Paper 9
`Trials@uspto.gov
`Date: July 22, 2021
`571-272-7822
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`GOOGLE LLC,
`Petitioner,
`v.
`ECOFACTOR, INC.,
`Patent Owner.
`
`IPR2021-00454
`Patent 8,738,327
`
`
`
`
`
`
`
`
`
`Before WESLEY B. DERRICK, JEFFREY W. ABRAHAM, and
`SCOTT B. HOWARD, Administrative Patent Judges.
`DERRICK, Administrative Patent Judge.
`
`DECISION
`Denying Institution of Inter Partes Review
`35 U.S.C. § 314
`
`
`
`
`
`
`
`
`Trials@uspto.gov
`Date: July 22, 2021
`571-272-7822
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`GOOGLE LLC,
`Petitioner,
`v.
`ECOFACTOR, INC.,
`Patent Owner.
`
`IPR2021-00454
`Patent 8,738,327
`
`
`
`
`
`
`
`
`
`Before WESLEY B. DERRICK, JEFFREY W. ABRAHAM, and
`SCOTT B. HOWARD, Administrative Patent Judges.
`DERRICK, Administrative Patent Judge.
`
`DECISION
`Denying Institution of Inter Partes Review
`35 U.S.C. § 314
`
`
`
`
`
`
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`
`INTRODUCTION
`Petitioner Google LLC filed a Petition (Paper 2, “Pet.”) requesting
`inter partes review of claims 1–19 of U.S. Patent No. 8,738,327 B2
`(“the ’327 patent”). Patent Owner EcoFactor, Inc., filed a Preliminary
`Response. Paper 6 (“Prelim. Resp.”). Patent Owner does not substantively
`address the merits of Petitioner’s challenge, but contends that the Board
`should exercise its discretion under 35 U.S.C. § 314 not to institute review.
`See Prelim. Resp.
`We have authority to determine whether to institute an inter partes
`review. 35 U.S.C. § 314 (2018); 37 C.F.R. § 42.4(a) (2021). The standard
`for instituting an inter partes review is set forth in 35 U.S.C. § 314(a), which
`provides that an inter partes review may not be instituted “unless the
`Director determines . . . there is a reasonable likelihood that the petitioner
`would prevail with respect to at least 1 of the claims challenged in the
`petition.” Section 314(a) does not require the Director to institute an inter
`partes review. See 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.”). Rather, a decision whether to institute is within the
`Director’s discretion, and that discretion has been delegated to the Board.
`See 37 C.F.R. § 42.4(a); 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.”).
`For the reasons that follow, we exercise our discretion to deny the
`Petition under 35 U.S.C. § 314(a).
`
`2
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`
` BACKGROUND
`A. Real Parties in Interest
`Petitioner and Patent Owner both identify itself, respectively, as the
`real party in interest. Pet. 6; Paper 3, 1.
`B. Related Matters
`The parties identify four district court cases as related matters:
`EcoFactor, Inc., v. Alarm.com Inc., No. 1:20-cv-11007-LTS (D. Mass.
`May 26, 2020); EcoFactor, Inc., v. Google, LLC, No. 6:20-cv-00075-ADA
`(W.D. Tex. Jan 31, 2020); EcoFactor, Inc., v. Ecobee, Inc., No. 6:20-cv-
`00078-ADA (W.D. Tex. Jan. 31, 2020); and EcoFactor, Inc., v. Vivint, Inc.,
`No. 6:20-cv-00080-ADA (W.D. Tex. Jan. 31, 2020).1 Pet. 6–7; Paper 4, 2.
`We understand that the case in the District of Massachusetts has been stayed.
`See, e.g., Pet. 6.
`C. The ’327 Patent (Ex. 1001)
`The ’327 patent is titled “System and Method for Using a Network of
`Thermostats as Tool to Verify Peak Demand Reduction,” and issued on
`May 27, 2014, from an application filed on March 28, 2013. Ex. 1001,
`codes (22), (45), (54). The ’327 patent identifies related applications,
`including provisional applications 60/963,183, filed on August 3, 2007, and
`60/994,011, filed on September 17, 2007. Id. at codes (60), (63), 1:5–16.
`The ’327 patent generally relates to controlling climate control systems, i.e.,
`heating and cooling systems (“HVAC systems”) in structures, and more
`
`
`1 The Petition also includes EcoFactor, Inc. v. Alarm.com Incorporated,
`6:20-cv-0076-ADA (W.D. Tex. Jan. 31, 2020), in its listing of related
`matters, but this case is understood to have been dismissed without
`prejudice. See EcoFactor, Inc. v. Alarm.com Incorporated, Inc., 6:20-cv-
`00076-ADA, (W.D. Tex. May 26, 2020) (notice of voluntary dismissal).
`
`3
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`specifically to “systems and methods for estimating the rate of change in
`temperature inside a structure” that uses a thermostat within the structure, a
`remote processor, and a database “to determine whether the climate control
`system is ‘on’ or ‘off.’” Id. at code (57), 3:25–4:17.
`D. Illustrative Claims
`The ’327 patent contains 19 claims, of which claims 1 and 11 are
`independent.
`1. A system for controlling the operational status of an HVAC
`system comprising:
`at least one thermostat associated with a structure that receives
`temperature measurements from inside the structure, the
`structure conditioned by at least one HVAC system, the
`thermostat having at least a first setting stored therein;
`one or more servers located remotely from the structure, the
`one or more servers configured to receive measurements
`of outside temperatures from at least one source other than
`the HVAC system,
`the one or more servers are further configured to communicate
`with the thermostat via a network, wherein the one or
`more servers receive inside temperatures from the
`thermostat and compares the inside temperatures of the
`structure and the outside temperatures over time to derive
`an estimation for the rate of change in inside temperature
`of the structure in response to outside temperature,
`the one or more servers are further configured to receive a
`demand reduction request and determine whether the
`structure is associated with demand rejection request, and
`based on the determination that the structure is associated with
`the demand reduction request, the one or more servers are
`further configured to send a signal to the thermostat to
`change the setting to a second setting to reduce electricity
`demand by the HVAC system.
`Ex. 1001, 9:27–54.
`
`4
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`11. A method for controlling the operation of an HVAC
`system comprising:
`receiving temperature measurements inside a structure from at
`least one thermostat, the structure conditioned by at least
`one HVAC system, the thermostat having at least a first
`setting stored therein;
`receiving at one or more servers located remotely from the
`structure, measurements of outside temperatures from at
`least one source other than the HVAC system;
`the one or more servers communicating with the thermostat
`via a network;
`receiving at the one or more servers, inside temperatures from
`the thermostat;
`comparing with the one or more servers, the inside
`temperatures of the structure and the outside temperatures
`over time to derive an estimation for the rate of change in
`inside temperature of the structure in response to outside
`temperature;
`receiving a demand reduction request and determining
`whether the structure is associated with demand rejection
`request; and
`based on the determination that the structure is associated with
`the demand reduction request, sending with the one or
`more servers a signal to the thermostat to change the first
`setting to a second setting to reduce electricity demand by
`the HVAC system.
`Ex. 1001, 10:16–41.
`
`5
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`E. Prior Art Relied Upon
`Petitioner relies on the references listed below (Pet. 7, 13, 66):
`Reference
`Date
`Exhibit No.
`Ehlers et al., US 2004/0117330 A1
`June 17, 2004 1004
`Schurr et al., US 6,868,293 B1
`Mar. 15, 2005 1005
`Rosen, US 6,789,739 B2
`Sep. 14, 2004 1006
`
`The status of these references as prior art printed patents or
`publications is not contested by Patent Owner. See generally Prelim. Resp.
`F. The Asserted Grounds of Unpatentability
`Petitioner challenges the patentability of the claims on the following
`grounds, relying on the Declaration from Mr. Rajendra Shah (Ex. 1002).
`Pet. 7, 13–70.
`Claim(s) Challenged
`1, 3–11, 13–19
`2, 12
`
`Reference(s)/Basis
`Schurr, Ehlers
`Schurr, Ehlers, Rosen
`
`35 U.S.C. §
`103
`103
`
`DISCRETIONARY DENIAL UNDER 35 U.S.C. § 314(A)
`Patent Owner argues that we should exercise discretion under
`35 U.S.C. § 314(a) and deny institution. See Prelim. Resp. Patent Owner
`relies on the involvement of the ’327 patent in the parallel district court
`litigation in the Western District of Texas that it contends is in an advanced
`state, with the trial set for a date well prior to the due date for a final written
`decision in this proceeding, and contends that certain findings in the parallel
`district court litigation will be instructive, perhaps dispositive, of relevant
`issues. Id. at 4. Patent Owner contends that we can exercise our discretion
`based on “efficiency considerations stemming from parallel proceedings on
`
`6
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`the same patent.” Id. at 3 (citing NHK Spring Co. v. Intri-Plex Techs., Inc.,
`IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential) (“NHK
`Spring”)). Patent Owner argues that the factors articulated in Apple Inc. v.
`Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential)
`(“Fintiv”)), weigh strongly against institution in our consideration of
`efficiency considerations. Prelim. Resp. 2–4.
`Petitioner argues against discretionary denial of institution, based on
`the weight of Fintiv factors it contends favor institution. Pet. 70 (citing
`Fintiv).
`Our exercise of discretion under 35 U.S.C. § 314(a) as to instituting
`inter partes review is guided by Board’s precedential decision in NHK
`Spring. Cf. Cuozzo, 136 S. Ct. at 2140 (“[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,
`815 F.3d at 1367 (“[T]he PTO is permitted, but never compelled, to institute
`an IPR proceeding.”).
`In NHK Spring, 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 Spring, 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 efficient alternative to district court litigation.’” Id. (citing Gen. Plastic
`Indus. Co., Ltd. v. Canon Kabushuki Kaisha, IPR2016-01357, Paper 19 at
`16–17 (PTAB Sept. 6, 2017) (precedential in relevant part)).
`
`7
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`In Fintiv, the Board set forth six factors to be considered in
`determining whether the discretion to deny institution due to the advanced
`state of parallel litigation should be exercised:
`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.
`Fintiv, Paper 11 at 6. Fintiv identifies these factors as “relat[ing] 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.
`Fintiv further instructs that “a holistic view of whether efficiency and
`integrity of the system are best served by denying or instituting review” is to
`be taken in evaluating the Fintiv factors. Id. (citing Patent Trial and Appeal
`Board Consolidated Trial Practice Guide 58 (Nov. 2019), available
`at https://www.uspto.gov/TrialPracticeGuideConsolidated).
`Factor 1: Whether a Stay Exists or Is Likely to Be Granted if a
`Proceeding is Instituted
`As noted above, the ’327 patent is the subject of district court
`litigation, including one case in which Petitioner is a party. Petitioner relies
`on having moved for a stay in the Western District of Texas, in light of
`moving for a transfer of venue to the Northern District of California, and, in
`the Alarm.com case, on the District of Massachusetts court having ordered a
`
`8
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`stay in that proceeding. Pet. 71–72 (citing Exs. 1012–1014). Patent Owner
`contends that there is no currently pending stay of the case involving
`Google, but that there was a brief stay from March 12 to April 16, 2021,
`prior to the court denying Google’s motion to transfer. Prelim. Resp. 6
`(citing Ex. 2011); see also Pet. 71 (citing Exs. 1013–1014). Patent Owner
`also acknowledges that the Alarm.com case—EcoFactor, Inc., v. Alarm.com
`Inc., No. 1:20-cv-11007-LTS (D. Mass. May 26, 2020)—is currently stayed,
`but contends it has “little (if any) relevance to the factors here” because
`Google is not a party. Prelim. Resp. 6 n.1. Patent Owner further contends
`that “it is unlikely that the district court case will be stayed pending IPR.”
`Id. at 6.
`Petitioner does not explain with any particularity how, or if, the
`parallel district court litigation in the Western District of Texas case is likely
`to be stayed. Pet. 70–72. Likewise, as highlighted by Patent Owner,
`Petitioner fails to explain how a stay of one proceeding involving
`the ’327 patent, namely, the Alarm.com case in the District of
`Massachusetts, bears on whether the parallel litigation in the Western
`District of Texas will be stayed.
`In sum, the evidence does not indicate whether the Western District of
`Texas court would grant a request for a stay following institution, and we
`will not speculate as to whether the district court will grant or deny a stay.
`Accordingly, we determine this factor to be neutral.
`Factor 2: Proximity of the Court’s Trial Date to the Board’s
`Projected Statutory Deadline
`Patent Owner argues this factor weighs against institution based on
`the scheduled trial falling well ahead of the statutory deadline for the final
`written decision if inter partes review is instituted. Prelim. Resp. 6–7.
`
`9
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`Patent Owner relies on the initial scheduled trial date of December 6, 2021.
`Id.; Ex. 2002, 2. Patent Owner highlights that this is over seven months
`prior to the projected statutory deadline and that there is no basis for
`significant delay of the trial. Prelim. Resp. 7.
`Petitioner argues that this factor weighs against discretionary denial
`because the trial is not scheduled until December 2021, and is subject to
`being delayed. Pet. 71. Petitioner also filed a copy of a district court order
`modifying the trial schedule that moves the trial date to January 31, 2022.
`Ex. 1015. Petitioner also argues that the petition must be timely because
`“Ecofactor is not even required to narrow its asserted claims [in the district
`court] until September of 2021” and, quoting Fintiv, that “it is often
`reasonable for a petitioner to wait to file its petition until it learns which
`claims are being asserted against it.” Pet. 70 (citing Ex. 1010, 11; Fintiv,
`Paper 11 at 11).
`As currently scheduled, the trial date in the district court will be well
`in advance of the final written decision, even if it has been delayed
`somewhat from its earlier date. And there is no evidence in the present
`record to support a finding that the trial will be further delayed to any
`significant degree.
`Accordingly, we determine this factor weighs against institution.
`Factor 3: Investment in the Parallel Proceeding by the Court and
`Parties
`Patent Owner argues that the court and parties have already invested,
`and will continue to invest, enormous effort and resources in the district
`court litigation. Prelim. Resp. 8–9. Patent Owner relies on the parallel
`district court case having been filed over a year ago in January 2020, and
`that there have been multiple motions, a full claim construction proceeding,
`
`10
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`and discovery proceedings. Id. Patent Owner argues that this factor weighs
`even more heavily against institution than it did in Fintiv, in which the
`Board found “this factor weighs somewhat in favor of discretionary denial,”
`because the district court trial “is many months closer . . . than in Fintiv, and
`more work is likely to be expended by the time of the institution decision
`given the advanced stage of the district court case.” Id. at 9 (citing Apple
`Inc. v. Fintiv, Inc., IPR2020-00019, Paper 15 (PTAB May 13, 2020) (order
`denying institution) (informative, designated July 13, 2020, at 7–8).
`Petitioner does not address this factor. See generally Pet. Petitioner
`filed a district court order modifying the trial schedule extending the dates
`for the close of fact and expert discovery to September 1, 2021, and October
`27, 2021, respectively (Ex. 1015, 2), but it was filed without argument and
`there is no particular evidence as to its import on this record.
`After considering the parties’ arguments and evidence of record, we
`determine that this factor weighs against institution. Patent Owner has
`provided argument and evidence supporting its position that significant
`investments have already been made in the district court proceeding. While
`these contentions are tempered somewhat by the extension of due dates in
`the modified trial schedule, on this record, we determine that the parties and
`the court have already made significant investments in the district court
`proceeding.
`Accordingly, we determine that this factor weighs against institution.
`Factor 4: Overlap Between Issues Raised in the Petition and in the
`Parallel Proceeding
`Patent Owner argues that this factor weighs against institution because
`“the same claims and claim construction standard are at issue . . . and there
`is substantial overlap in invalidity theories and prior art.” Prelim. Resp.
`
`11
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`10–12. Patent Owner relies on the assertion of Ehlers and Rosen against the
`’327 patent in the district court litigation. Id. at 11 (citing Pet. 7; Ex. 2003
`(A-15); Ex. 2004 (B-15), 1–3, 11; Ex. 2005 (B-16), 1–3; Ex. 2006 (B-17), 1,
`2, 4; Ex. 2007 (B-20), 1–2; Ex. 2008 (B-23), 1–2; Ex. 2009 (B-24), 2;
`Ex. 2010 (B-37), 3–5).
`Petitioner argues that this factor weighs against discretionary denial
`because Petitioner “stipulates that, in the event the petition is instituted, it
`will not present the combination of Schurr and Ehlers[], nor the same
`combination additionally in view of Rosen, under 35 U.S.C. § 103 before the
`district court.” Pet. 71. Petitioner also has filed, as exhibits, letters from
`defendants ecobee and Vivant stating that they also “stipulate[] not to
`present the combination of prior art references in the Ground of the ’327 IPR
`Petition before the district court . . . if the Board institutes inter partes
`review.” Exs. 1016–1017 (emphasis added).
`On this record, the stipulation fails to fully mitigate the concerns of
`duplicative efforts between the district court and the Board, and of
`potentially conflicting decisions. See Sand Revolution II, LLC v.
`Continental Intermodal Grp. Trucking LLC, IPR2019-01393, Paper 24 at 12
`(June 16, 2020) (informative). As set forth in Sand Revolution, the
`stipulation by Petitioner that it will not present the same combinations in the
`parallel district court litigation is less effective than a broader stipulation
`“that it would not pursue any ground raised or that could have been
`reasonably raised in an IPR, i.e., any ground that could be raised under
`§§ 102 or 103 on the basis of prior art patents or printed publications.” Id.
`at 12 n.5. The stipulations by co-defendants ecobee and Vivant add no
`weight because they too similarly fall short as they are also limited to the
`combination in the grounds of the ’327 IPR petition. Despite the apparent
`
`12
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`similarity of a number of references, particularly as to the teachings relied on
`by Petitioner, the stipulation fails to address that such similar references
`could be substituted one for another.
`Accordingly, we determine this factor weighs marginally in favor of
`institution.
`Factor 5: Whether the Petitioner and the Defendant in the Parallel
`Proceeding Are the Same Party
`Patent Owner contends that this factor weighs against institution
`because Petitioner is a defendant in the district court case. Prelim. Resp. 12.
`Petitioner does not address this factor. See generally Pet.
`Patent Owner and Petitioner are parties in the district court case.
`Accordingly, this factor weighs marginally against institution. Fintiv,
`Paper 11 at 6.
`Factor 6: Other Circumstances that Impact the Board’s Exercise of
`Discretion, Including the Merits
`Patent Owner contends that “Schurr was considered during
`prosecution of the ’327 patent” and that, accordingly, Petitioner “is incorrect
`that ‘[the] merits of the petition are strong.’” Prelim. Resp. 13 (citing
`Ex. 1001, 2 (References Cited)).
`Petitioner contends that “the merits of the petition are strong, as
`demonstrated” in the Petition. Pet. 71–72.
`Based on our review of the arguments and evidence presented on the
`preliminary record, we find that the merits do not tip the scale either for or
`against exercising our discretion to deny institution.
`In view of the foregoing, we determine this factor to be neutral.
`
`13
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`Evaluating the Fintiv Factors
`We have considered the circumstances and facts before us in view of
`the Fintiv factors. Our analysis is fact driven and no single factor is
`determinative of whether we exercise our discretion to deny institution under
`35 U.S.C. § 314(a). Based on the arguments and evidence of record, and in
`the exercise of the Director’s discretion under 35 U.S.C. § 314(a), inter
`partes review is not instituted.
`
`ORDER
`
`It is:
`ORDERED that, pursuant to 35 U.S.C. § 314(a), the Petition is denied.
`
`
`14
`
`
`
`IPR2021-00454
`Patent 8,738,327 B2
`FOR PETITIONER:
`Matthew Smith
`Elizabeth Laughton
`SMITH BALUCH LLP
`smith@smithbaluch.com
`laughton@ smithbaluch.com
`FOR PATENT OWNER:
`Philip Wang
`C. Jay Chung
`RUSS AUGUST & KABAT
`pwang@raklaw.com
`jchung@raklaw.com
`
`15
`
`
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