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`Rudolph A. Telscher, Jr.* (MO Bar No. 41072)
`
`rudy.telscher@huschblackwell.com
`Daisy Manning* (MO Bar No. 62134)
`
`daisy.manning@huschblackwell.com
`Jennifer E. Hoekel* (MO Bar No. 45880)
`
`Jennifer.hoekel@huschblackwell.com
`HUSCH BLACKWELL LLP
`190 Carondelet Plaza, Suite 600
`St. Louis, MO 63105
`314-480-1500 Telephone
`
`Nathan Sportel* (IL Bar No. 6304061)
`nathan.sportel@huschblackwell.com
`HUSCH BLACKWELL LLP
`120 South Riverside Plaza Suite 2200
`Chicago, IL 60606
`312-655-1500 Telephone
`Dustin Taylor* (CO Bar No. 54463)
`dustin.taylor@huschblackwell.com
`HUSCH BLACKWELL LLP
`1801 Wewatta St., Suite 1000
`Denver, CO 80205
`*admitted pro hac vice
`
`J. Christopher Jaczko (Bar No. 149317)
`chris.jaczko@procopio.com
`PROCOPIO, CORY, HARGREAVES
`& SAVITCH LLP
`12544 High Bluff Drive, Suite 400
`San Diego, CA 92130
`619-238-1900 Telephone
`Attorneys for Defendant
`Sotera Wireless, Inc.
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF CALIFORNIA
`
`MASIMO CORPORATION, a
`California corporation,
`Plaintiff,
`
`v.
`SOTERA WIRELESS, INC., a
`California corporation,
`Defendant.
`
`Case No.: 3:19-cv-01100-BAS-NLS
`DEFENDANT SOTERA
`WIRELESS, INC.’S MOTION TO
`STAY PROCEEDINGS
`HEARING DATE: June 22, 2020
`JUDGE: HONORABLE CYNTHIA
`A. BASHANT
`ORAL ARGUMENT REQUESTED
`
`MOTION TO STAY
`
`EX1036
`Petitioner Sotera
`IPR2020-01019
`
`

`

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`
`TABLE OF CONTENTS
`
`TABLE OF CONTENTS ................................................................................. i
`TABLE OF AUTHORITIES ........................................................................... ii
`I.
`INTRODUCTION .................................................................................. 1
`II.
`FACTUAL BACKGROUND ................................................................ 3
`III. ARGUMENT .......................................................................................10
`Inter Partes Review Proceedings ............................................... 10
`A.
`B.
`Legal Standards for Motions to Stay Pending IPR. ................... 13
`C.
`The Court Should Stay the Litigation During Inter Partes
`Review of the Asserted Patents .................................................. 14
`1.
`The Litigation is in its Early Stages and Discovery Is
`Far From Complete .......................................................... 14
`Granting a Stay Will Simplify and/or Moot the Issues in
`the Litigation .................................................................... 16
`A Stay Will Not Unduly Prejudice or Tactically
`Disadvantage Masimo ..................................................... 20
`IV. MEET AND CONFER .........................................................................22
`V.
`CONCLUSION ....................................................................................22
`
`2.
`
`3.
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`MOTION TO STAY
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`i
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`TABLE OF AUTHORITIES
`
`
`
`Cases
`Acantha LLC v. Depuy Synthes Sales Inc.,
` No. 15-CV-1257, 2016 WL 8201780 (E.D. Wis. June 6, 2016) .......... 16, 20, 21
`Allergan Inc. v. Cayman Chem. Co., No. SACV 07-01316 JVS (RNBx),
` 2009 WL 8591844 (C.D. Cal. Apr. 9, 2009) ..................................................... 13
`American GNC Corp. v. LG Electronics Inc.,
` Case No. 17-cv-01090-BAS-BLM (S.D. Cal. Mar. 12, 2018) ........ 13, 14, 15, 17
`Asetek Holdings, Inc. v. Cooler Master Co.,
` No. 13-CV-00457-JST, 2014 WL 1350813 (N.D. Cal. Apr. 3, 2014) ............. 20
`Black & Decker Inc. v. Positec USA, Inc.,
` No. 13 C 3075, 2013 WL 5718460 (N.D. Ill. Oct. 1, 2013) ............................. 21
`Blast Motion, Inc. v. Zepp Labs, Inc.,
` No. 15-CV-700 JLS(NLS), 2016 WL 5107678 (S.D. Cal. Mar. 29,
`2016) ................................................................................................. 14, 16, 20, 21
`Capriola Corp. v. LaRose Indus., LLC,
` No. 8:12-ccv-02346 (M.D. Fla. Mar. 11, 2013) ............................................... 18
`Davol, Inc. v. Atrium Med. Corp.,
` No. 12-958-GMS, 2013 WL 3013343 (D. Del. June 17, 2013) ....................... 21
`DivX, LLC v. Netflix, Inc.,
` 2-19-cv-01602 (C.D. Cal. 2020-05-11, Order ECF No. 106) ...................... 15, 16
`e-Imagedata Corp. v. Digital Check Corp.,
` No. 16-CV-576, 2017 WL 657462 (E.D. Wis. Feb. 17, 2017) ................... 19, 21
`Emhart Industries, Inc. v. Sankyo Seiki Mfg. Co.,
` 3 U.S.P.Q.2d 1889 (N.D. Ill. 1987) ................................................................... 12
`Ethicon, Inc. v. Quigg,
` 849 F.2d 1422 (Fed. Cir. 1988) ......................................................................... 13
`Evolutionary Intelligence, LLC v. Sprint Nextel Corp.,
` No. C-13-4513-RMW, 2014 WL 819277 (N.D. Cal. Feb. 28, 2014) ......... 17, 18
`e-Watch, Inc. v. ACTi Corp., Inc.,
`No. SA-12-CA-492-FB, 2013 WL 12091167 (W.D. Tex. May 21, 2013) ....... 18
`Fresenius USA, Inc. v. Baxter Int’l, Inc.,
` 721 F.3d 1330 (Fed. Cir. 2013) ......................................................................... 12
`
`MOTION TO STAY
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`ii
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`Krippelz v. Ford Motor Co.,
` 667 F.3d 1261 (Fed. Cir. 2012) .......................................................................... 18
`Lodge Mfg. Co. v. Gibson Overseas, Inc.,
` CV 18-8085 PSG (GJSx) (slip op.), (C.D. Cal. Sept. 24, 2019) ........................ 14
`Microsoft Corp. v. i4i Ltd. P’ship,
` 564 U.S. 91 (2011) ............................................................................................ 11
`Microsoft Corp. v. Tivo Inc.,
` 2011 WL 1748428 (N.D. Cal. May 6, 2011) ..................................................... 15
`Milwaukee Elec. Tool Corp. v. Hilti, Inc.,
` 138 F. Supp. 3d 1032 (E.D. Wis. 2015) ............................................................ 17
`Out Rage, LLC v. New Archery Prods. Corp.,
` No. 11-cv-701-bbc, ECF No. 72 (W.D. Wis. Apr. 9, 2012) ................. 12, 18, 21
`SCA Hygiene Products AB v. Tarzana Enterprises, LLC,
` Case No. CV 17-04395, slip op at 4, (C.D. Cal. Sept. 27, 2017) ................ 14, 15
`Seaquist Closures LLC v. Rexam Plastics,
` No. 08-C-0106, 2008 WL 4691792 (E.D. Wis. Oct 22, 2008) ......................... 11
`Security People, Inc. v. Ojmar US, LLC,
` Case No. 14-cv-04968-HSG, 2015 WL 3453780 (N.D. Cal. May 29,
`2015) ................................................................................................................... 21
`Semiconductor Energy Lab. Co. v. Chimei Innolux Corp.,
` No. SACV12-21-JST (JPRx), 2012 WL 7170593 (C.D. Cal. Dec. 19,
`2012) ................................................................................................................... 16
`Serv. Sol. U.S. LLC v. Autel. US Inc.,
` No. 13-10534, 2015 WL 401009 (E.D. Mich. Jan. 28, 2015) .......................... 17
`Slip Track Systems, Inc. v. Metal Lite, Inc.,
` 159 F.3d 1337 (Fed. Cir.1998) .......................................................................... 14
`Software Rights Archive, LLC v. Facebook, Inc.,
` No. 12-cv-03970-RMW, 2013 WL 5225522 (N.D. Cal. Sept 17, 2013) ......... 10
`Sorensen v. Black & Decker Corp.,
` No. 06cv1572 BTM (CAB), 2007 WL 2696590, (S.D. Cal. Sept. 10,
`2007) ................................................................................................................... 14
`TAS Energy, Inc v. San Diego Gas & Elec. Co.,
` No. 12CV2777-GPC BGS, 2014 WL 794215 (S.D. Cal. Feb, 26, 2014) ......... 15
`
`
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`MOTION TO STAY
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`Statutes
`35 U.S.C. § 101 ........................................................................................................ 7
`35 U.S.C. § 112 ........................................................................................................ 7
`35 U.S.C. § 251 ........................................................................................................ 6
`35 U.S.C. § 252 ........................................................................................................ 7
`35 U.S.C. § 315 ............................................................................................ 9, 11, 12
`
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`MOTION TO STAY
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`I.
`
`Defendant Sotera Wireless, Inc. (“Sotera”) seeks a stay of this litigation in
`
`light of Sotera’s filings of nine petitions for inter partes review (“IPR”) with the
`Patent and Trial Appeal Board (“PTAB”) – one IPR for each of the nine patents
`asserted by Masimo in this litigation. These nine proceedings are based on
`substantial prior art never considered before by the Patent Office, and plainly
`showing what Masimo contended distinguished its patent claims over the prior art.
`The IPRs will almost certainly result in many claims being invalidated, thus
`significantly narrowing the scope of this litigation, and it is certainly a realistic
`possibility, given the strength of the new art, that all claims will be invalidated,
`thus ending this case altogether. The patents asserted in this case are based on
`older patent rights that were amended by Masimo Corporation (“Masimo”) more
`recently to try to capture the accused product, which given this manipulation of
`claims terms by Masimo to re-characterize its inventions has led to the parties
`identifying over 80 claim term disputes for the Markman process. Masimo is
`asserting nearly 100 patent claims in this litigation, and refuses to reduce the
`number of asserted claims to focus the litigation, making a stay in view of IPRs
`even more compelling.
`
`Sotera has been marketing the accused ViSi Mobile® System since 2013,
`and before this suit, Masimo never contended that Sotera infringed any of its then
`many existing patents covering its technology. Instead, in 2013, immediately after
`launching the accused ViSi Mobile® System, Masimo sued Sotera (a much smaller
`competitor) for trade secret theft. It ultimately lost those claims in 2017–the court
`found Sotera did not copy Masimo’s trade secrets–but within weeks of receiving
`the court’s oral ruling in favor of Sotera, Masimo began filing new patents now
`issued and involved in this case. It seems clear that Masimo knew its trade secret
`case was predominantly without merit, as turned out to be the case, and decided to
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`INTRODUCTION
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`try a different tack; namely filing patent applications designed to read on Sotera’s
`ViSi Mobile® System.
`Not surprisingly, when a company like Masimo is forced to manipulate the
`language of its existing patents to cover what none of its many prior patents
`covered, there are numerous issues with those patents. The issues in suit are
`numerous and, despite repeated requests (including by suggestion of Magistrate
`Judge Stormes during the Early Neutral Evaluation), Masimo has made no effort to
`streamline issues. The Patent Office is a much more efficient and far less costly
`venue to address the questionable validity of Masimo’s patent claims reconfigured
`for this litigation. Sotera has identified no less than 19 prior art references never
`considered by the Patent Office. It is highly likely that this case will be
`substantially narrowed; indeed, the case may go away altogether. There is also no
`prejudice to Masimo in allowing the Patent Office to consider the validity of these
`nine patents and over 100 patent claims, as Masimo can recover easily-measurable
`compensatory damages if the Patent Trial and Appeal Board (“PTAB”) does not
`invalidate all asserted claims and Masimo ultimately proves infringement.
`Moreover, this case is in its early stages, with opening claim construction briefs not
`due until September 22, 2020 and the claim construction hearing scheduled for
`November 3—approximately the same time the PTAB will issue its first decision
`regarding whether to institute IPRs of the asserted patents. Accordingly, the factors
`considered for a stay pending IPR strongly favor a stay of this case.
`In order to preserve the resources of both the Court and the parties in a
`complicated patent infringement case that may be mooted by IPR decisions (or at
`the very least streamlined), Sotera requests the Court grant a stay of the litigation
`pending PTAB’s decisions on all nine asserted patents. As discussed below, Sotera
`has already filed IPR petitions against two of the asserted patents, and the other
`seven petitions will be on file by the IPR bar deadline of June 13, 2020.
`Accordingly, conditioned on the filing of IPR petitions against all nine asserted
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`patents by June 13, Sotera requests a stay of the litigation until the PTAB renders
`decisions on whether to institute IPRs. Under the PTAB’s rules, such decisions
`occur six months after each IPR petition is filed (between November 8, 2020 and
`mid-December 2020). At that time, Sotera requests that the Court and the parties
`consider whether the stay should be continued or not based on the PTAB’s
`decisions.
`
`FACTUAL BACKGROUND
`
`II.
`
`
`Masimo and Sotera are
`competitors in the field of
`medical monitoring devices,
`though Sotera
`is a much
`smaller competitor. Ex. A, p.
`30; Telscher Dec. ¶ 2. In
`approximately 2009, Sotera
`began development of a
`patient
`worn,
`battery-
`operated, physiological monitoring device that would come to be known as the
`ViSi Mobile® Monitoring System (the “ViSi Mobile® System”). First deployed to
`hospitals in 2013, the ViSi Mobile® System (shown right) monitors various vital
`signs, including ECG, heart rate, pulse rate, respiration, blood pressure, pulse
`oximetry, and skin temperature. ECF No. 1, ¶ 31. Relevant to the issues in suit, the
`ViSi Mobile® System includes a wrist monitor that displays vital sign
`measurements and includes various alarms that activate when a particular vital sign
`exceeds an alarm threshold for a predetermined amount of time. ECF No. 1, ¶ 31
`(referenced as the “Visi Remote viewer”).
`
`Soon after Sotera launched this product, in May 2013, Masimo sued Sotera,
`but not for patent infringement. Rather, Masimo filed trade secret misappropriation
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`claims against Sotera and two former Masimo employees in the Superior Court of
`the State of California, County of Orange. Ex. B. Masimo claimed
`misappropriation of customer and pricing information and technical trade secrets.
`Id. After several years of expensive litigation, Sotera’s finances began drying up
`and it filed a petition for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for
`the Southern District of California in September 2016. Ex. C. The trade secret
`litigation was transferred to an adversary proceeding in the bankruptcy court,
`where Masimo sought approximately $28 million in damages. Ex. D.
`On April 14, 2017, the bankruptcy court issued an oral ruling after a bench
`trial, memorialized in a May 2017 written decision, finding that Masimo’s claimed
`technical trade secrets were either not trade secrets and/or Sotera did not use
`them, but rather independently created its ViSi technology. Exs. E, F. The court
`awarded Masimo only $558,000 under the Respondent Superior Doctrine based on
`misappropriation of customer and pricing trade secrets by a Sotera employee. Ex.
`F. Masimo appealed to United States District Court for the Southern District of
`California and then again to the Ninth Circuit Court of Appeals, each of which
`affirmed the judgment of the bankruptcy court in September 2018. Exs. G, H.
`Unhappy with this result, Masimo contrived of a new strategy to harm its
`competitor. Within weeks of the bankruptcy court’s oral ruling on April 14, 2017,
`Masimo filed a slew of continuation and reissue patent applications with the U.S.
`Patent Office—continuation applications for three of the currently asserted patents
`directed to wrist monitors were filed April 27, 2017, broadening reissue
`applications for three of the currently asserted patents directed to alarm analytics
`were filed May 1, 2017, and two of the other asserted patents were not filed until
`2018. ECF No. 1, Exs 1-9.
`Masimo already had an extensive patent portfolio directed to wrist monitors
`and alarm analytics going back to 2003, but none of Masimo’s patents covered
`Sotera’s ViSi Mobile® System, else Masimo would have asserted patent
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`infringement claims against Sotera’s new technology when it was launched in
`2013, as it did with the 2013 trade secret litigation. After what was largely a loss
`for Masimo in the trade secret litigation, and after learning more about Sotera’s
`technology through that litigation, Masimo immediately began filing continuation
`and reissue applications in an attempt to manufacture another expensive litigation
`over Sotera’s ViSi Mobile® System. After issuance of the asserted patents, six of
`which issued just last year and mere months before Masimo sued Sotera again in
`the instant litigation. It is obvious that the far larger Masimo is using the
`extraordinary cost of successive litigations to harm the much smaller Sotera,
`making IPRs a far more effective and far less costly forum to address the issues
`regarding Masimo’s aging and manipulated patent portfolio.
`The Asserted Patents
`Masimo filed its complaint on June 12, 2019, asserting infringement by the
`ViSi Mobile® System of nine patents, attached as Exhibits 1-9 to the complaint,
`rendering this an unusually very large, complicated, and costly patent infringement
`litigation. ECF No. 1. The asserted patents are directed to two general categories:
`(1) wearable wrist monitoring devices; and (2) monitor alarms. The wrist monitor
`patents include U.S. Patent Nos. 9,788,735 (the “‘735 patent”), 9,795,300 (the
`“‘300 patent”), 9,872,623 (the “‘623 patent”), and U.S. Patent No. 10,213,108 (the
`“‘108 patent”). ECF No. 1, Exs. 1, 2, 3, 7. All wrist monitor patents claim priority
`to an application filed March 25, 2002, so they will expire in less than three years.
`ECF No. 1, Exs. 1, 2, 3, 7; (63) Related U.S. Application Data. It is curious why
`Masimo even pursued four more patents in this old patent family where such
`efforts and this case provide no prospect for injunctive relief given the patents will
`expire before this case can realistically conclude through appeal. The claims of the
`wrist monitor patents have many common features, including in relevant part, for
`example, a sensor port positioned such that a sensor wire extends along an axis
`perpendicular to a “face” of the housing of the device and a transmitter configured
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`to wirelessly transmit information from the wrist monitor to a computing or
`monitoring device that displays the information. ECF No. 1, Exs. 1, 2, 3, 7; (57)
`Abstract.
`The alarm patents include U.S. Reissue Patent Nos. RE47,218 (the “RE218
`patent”), RE47,244 (the “RE244 patent”), RE47,249 (the “RE249 patent”),
`RE47,353 (the “RE353 patent”), 10,255,994 (the “‘994 patent”). ECF No. 1, Exs.
`4, 5, 6, 8, 9. Four of the five alarm patents are reissue patents. ECF No. 1, Exs. 4,
`5, 6, 9. A reissue patent is a patent issued to correct a significant error in the
`original issued patent, including patent claims that are inaccurate, or too narrow or
`broad. A reissue patent may broaden the scope of the original patent claims as long
`as it is filed within two years of the grant of the original patent. 35 U.S.C. § 251.
`All four reissue patents broaden the claims of the original patents, meaning despite
`having competent patent counsel, Masimo did not previously have claims covering
`Sotera’s different and independently created technology. ECF No. 1, Exs. 4, 5, 6,
`9.
`
`The RE218 patent is directed to automatically adapting alarm thresholds that
`are at an “offset” from a first oxygen saturation level of a patient, which
`“dimishe[s] as a difference between the at least first oxygen saturation value and
`the lower limit.” ECF No. 1, ¶ 57. The specification only describes an “offset” as
`an automatic continual linear decrease corresponding to a continual linear decrease
`in a first baseline value as illustrated in Figure 5A of the RE218 patent. ECF No. 1,
`Ex. 4. The RE244, RE249, and RE353 patents are directed to “parameter-specific
`alarm delays and suspensions” and “parameter-specific alarm hold periods.” ECF
`No. 1, Exs. 5, 6, 9. The original claims of these reissue patents were limited to
`“parameter-specific alarm suspensions,” consistent with
`the specification’s
`disclosure of a system in which an alarm has already triggered and a clinician may
`“suspend” the alarm for an amount of time corresponding to the treatment time of
`the condition that triggered the alarm. ECF No. 1, Exs. 5, 6, 9. The ‘994 patent is
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`directed to a system that automatically simulates different alarm notification delay
`times to determine and program a different alarm notification delay time that
`reduces false alarms. ECF No. 1, Ex. 8, (57) Abstract.
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`Issues in Suit and
`Status of the Proceedings
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`This case involves nine patents and 94 asserted claims, and as might be
`expected of patents manipulated well after the fact to cover a competitor’s product,
`there are numerous defenses and legal issues present in this case. ECF No. 30. For
`example, on April 3, 2020, the parties exchanged claim terms for construction as
`part of the Markman proceedings. There are more than 80 claim terms in dispute,
`many of which were added during reissue and lack support in the specification.
`Sotera also has exceptionally strong invalidity positions, not only based on the
`prior art discussed below and at issue in the IPR proceedings, but also based on
`lack of written description under 35 U.S.C. §112, and failure to claim patentable
`subject matter under 35 U.S.C. § 101.
`There are also issues of intervening rights. Because each of the asserted
`claims of the reissue patents were not in the original patents, and Sotera began
`making and selling the ViSi Mobile® System many years before their issuance,
`Sotera is not liable for infringement or damages prior to the grant of the reissue
`patents under the doctrine of absolute intervening rights under 35 U.S.C. § 252.
`Moreover, Sotera is not liable for infringement or damages after the issuance of the
`reissue patents under the doctrine of equitable intervening rights, because in
`addition to the foregoing, it made substantial investments in commercialization of
`the ViSi Mobile® System and commencement of business relating to the ViSi
`Mobile® System prior to the issuance of the reissue patents. ECF No. 30, pp. 20,
`22, 24, 29, Affirm. Defenses 23, 30, 37, 54. And, despite Masimo drafting patents
`to read on its competitor’s products, Sotera has multiple non-infringement defenses
`because Sotera did not infringe the original patents and, while using new words,
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`Masimo cannot change the scope of its patents to cover subject matter it did not
`invent or previously disclose.
`In the face of these obstacles, Masimo has done little to advance the
`litigation or narrow issues in dispute. For example, in December 2019, Sotera,
`through counsel, wrote to counsel for Masimo, explaining that a change in the
`source code of the accused ViSi Mobile® System precluded any claim to
`infringement of RE218 patent. Ex. I. Sotera invited resolution of this claim, since
`there was no possible argument for on-going infringement. Id. Sotera wrote again
`in March 2020, seeking a reduction of asserted claims to a manageable number and
`dismissal of the RE218 patent (both of which Magistrate Judge Stormes also
`suggested at the Early Neutral Evaluation). Ex. J; Telscher Dec. ¶ 11. In an April
`10 meet and confer, Sotera again requested Masimo address the RE218 patent. Ex.
`K, Telscher Dec. ¶ 12. Masimo never responded and has refused to engage in
`reasonable efforts to streamline the case. Telscher Dec. ¶ 12.
`While some written discovery and documents have been exchanged, there is
`much still to do. No depositions have occurred in the case. Telscher Dec. ¶ 22.
`Source code has not yet been reviewed. Id. Presently, the Markman hearing is not
`scheduled to occur until November 3, 2020 and briefing has not yet occurred. ECF
`No. 43. Fact discovery does not close until December 17, 2020 and expert
`discovery has not even begun. Trial is presently set for September 21, 2021, but
`with trials being postponed due to COVID-19, this date may get extended as well.
`Sotera’s Fillings for Inter Partes Review
`As described in more detail below, an Inter Partes Review proceeding or
`“IPR” is an administrative proceeding that challenges the validity of patents based
`on prior art patents or printed publications. IPRs, though typically cheaper than
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`MOTION TO STAY
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`litigation, are still expensive and time-consuming to prepare. 1 Telscher Dec. ¶ 14.
`On May 8, 2020, Sotera filed the first of nine IPR petitions that will be filed
`against all nine asserted patents. Telscher Dec. ¶ 16. A copy of that first filed IPR
`petition, for cancellation of all claims of the ‘108 patent, is attached as Exhibit M.2
`On May 18, 2020, Sotera filed for a petition IPR of the ‘735 patent, and Sotera is
`presently in the process of completing and filing petitions on all remaining asserted
`patents and all claims, each of which will be on file no later than June 13, 2020, the
`IPR bar deadline. Telscher Dec. ¶ 17. One is being finalized for filing this week,
`and three more near completion and expected to be filed next week or soon
`thereafter. Because Masimo refuses to streamline the case and reduce the number
`of asserted claims (many of which are redundant of one another), Sotera has been
`forced to prepare IPR petitions against every claim of all nine patents, needlessly
`increasing the cost to Sotera. Without getting into the detail of the arguments, the
`invalidity arguments set forth in the IPR petitions are exceptionally strong.
`Masimo did not invent body-worn, medical devices that track and wirelessly
`transmit physiological data, nor did it conceive of alarm delays or suspensions,
`customized alarm thresholds, or simulation of alarm notifications.
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`1 The filing fees alone for the first filed IPR (for the ‘108 patent) were $35,300. Ex.
`L.
`2 While Sotera, not Hon Hai, prepared and filed the petitions, Hon Hai has agreed
`to be bound by the estoppel provisions of 35 U.S.C. § 315(e) to the same extent as
`Sotera. Exhibit M at 1.
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`Indeed, what Masimo claims to have invented (shown below right) is
`virtually identical to what already existed in the prior art (shown below left).
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`See Ex. M, p. 6. Furthermore, most of the prior art references asserted in the IPR
`petitions were never considered by the patent examiner and render the currently
`asserted claims unpatentable.
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`III. ARGUMENT
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`A.
`Inter Partes Review Proceedings
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`Congress created inter partes review proceedings as a cost-effective
`alternative to litigation that allows “the agency with expertise [the Patent Office] to
`have the first crack at cancelling any claims that should not have issued in the
`patents-in-suit before costly litigation continues.” Software Rights Archive, LLC v.
`Facebook, Inc., No. 12-cv-03970-RMW, 2013 WL 5225522, at *6 (N.D. Cal. Sept
`17, 2013). It was enacted as part of the America Invents Act (the “AIA”) with the
`purpose of “establish[ing] a more efficient and streamlined patent system that will
`improve patent quality and limit unnecessary and counterproductive litigation
`costs.” Changes to Implement Inter Partes Review Proceedings, 77 Fed. Reg. at
`48,680 (codified at 37 C.F.R. §§ 42.100 et seq.). Consistent with this purpose, “the
`AIA established a new inter partes review procedure, replacing the former inter
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`partes reexamination procedure, for parties to challenge the validity of patents in a
`‘timely, cost-effective alternative to litigation.’” Id. Indeed, Congress intended the
`AIA to “provide[] more coordination between district court infringement litigation
`and inter partes review to reduce duplication of efforts and costs.” Id. at 48,721.
`To this end, similar to the old inter partes reexaminations, IPRs “allow[] courts to
`avoid expending unnecessary judicial resources by attempting to resolve claims
`which may be amended, eliminated or lucidly narrowed” by the PTO “and the
`expertise of its officers.” Seaquist Closures LLC v. Rexam Plastics, No. 08-C-
`0106, 2008 WL 4691792, at *1 (E.D. Wis. Oct 22, 2008).
`Under the AIA, any party other than the patent owner may file a petition
`with the Patent Trial and Appeal Board to institute IPR to request cancellation of
`patent claims under 35 U.S.C. §§ 102 and 103 on the basis of prior art consisting of
`patents or printed publications. 35 U.S.C. § 311. The validity of the claims is
`reviewed under a lower preponderance of the evidence standard of proof, 35
`U.S.C. § 316(e), in contrast to the clear and convincing standard applicable to
`litigation, Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 95 (2011). A party
`accused of patent infringement may file a petition to institute IPR within one year
`after the date on which it was served with a complaint alleging infringement of the
`patent. 35 U.S.C. § 315(b). The patent owner