Trials@uspto.gov
`571-272-7822
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`Paper 22
`Date: October 5, 2020
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`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`INTEL CORPORATION,
`Petitioner,
`
`v.
`
`VLSI TECHNOLOGY LLC,
`Patent Owner.
`____________
`
`IPR2020-00583
`Patent 7,606,983 B2
`____________
`
`
`
`Before THU A. DANG, BART A. GERSTENBLITH, and
`KIMBERLY McGRAW, Administrative Patent Judges.
`
`GERSTENBLITH, Administrative Patent Judge.
`
`
`DECISION
`Denying Institution of Inter Partes Review
`35 U.S.C. § 314
`
`
`
`
`
`
`
`
`571-272-7822
`
`
`
`
`
`
`
`Paper 22
`Date: October 5, 2020
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`INTEL CORPORATION,
`Petitioner,
`
`v.
`
`VLSI TECHNOLOGY LLC,
`Patent Owner.
`____________
`
`IPR2020-00583
`Patent 7,606,983 B2
`____________
`
`
`
`Before THU A. DANG, BART A. GERSTENBLITH, and
`KIMBERLY McGRAW, Administrative Patent Judges.
`
`GERSTENBLITH, Administrative Patent Judge.
`
`
`DECISION
`Denying Institution of Inter Partes Review
`35 U.S.C. § 314
`
`
`
`
`
`
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`
`I. INTRODUCTION
`Intel Corporation (“Petitioner”) filed a Petition requesting an inter
`partes review of claims 1–5, 7, 9, 11–14, and 16 (the “challenged claims”)
`of U.S. Patent No. 7,606,983 B2 (Ex. 1001, “the ’983 patent”). Paper 3
`(“Pet.”). VLSI Technology LLC (“Patent Owner”) filed a Preliminary
`Response. Paper 9 (“Prelim. Resp.”). Pursuant to our authorization
`(Paper 13), Petitioner filed a Reply to Patent Owner’s Preliminary Response
`(Paper 14 (“Pet. Prelim. Reply”)) and Patent Owner filed a Sur-reply
`(Paper 15, “PO Prelim. Sur-reply”), each directed to whether we should
`exercise our discretion to deny institution pursuant to 35 U.S.C. § 314(a).
`We also granted each party authorization to file a paper addressing the
`Memorandum issued by the Director of the U.S. Patent and Trademark
`Office on August 18, 2020, regarding the treatment of statements of the
`applicant in the challenged patent in inter partes reviews under 35 U.S.C.
`§ 311.1 Paper 16. In response, Petitioner filed Paper 18 and Patent Owner
`filed Paper 19.
`An inter partes review may not be instituted “unless . . . the
`information presented in the petition . . . shows that 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) (2018). The Board,
`however, has discretion to deny a petition even when a petitioner meets that
`threshold. Id.; see, e.g., 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.”); see also Patent Trial and
`Appeal Board Consolidated Trial Practice Guide (Nov. 2019)
`
`1 The Memorandum is available at https://www.uspto.gov/sites/default/files/
`documents/signed_aapa_guidance_memo.pdf.
`
`2
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`(“Consolidated TPG”), 55–63, available at https://www.uspto.gov/sites/
`default/files/documents/tpgnov.pdf (identifying considerations that may
`warrant exercise of this discretion). In particular, 35 U.S.C. § 314(a) permits
`the Board to deny institution under certain circumstances. See Gen. Plastic
`Indus. Co. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB
`Sept. 6, 2017) (precedential as to § II.B.4.i); NHK Spring Co. v. Intri-Plex
`Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential).
`Having considered the parties’ submissions, we determine that it is
`appropriate in this case to exercise our discretion to deny institution of inter
`partes review pursuant to 35 U.S.C. § 314(a).
`
`II. BACKGROUND
`A. Real Parties in Interest
`Petitioner identifies Intel Corporation as the real party in interest.
`Pet. 1. Patent Owner identifies VLSI Technology LLC and CF VLSI
`Holdings LLC as the real parties in interest. Paper 5 (Patent Owner’s
`Mandatory Notices), 1.
`
`B. Related Matters
`The parties identify the ’983 patent as the subject of VLSI Tech. LLC
`v. Intel Corp., No. 6-19-cv-00256 (“Western District of Texas litigation” or
`“third case”). Pet. 2; Paper 5, 1. Petitioner explains that the ’983 patent is
`one of several patents asserted by Patent Owner in three venues:
`Nos. 6-19-cv-00254, -00255, -00256 (W.D. Tex.); 1-18-966-CFC (D. Del.);
`and 5-17-cv-05671 (N.D. Cal.). Pet. 5. Petitioner also explains that
`cases -254, -255, and -256 are consolidated until trial as 1-19-cv-00977.
`Id. at 2.
`
`3
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`C. Asserted Grounds of Unpatentability
`Petitioner challenges the patentability of claims 1–5, 7, 9, 11–14, and
`16 of the ’983 patent on the following grounds (Pet. 4–5):
`Claims Challenged
`35 U.S.C. §2
`References/Basis
`1–3, 5, 7, 9, 11, 12, 14, 16
`103
`AAPA,3 Khare4
`4, 13
`103
`AAPA, Khare, Weber5
`
`Petitioner relies on the Declaration of John D. Kubiatowicz, Ph.D.
`(Ex. 1002), dated February 28, 2020, in support of its unpatentability
`contentions.
`
`III. ANALYSIS – 35 U.S.C. § 314(a)
`Under 35 U.S.C. § 314(a), the Director has discretion to deny
`institution. In determining whether to exercise that discretion on behalf of
`the Director, we are guided by the Board’s precedential decision in NHK.
`In NHK, the Board found that the “advanced state of the district court
`proceeding” was a “factor that weighs in favor of denying” the petition
`under § 314(a). NHK, Paper 8 at 20. The Board determined that
`“[i]nstitution of an inter partes review under these circumstances would not
`be consistent with ‘an objective of the AIA . . . to provide an effective and
`
`
`2 The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284
`(2011) (“AIA”), amended 35 U.S.C. § 103. Because the ’983 patent has a
`filing date of July 31, 2006, which is prior to the effective date of the
`applicable AIA amendments, we refer to the pre-AIA version of § 103. See
`Ex. 1001, code (22).
`3 Petitioner refers to the following portions of the ’983 patent as “AAPA”:
`1:15–4:47, 5:21–27, and Figures 1 and 2. Pet. 3–4.
`4 U.S. Patent Application Publication No. 2003/0005167 A1, pub. Jan. 2,
`2003 (Ex. 1003, “Khare”).
`5 U.S. Patent No. 7,149,829 B2, issued Dec. 12, 2006.
`
`4
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`efficient alternative to district court litigation.’” Id. (citing Gen. Plastic,
`Paper 19 at 16–17 (precedential in relevant part)).
`“[T]he Board’s cases addressing earlier trial dates as a basis for denial
`under NHK have sought to balance considerations such as system efficiency,
`fairness, and patent quality.” Apple Inc. v. Fintiv Inc., IPR2020-00019,
`Paper 11 at 5 (PTAB Mar. 20, 2020) (precedential) (collecting cases). Fintiv
`sets forth six non-exclusive factors for determining “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. at 6. These
`factors consider:
`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.
`We discuss the parties’ arguments in the context of considering the
`above factors. In evaluating the factors, we take a holistic view of whether
`efficiency and integrity of the system are best served by denying or
`instituting review. Fintiv at 6.
`
`5
`
`
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`IPR2020-00583
`Patent 7,606,983 B2
`1. whether the court granted a stay or evidence exists that one may be
`granted if a proceeding is instituted
`On the present record, neither party has produced evidence that a stay
`has been requested or that the Western District of Texas has considered a
`stay in this case. See Pet. Prelim. Reply 6; PO Prelim. Sur-reply 2. Thus,
`this factor does not weigh in favor of or against exercising our discretion to
`deny institution pursuant to § 314(a).
`
`2. proximity of the court’s trial date to the Board’s projected statutory
`deadline for a final written decision
`Both parties rely upon the proposed Third Amended Agreed
`Scheduling Order (Ex. 1022) as representing the most current district court
`schedule. See Pet. Prelim. Reply 6–7; PO Prelim. Sur-reply 2–4. The
`proposed Third Amended Agreed Scheduling Order reflects the following:
`(1) the three cases between the parties (No. 6:19-cv-254, -255, and -256) are
`consolidated for much of the pre-trial phase of the cases (see Ex. 1022, 1–3);
`(2) the three cases are scheduled to have separate trials; (3) the first case
`(-254) is scheduled for trial on November 16, 2020 (id. at 3); and (4) the trial
`dates for the second and third cases are “[t]o be set by the Court in each
`case” (id. at 4).
`Petitioner contends that the uncertainty regarding the precise trial date
`for the third trial (which includes the ’983 patent) weighs against exercising
`discretion to deny institution. Pet. Prelim. Reply 6–7 (citing Sand
`Revolution II, LLC v. Cont’l Intermodal Grp.-Trucking LLC, IPR2019-
`01393, Paper 24 at 9–10 (PTAB June 16, 2020) (informative)). In response,
`Patent Owner contends that even if the third trial was scheduled with the
`same intervening time originally proposed by Patent Owner, it would occur
`112 days after the first trial, on March 8, 2021. PO Prelim. Sur-reply 3.
`
`6
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`If an inter partes review was instituted, a final written decision in this
`matter likely would not issue until October 2021. Despite there not being a
`firm trial date in the Western District of Texas litigation, there is no
`indication that trial will occur after October 2021. Rather, the only
`indications of record suggest the opposite. First, the consolidation of the
`pre-trial phases of the three district court cases permitted the Western
`District of Texas litigation to move along with the -254 case, which is
`scheduled for trial in just over a month. Second, the proposed Third
`Amended Agreed Scheduling Order indicates that each of the second and
`third cases (-255 and -256) requires only five weeks of lead time prior to
`trial. See Ex. 1022, 4 (noting the first listing under “Amended Dates” of
`“5 weeks before each respective trial date”). Third, the only schedule for
`three trial dates previously proposed by either party reflects a spread of
`112 days between the first and third trials. See Prelim. Resp. 13 (citing
`Ex. 2031 (Proposed Scheduling Order), 3–4). Thus, the evidence of record
`suggests that trial is likely to occur months before any final written decision
`in this matter.
`Accordingly, on the record before us, this factor weighs slightly in
`favor of exercising our discretion to deny institution pursuant to § 314(a).
`
`3. investment in the parallel proceeding by the court and the parties
`Patent Owner contends there has been “immense” investment in the
`parallel proceeding. See PO Prelim. Resp. 17. Petitioner contends that the
`“district court’s investment in the challenged claims has been relatively
`limited.” Pet. Prelim. Reply 7. In particular, Petitioner asserts that the
`district court only construed one claim term relevant to this proceeding.
`The district court issued a claim construction order on January 3,
`2020, approximately nine months ago, in which the court construed the term
`
`7
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`“an indication of a/the specified order” as recited in the ’983 patent.
`Ex. 1005, 3. Additionally, the parties’ final infringement and invalidity
`contentions were served in January 2020. Ex. 1022, 2. Further, expert
`discovery has already closed or is about to close. Id. at 3. Accordingly, in
`light of the present posture of the district court action, we find that the
`district court’s and parties’ investment in that action weighs in favor of
`exercising our discretion to deny institution pursuant to § 314(a).
`
`4. overlap between issues raised in the petition and in the parallel proceeding
`Patent Owner contends that there is a “complete” overlap between the
`issues raised in the Petition and those in the Western District of Texas
`litigation. PO Prelim. Resp. 19–22 (contending that Petitioner relies upon
`the same references, in the same combinations). Patent Owner points to
`Petitioner’s Amended Final Invalidity Contentions (Ex. 2010) challenging
`the claims as obvious over AAPA, Khare, and Weber. Id. at 20.
`Petitioner does not dispute Patent Owner’s argument, but contends
`that it does not “paint the full picture” because Petitioner will be required to
`narrow the invalidity grounds asserted in the Western District of Texas
`litigation and there may be no overlap thereafter. Pet. Prelim. Reply 8–9.
`Additionally, Petitioner explains that Patent Owner is required to reduce the
`number of asserted claims to six, which will result in leaving the remaining
`six claims (of the twelve challenged in the Petition) unadjudicated. Id. at 9.
`At this point in the Western District of Texas litigation, Petitioner
`asserts the same art presented here in challenging the same claims 1–5, 7, 9,
`11–14, and 16 of the ’983 patent. Ex. 2010, 6. Even though not all of the
`challenged claims may be adjudicated in the Western District of Texas
`litigation, at this point, the claims overlap completely. To the extent Patent
`Owner seeks to pursue the claims to be dropped from the Western District of
`
`8
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`Texas litigation, Petitioner likely will have the opportunity to challenge their
`validity in response. Thus, the potential for claim differences alone does not
`negate that the same combinations of references asserted in the Petition also
`are asserted in the Western District of Texas litigation. On the present
`record, we find that there is a substantial overlap between the issues raised in
`the Petition and in the Western District of Texas litigation.
`Accordingly, this factor weighs in favor of exercising our discretion to
`deny institution pursuant to § 314(a).
`
`5. whether the petitioner and the defendant in the parallel proceeding are the
`same party
`Petitioner and Patent Owner are the defendant and plaintiff,
`respectively, in the Western District of Texas litigation. PO Prelim.
`Resp. 22. Therefore, we find that this factor weighs in favor of exercising
`our discretion to deny institution pursuant to § 314(a).
`
`6. other circumstances that impact the Board’s exercise of discretion,
`including the merits
`Petitioner contends that discretionary denial would reward Patent
`Owner’s tactics to evade review of its patents. Pet. Prelim. Reply 1–2.
`Petitioner asserts that Patent Owner’s “scheme is evident: to file serial
`lawsuits against Intel in multiple venues asserting numerous patents and
`claims, to resist narrowing the number of asserted claims, and to delay
`adjudication of the validity of its claims.” Id. at 3. In particular, Petitioner
`reiterates that other factors should weigh more heavily toward not exercising
`discretion to decline institution; e.g., the Patent Owner’s identity and
`behavior, and the number and identity of claims ultimately asserted in each
`jurisdiction. Id. at 2–4. In particular, Petitioner contends Patent Owner is a
`non-practicing entity whose business model is centered on filing an
`
`9
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`unreasonably large number of patent suits against Intel in a fast-moving
`jurisdiction, with numerous asserted claims, to encourage a quick settlement
`or long-shot jury verdict and avoid inter partes review. Id. at 1–3.
`Even if Petitioner’s contentions are true, the validity of the ’983 patent
`is at issue in the co-pending litigation, which is likely to go to trial well
`before the deadline for a final written decision in this proceeding.
`Accordingly, this argument does not weigh against exercising our discretion
`to deny institution pursuant to § 314(a).6
`Patent Owner contends that other circumstances weigh in favor of
`exercising our discretion to deny institution. In particular, Patent Owner
`asserts that Petitioner relies upon AAPA as the lead reference in each ground
`presented in the Petition, contrary to the Director’s new Memorandum on
`the use of AAPA in inter partes reviews. PO Prelim. Sur-reply 7–8
`(citations omitted). The parties discuss the impact of the Memorandum in
`Papers 18 and 19.
`For purposes of considering this Fintiv factor, we need not decide
`whether Petitioner’s use of AAPA is proper because, in the best case for
`Petitioner, this factor weighs neutrally, assuming Petitioner’s use was
`proper. In the worst case for Petitioner, this factor would weigh in favor of
`denying institution. On balance, as discussed below, the factors (whether we
`consider Petitioner’s use of AAPA or not) weigh in favor of exercising our
`
`
`6 In a footnote, Petitioner argues that the NHK/Fintiv framework should not
`be applied because it is “inconsistent with the AIA’s purpose and creates
`significant practical challenges, particularly when the Petition challenges a
`patent subject to litigation in a ‘rocket docket’ jurisdiction.” Pet. Prelim.
`Reply 1 n.1. Although Petitioner’s argument may be appropriate for review
`in another forum, we are bound to follow the precedential NHK/Fintiv
`framework.
`
`10
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`discretion to deny institution pursuant to § 314(a). Thus, the outcome of
`weighing Petitioner’s use of AAPA as part of this factor does not change
`that result.
`
`7. Weighing the factors
`There is no dispute that the related district court litigation involves the
`same parties and issues as this proceeding. At this juncture, the Western
`District of Texas litigation is quite advanced and trial will likely be
`scheduled months prior to the issuance of any final written decision in this
`case. The district court may resolve the issues in this proceeding before we
`would reach a final written decision, and instituting an inter partes review
`would likely duplicate the district court’s efforts and could lead to
`inconsistent results, undercutting the efficiency and integrity of the patent
`system. After weighing all of the factors and taking a holistic view of the
`relevant circumstances of this proceeding, we determine that instituting an
`inter partes review would be an inefficient use of the Board’s and parties’
`resources, and we exercise discretion to deny institution under 35 U.S.C.
`§ 314(a).
`
`IV. CONCLUSION
`For the foregoing reasons, we exercise our discretion pursuant to
`35 U.S.C. § 314(a) to deny institution of inter partes review.
`
`V. ORDER
`In consideration of the foregoing, it is hereby:
`ORDERED that the Petition (Paper 3) is denied as to the challenged
`claims of the ’983 patent; and
`FURTHER ORDERED that no inter partes review is instituted.
`
`11
`
`
`
`IPR2020-00583
`Patent 7,606,983 B2
`FOR PETITIONER:
`Taeg Sang Cho
`S. Calvin Walden
`Donald R. Steinberg
`WILMER, CUTLER, PICKERING, HALE AND DORR LLP
`tim.cho@wilmerhale.com
`don.steinberg@wilmerhale.com
`
`
`FOR PATENT OWNER:
`Kenneth J. Weatherwax
`Bridget Smith
`Flavio Rose
`Edward Hsieh
`Parham Hendifar
`Patrick Maloney
`Jason C. Linger
`LOWENSTEIN & WEATHERWAX LLP
`weatherwax@lowensteinweatherwax.com
`smith@lowensteinweatherwax.com
`rose@lowensteinweatherwax.com
`hseih@lowensteinweatherwax.com
`hendifar@lowensteinweatherwax.com
`maloney@lowensteinweatherwax.com
`linger@lowensteinweatherwax.com
`
`
`12
`
`
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