UNITED STATES PATENT AND TRADEMARK OFFICE
`____________________________________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________________________________________
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`APPLE INC.
`Petitioner
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`v.
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`PARUS HOLDINGS, INC.
`Patent Owner
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`Case IPR2020-00686
`U.S. Patent No. 7,076,431
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`PETITIONER’S REPLY TO
`PATENT OWNER PRELIMINARY RESPONSE
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`Reply to Patent Owner Preliminary Response
`IPR2020-00686
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`TABLE OF CONTENTS
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`B.
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`C.
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`THE FINTIV FACTORS SUPPORT INSTITUTING IPR ......................................... 1
`A.
`FACTOR 1: LACK OF EVIDENCE OF STAY RENDERS THIS FACTOR
`NEUTRAL ............................................................................................. 1
`FACTOR 2: PARUS’ FOCUS ON A TRIAL DATE ONLY TWO
`MONTHS BEFORE THE FWD IGNORES CURRENT REALITIES OF
`TRIALS IN TEXAS ................................................................................. 1
`FACTOR 3: APPLE DID NOT DELAY FILING FOR ANY STRATEGIC
`ADVANTAGE AND THE DISTRICT COURT HAS NOT INVESTED
`SIGNIFICANT RESOURCES ..................................................................... 3
`FACTOR 4: THERE IS NO ISSUE OVERLAP ............................................. 4
`FACTOR 6: APPLE’S STRONG PETITION OUTWEIGHS OTHER
`FACTORS ............................................................................................. 5
`ADDITIONAL CONSIDERATIONS UNDER FACTOR 6 FAVOR
`INSTITUTION ........................................................................................ 6
`THE NHK/FINTIV FRAMEWORK SHOULD BE OVERTURNED .................... 7
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`D.
`E.
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`F.
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`G.
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`i
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`I.
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`Reply to Patent Owner Preliminary Response
`IPR2020-00686
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`Apple submits this reply pursuant to the authorization of the Board to address
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`the Fintiv factors. Ex. 1033 (Board’s Email). The POPR urges denying the petition
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`based on misapplying the Fintiv factors. It also unduly focuses on the alleged overlap
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`between the proceedings, and the time between the current trial date in the litigation
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`(“Texas case”) and the Final Written Decision (“FWD”). A balanced weighing of
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`the factors shows that the patent system would best be served by instituting review.
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`I.
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`THE FINTIV FACTORS SUPPORT INSTITUTING IPR
`A.
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`Factor 1: Lack of Evidence of Stay Renders This Factor Neutral
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`No motion to stay has been filed in the Texas case. The Board, “in the absence
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`of specific evidence, [] will not attempt to predict how the district court in the related
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`district court litigation will proceed because the court may determine whether or not
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`to stay any individual case, including the related one, based on a variety of
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`circumstances and facts beyond [its] control and to which the Board is not
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`privy.” Sand Revolution II, LLC v. Continental Intermodal Group-Trucking LLC,
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`IPR2019-01393, Paper 24 at 7 (June 16, 2020) (Informative). This factor is neutral.
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`B.
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`Factor 2: Parus’ Focus on a Trial Date Only Two Months Before
`the FWD Ignores Current Realities of Trials in Texas
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`Parus devotes much of its POPR to arguing that the Texas litigation will reach
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`trial “at least two months before any final written decision deadline in the requested
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`IPR.” POPR at 6. But the two-month difference is not the bright-line test Parus
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`suggests it to be. The Board recently has instituted a number of proceedings with a
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`Reply to Patent Owner Preliminary Response
`IPR2020-00686
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`eight-month difference. Apple Inc. v. Maxell, Ltd., IPR2020-00199, Paper 11 (June
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`19, 2020); IPR2020-00200, Paper 12 (July 15, 2020). Similarly, in the Sand
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`Revolution proceeding, the Board found that a trial date five months before the FWD
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`was “in relatively close proximity to the expected final decision” and insufficient to
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`deny institution. See Sand Revolution II, LLC v. Cont’l Intermodal Grp.–Trucking
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`LLC, IPR2019-01393, Paper 24, 8-9 (June 16, 2020). The Board found the five
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`month difference weighed in favor of not exercising discretion because “at this point
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`it is unclear that the court in the related district court litigation will adhere to any
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`currently scheduled jury trial date or, if it is changed, when such a trial will be held.”
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`Id. at 8-9. This is the precise scenario in the Texas case where civil trials have been
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`canceled and repeatedly rescheduled due to the pandemic creating a backlog that
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`makes any future trial date unclear. Parus also fails to note the current trial date will
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`change if Apple’s motion to transfer is granted. Ex. 1034.
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`Parus’ assumption regarding a firm trial date fails to account for the fact that
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`trials in the Western District of Texas currently have been canceled by general order
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`of the Chief Judge and that future trials will be impacted as well. See, e.g., Ex. 1035
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`(W.D.Tex. General Order canceling trials). Indeed, trials already are being continued
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`due to the pandemic. For example, the MV3 Partners litigation already has had its
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`trial date moved twice. Ex. 1036 at Docket Nos. 301 and 293 (MV3 Partners v. Roku,
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`Docket Sheet) (transcripts unavailable for 90 days). Outside of the pandemic, trial
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`Reply to Patent Owner Preliminary Response
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`dates are very fluid. Over 40% of cases have their initial trial dates continued. Ex.
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`1037. Parus cannot credibly claim that the trial date in this matter is a fixed,
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`immovable date.
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`C.
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`Factor 3: Apple Did Not Delay Filing For Any Strategic
`Advantage And The District Court Has Not Invested Significant
`Resources
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`By the time the petition was filed, invalidity contentions had just been served.
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`Ex. 1032 at 2. Parus had not provided any responses to those contentions that Apple
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`used in preparing this petition. Nor had the parties submitted proposed claim
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`construction positions or briefs and, thus, there was nothing for Apple to use for its
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`advantage in the Petition. Id. For this reason, Parus devotes much of its argument to
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`the “extensive briefing” the parties have done on motions to dismiss—something
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`that has nothing to do with invalidity. By all accounts, Apple prepared and filed its
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`petition as early in the litigation as reasonably possible and “this fact has weighed
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`against exercising the authority to deny institution under NHK.” Apple Inc. v. Seven
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`Networks, LLC, IPR2020-00156, Paper 10 at 11-12 (June 15, 2020).
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`Moreover, the relevant question is what resources the Court has invested into
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`the question of invalidity and, in that regard, the answer is none. No Markman
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`hearing has occurred, fact discovery is not open, dispositive motions have not been
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`filed, no expert reports have been completed, and no Daubert challenges have been
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`filed. As the Board in Sand Revolution recognized, “we recognize that much work
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`Reply to Patent Owner Preliminary Response
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`remains in the district court as it relates to invalidity: fact discovery is still ongoing,
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`expert reports are not yet due, and substantive motion practice has yet to come.”
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`Sand Revolution, IPR2019001393, Paper 24 at 11. Factor 3 thus favors Apple.
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`D.
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`Factor 4: There Is No Issue Overlap
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`The Texas case is still in its infancy and final invalidity contentions are not
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`due until October 30, 2020. Ex. 1032 at 2. Apple is still in the process of evaluating
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`both its art and the evidence it can put forth. For this reason, the question of overlap
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`is premature. But, in any event, and in order to eliminate any doubt as to overlap
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`between the proceedings, Apple stipulates that, if the IPR is instituted, Apple will
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`not pursue the same grounds in the district court litigation.
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`The Board previously has found that such stipulations eliminate the chance of
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`inconsistent findings and nearly eliminate the risk of duplicative efforts. For
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`example, in Sand Revolution, Paper 24, at 11-12. And in Seven Networks, the Board
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`found that “Petitioner here does not rely on the ‘same prior art and arguments’ with
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`respect to at least three of the four grounds” and, therefore, “the IPR trial here does
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`not involved an appreciable duplication of efforts with respect to the District Court
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`action.” Seven Networks, IPR2020-00156, Paper 10 at 16-17. For this reason, this
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`proceeding “will impact the integrity of the patent system positively by considering
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`material issues not raised in the District Court Action.” Id. at 17.
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`This factor weighs in favor of Apple and against denying institution.
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`Reply to Patent Owner Preliminary Response
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`Factor 6: Apple’s Strong Petition Outweighs Other Factors
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`E.
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`This factor favors Apple because its strong showing on the merits outweighs
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`the other factors. See Seven Networks, IPR2020-00156, Paper 10 at 20-22. For
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`example, Parus argues Apple failed to map the claimed “instruction set” in claim
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`1(e) and otherwise does not substantively attack Apple’s mapping. POPR at 41. But
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`Parus ignores that Apple mapped the “instruction set” limitation, in detail, at pages
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`25-30 of the Petition. The POPR also does not provide any substantive arguments
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`for why Apple’s mapping of the “instruction set” under the plain and ordinary
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`construction fails to meet the limitation, other than referring to another party’s
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`construction in the litigation. POPR at 48-49. Thus, Apple’s mapping under the plain
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`and ordinary construction is unchallenged.
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`Parus’ POPR is also weak because it relies on misapplications of the proposed
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`combination. Parus argues that “in every Ground,” Apple relies on Goedken to teach
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`the “sequential access” limitation. POPR at 51. Parus then argues Goedken does not
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`teach sequentially accessing pre-selected web sites. Id. But Parus misunderstands or
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`ignores Apple’s proposed combination. In the Petition, Apple mapped Kurosawa for
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`sequentially accessing the websites, and mapped Goedken for accessing a first one
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`and then moving to a second (or third and so on) if the information is not located at
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`the first website. Petition at 39-40. Similarly, Parus argues Goedken is directed
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`towards database files and not websites (POPR at 52) but ignores the fact that Apple
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`directly addressed this argument in its Petition at page 46.
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`Reply to Patent Owner Preliminary Response
`IPR2020-00686
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`These flaws in Parus’ POPR show its overall weakness and the strength of
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`Apple’s petition. This factor strongly favors Apple.
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`F.
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`Additional Considerations under Factor 6 Favor Institution
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`Parus also fails to present other key factors that weigh in favor of institution.
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`First, addressing the invalidity of the ’431 Patent in IPR serves the public interest
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`because Parus has asserted this patent against multiple defendants. Ex. 1038.
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`Second, the Board is well suited to address the complex technical subject
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`matter of the challenged patent. Presenting this subject matter to a jury poses a
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`number of challenging issues, especially with two asserted patents to try in just a
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`short one-week trial. Within that context, the ’431 Patent’s validity is likely to
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`occupy only a small segment of trial. Instituting the IPR “avoids potentially
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`complicated and overlapping jury issues of [two] patents, while allowing the panel
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`to focus on multiple issues in depth that only involve the ‘[431] patent. Therefore,
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`this IPR trial will provide the parties with an in-depth analysis of the ‘[431] patent,
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`providing a full record that will enhance the integrity of the patent system.” Seven
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`Networks, IPR2020-00156, Paper 10 at 22.
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`Finally, the uncertainties created by the COVID-19 pandemic lean in favor of
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`institution. Though Texas trial is still a ways off, the pandemic will have a far
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`reaching impact on existing schedules and the likelihood of a jury commencing at
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`Reply to Patent Owner Preliminary Response
`IPR2020-00686
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`the scheduled time is unclear. The Board, by contrast, has continued to hold hearings
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`remotely and on schedule because of the statutory deadlines.
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`G. The NHK/Fintiv Framework Should be Overturned
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` The NHK/Fintiv framework is legally invalid. The PTO lacks authority to
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`deny institution based on non-statutory factors. University of Texas Sw. Med. Ctr.
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`v. Nassar, 570 U.S. 338, 356 (2013). The NHK/Fintiv framework also contravenes
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`Congress’s judgment to allow IPR if filed within one year. §315(b); cf. §315(a)(1).
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`The NHK/Fintiv framework is also arbitrary and capricious. The factors
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`require speculation about the likely course of parallel litigation, which will produce
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`irrational and unfair outcomes. This speculation will undermine the PTO’s
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`efficiency goal by incentivizing accused infringers to splinter issues and petition for
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`IPR prematurely. See 157 Cong. Rec. S5430 (Sept. 8, 2011).
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`Finally, the NHK/Fintiv framework is invalid because it is a substantive rule
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`that was adopted without public notice and comment. “[T]he Director has no
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`substantive rule making authority with respect to interpretations of the Patent Act.”
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`Facebook, Inc. v. Windy City Innovations, LLC, 953 F.3d 1313, 1341 (Fed. Cir.
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`2020) (additional views of Prost, C.J., Plager, & O’Malley, JJ.). The Director
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`designated NHK and Fintiv as a binding rule without such procedures.
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`Reply to Patent Owner Preliminary Response
`IPR2020-00686
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`Respectfully submitted,
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`BY: /s/ Adam P. Seitz
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`Jennifer C. Bailey, Reg. No. 52,583
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`Adam P. Seitz, Reg. No. 52,206
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`COUNSEL FOR PETITIONER
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`Reply to Patent Owner Preliminary Response
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`Updated Exhibit List
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`Exhibit 1001 U.S. Patent No. 7,076,431 (“the ’431 Patent”)
`Exhibit 1002 File History of U.S. Patent No. 7,076,431 (“File History for ’431
`Patent”)
`Exhibit 1003 Declaration of Dr. Loren Terveen, PhD (including Appendices A
`and B) (“Dec.”)
`Exhibit 1004 U.S. Patent No. 6,269,336 to Ladd (“Ladd”)
`Exhibit 1005 Japanese Patent Application No. JP H9-311869 to Kurosawa
`(“Kurosawa”)
`Exhibit 1006 U.S. Patent No. 6,393,423 to Goedken (“Goedken”)
`Exhibit 1007 U.S. Patent No. 5,913,214 to Madnick (“Madnick”)
`Exhibit 1008 U.S. Patent No. 5,774,859 to Houser (“Houser”)
`Exhibit 1009 U.S. Patent No. 7,203,646 to Bennett (“Bennett”)
`Exhibit 1010 U.S. Patent No. 6,650,998 to Rutledge et al. (“Rutledge”)
`Exhibit 1011 MURAX: A Robust Linguistic Approach for Question Answering
`Using an Online Encyclopedia SIGIR ’93, July 1993 Kupiec,
`Julian (“MURAX”)
`Exhibit 1012 U.S. Patent No. 6,606,611 to Khan (“Khan”)
`Exhibit 1013 U.S. Patent No. 6,428,941 to Ho et al. (“Ho”)
`Exhibit 1014 U.S. Patent No. 6,427,165 to Anderson (“Anderson”)
`Exhibit 1015 U.S. Patent No. 6,460,060 to Maddalozzo, Jr. et al.
`(“Maddalozzo”)
`Exhibit 1016 U.S. Patent No. 5,642,502 to Driscoll (“Driscoll”)
`Exhibit 1017 U.S. Patent No. 5,850,442 to Muftic (“Muftic”)
`Exhibit 1018 U.S. Patent No. 5,956,716 to Kenner et al. (“Kenner”)
`Exhibit 1019 U.S. Patent No. 6,131,085 to Rossides (“Rossides”)
`Exhibit 1020 Just Say No: How Are Visual Searches Terminated When There Is
`No Target Present? Cognitive Psychology, 1996 Chun et al.
`(“Chun”)
`Exhibit 1021 PCT Application WO 98/03923 to Kraftsow et al. (“Kraftsow”)
`Exhibit 1022 US Patent No. 6,397,212 to Biffar (“Biffar”)
`Exhibit 1023 U.S. Patent No. 6,587,466 to Battacharya et al. (“Battacharya”)
`Exhibit 1024 Web Hunting: Design of a Simple Intelligent Web Search Agent
`Crossroads, June 1999 Youngblood (“Youngblood”)
`Exhibit 1025 Collective Intelligence and Its Implementation on the Web
`Computational and Mathematical Organization Theory, October
`1999 Heylighen, Francis (“Heylighen”)
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`Exhibit 1026 U.S. Patent No. 6,704,722 to Wang Baldonado (“Wang
`Baldonado”)
`Exhibit 1027 University of Sheffield TREC-8 Q&A System Computer Science,
`June 1999 Humphries et al. (“Humphries”)
`Exhibit 1028 U.S. Patent No. 7,149,359 to Omoigui (“Omigui”)
`Exhibit 1029 CV of Dr. Loren Terveen
`Exhibit 1030 U.S. Patent No. 9,451,084 (“the ’084 Patent”)
`Exhibit 1031 File History of U.S. Patent No. 9,451,084 (“File History for ’084
`Patent”)
`Exhibit 1032 Parus Holdings Inc. v. Apple Inc., Case No. 6_19-cv-00432
`(W.D. Tex. Jan. 17, 2020), Doc. No. 85 (Scheduling Order)
`Exhibit 1033 Board’s Email Authorizing the Reply
`Exhibit 1034 Apple’s Motion to Transfer from Texas to California
`Exhibit 1035 W.D.Tex. General Order Canceling Trials
`Exhibit 1036 MV3 Partners Docket Canceling and Rescheduling Trial
`Exhibit 1037 Trial Delay Statistics
`Exhibit 1038 Docket Report for Parus Litigation of Challenged Patents
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`CERTIFICATE OF SERVICE ON PATENT OWNER
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`UNDER 37 C.F.R. § 42.6
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`Pursuant to 37 C.F.R. § 42.6(e), the undersigned certifies that on July 23, 2020
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`the foregoing Petitioner Apple Inc.’s Preliminary Reply was served via electronic
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`filing with the Board and via Electronic Mail on the following practitioners of record
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`for Patent Owner:
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`Michael J. McNamara (mmcnamara@mintz.com)
`Michael T. Renaud (mtrenaud@mintz.com)
`William A. Meunier (wameunier@mintz.com)
`Andrew H. deVoogd (ahdevoogd@mintz.com)
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`/s/ Adam P. Seitz
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`Adam P. Seitz, Reg. No. 52,206
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`ATTORNEY FOR PETITIONER
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