construction
`arguments and evidence in the Petition, Patent Owner’s Response,
`Petitioner’s Reply, or otherwise during trial, as permitted by our rules.
`
`17
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`IPR2020-00499
`Patent 8,827,153
`C. Principles of Law Regarding Obviousness
`A claim is unpatentable under 35 U.S.C. § 103(a) if “the differences
`between the subject matter sought to be patented and the prior art are such
`that the subject matter as a whole would have been obvious at the time the
`invention was made to a person having ordinary skill in the art to which said
`subject matter pertains.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
`(2007). The question of obviousness is resolved on the basis of underlying
`factual determinations, including: (1) the scope and content of the prior
`art; (2) any differences between the claimed subject matter and the prior
`art; (3) the level of skill in the art; and (4) objective evidence of
`nonobviousness, i.e., secondary considerations. See Graham v. John Deere
`Co. of Kansas City, 383 U.S. 1, 17–18 (1966).
`“While the sequence of these questions might be reordered in any
`particular case,” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 407 (2007), the
`U.S. Court of Appeals for Federal Circuit has “repeatedly emphasized that an
`obviousness inquiry requires examination of all four Graham factors and that
`an obviousness determination can be made only after consideration of each
`factor,” Nike, Inc. v. Adidas AG, 812 F.3d 1326, 1335 (Fed. Cir. 2016),
`overruled on other grounds by Aqua Prods., Inc. v. Matal, 872 F.3d 1290
`(Fed. Cir. 2017) (en banc). The analysis below addresses the all four
`Graham factors.
`
`D. Burden of Proof
`“In an [inter partes review], the petitioner has the burden from the
`onset to show with particularity why the patent it challenges is unpatentable.”
`Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed. Cir. 2016)
`(citing 35 U.S.C. § 312(a)(3) (requiring inter partes review petitions to
`
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`IPR2020-00499
`Patent 8,827,153
`identify “with particularity . . . the evidence that supports the grounds for the
`challenge to each claim”)). This burden of persuasion never shifts to Patent
`Owner. See Dynamic Drinkware, LLC v. Nat’l Graphics, Inc., 800
`F.3d 1375, 1378 (Fed. Cir. 2015) (discussing the burden of proof in inter
`partes review). Furthermore, Petitioner cannot satisfy its burden of proving
`obviousness by employing “mere conclusory statements.” In re Magnum Oil
`Tools Int’l, Ltd., 829 F.3d 1364, 1380 (Fed. Cir. 2016).
`Thus, to prevail in an inter partes review, Petitioner must explain how
`the proposed prior art or combinations of prior art would have rendered the
`challenged claims unpatentable. At this preliminary stage, we determine
`whether the information presented in the Petition shows there is a reasonable
`likelihood that Petitioner would prevail in establishing that one of the
`challenged claims is unpatentable. Additionally, the Supreme Court held that
`a decision to institute under 35 U.S.C. § 314(b) may not institute review on
`less than all claims challenged in the petition. SAS Inst., Inc. v. Iancu, 138 S.
`Ct. 1348, 1355–56 (2018). Moreover, in accordance with USPTO Guidance,
`“if the PTAB institutes a trial, the PTAB will institute on all challenges raised
`in the petition.” Guidance on the Impact of SAS on AIA Trial Proceedings
`(April 26, 2018) (available at https://www.uspto.gov/patents-application-
`process/patent-trial-and-appeal-board/trials/guidance-impact-sas-aia-trial)
`(“USPTO Guidance”).
`E. Level of Ordinary Skill in the Art
`In determining whether an invention would have been obvious at the
`time it was made, we consider the level of ordinary s
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