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`Filed on behalf of: Philip Morris Products S.A.
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`Entered: October 8, 2021
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________________
`
`R.J. REYNOLDS VAPOR COMPANY,
`Petitioner,
`
`v.
`
`PHILIP MORRIS PRODUCTS S.A.,
`Patent Owner.
`_______________________
`Case IPR2021-00826
`Patent 9,814,265
`______________________
`
`
`PATENT OWNER’S
`SUPPLEMENTAL RESPONSE
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`IPR2021-00826 (USP 9,814,265)
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`PO’s Supplemental Response
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`TABLE OF AUTHORITIES
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`CASES
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` Page(s)
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`Apple Inc. v. Fintiv, Inc.,
`IPR2020-00019, Paper 11 (Mar. 20, 2020) .......................................................... 3
`Cisco Sys., Inc. v. Estech Sys., Inc.,
`IPR2021-00329, Paper 13 (July 6, 2021) ............................................................. 2
`Sotera Wireless, Inc. v. Masimo Corp.,
`IPR2020-01019, Paper 12 (Dec. 1, 2020)..................................................... 1, 2, 3
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`i
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`IPR2021-00826 (USP 9,814,265)
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`PO’s Supplemental Response
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`
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`Exhibit List
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`Description
`Ex.
`2001 Declaration of Harold J. Walbrink in Support of Patent Owner’s
`Preliminary Response
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`2002 Curriculum Vitae of Harold J. Walbrink
`
`2003 Complaint for Patent Infringement, RAI Strategic Holdings, Inc. v.
`Altria Client Services LLC, No. 1:20-cv-00393-LO-TCB (E.D. Va. Apr.
`9, 2020), ECF No. 1
`
`2004 Defendants Altria Client Services LLC and Philip Morris USA Inc.’s
`Partial Answer to Complaint and Counterclaims, RAI Strategic
`Holdings, Inc. v. Altria Client Services LLC, No. 1:20-cv-00393-LO-
`TCB (E.D. Va. June 29, 2020), ECF No. 39
`
`2005 Defendant Philip Morris Products S.A.’s Partial Answer to Complaint
`and Counterclaims, RAI Strategic Holdings, Inc. v. Altria Client
`Services LLC, No. 1:20-cv-00393-LO-TCB (E.D. Va. June 29, 2020),
`ECF No. 40
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`2006 Order, RAI Strategic Holdings, Inc. v. Altria Client Services LLC, No.
`1:20-cv-00393-LO-TCB (E.D. Va. Aug. 10, 2020), ECF No. 79
`
`2007
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`Joint Proposed Discovery Plan Pursuant to Rule 26(f), RAI Strategic
`Holdings, Inc. v. Altria Client Services LLC, No. 1:20-cv-00393-LO-
`TCB (E.D. Va. Sept. 2, 2020), ECF No. 97
`
`2008 Rule 16(b) Scheduling Order, RAI Strategic Holdings, Inc. v. Altria
`Client Services LLC, No. 1:20-cv-00393-LO-TCB (E.D. Va. Sept. 8,
`2020), ECF No. 99
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`2009 Claim Construction Order, RAI Strategic Holdings, Inc. v. Altria Client
`Services LLC, No. 1:20-cv-00393-LO-TCB (E.D. Va. Nov. 4, 2020),
`ECF No. 360
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`2010 Order, RAI Strategic Holdings, Inc. v. Altria Client Services LLC, No.
`1:20-cv-00393-LO-TCB (E.D. Va. Dec. 4, 2020), ECF No. 426
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`ii
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`Ex.
`Description
`2011 Order, RAI Strategic Holdings, Inc. v. Altria Client Services LLC, No.
`1:20-cv-00393-LO-TCB (E.D. Va. Dec. 7, 2020), ECF No. 432
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`2012 Order, RAI Strategic Holdings, Inc. v. Altria Client Services LLC, No.
`1:20-cv-00393-LO-TCB (E.D. Va. Feb. 16, 2021), ECF No. 456
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`2013 Order, RAI Strategic Holdings, Inc. v. Altria Client Services LLC, No.
`1:20-cv-00393-LO-TCB (E.D. Va. Feb. 19, 2021), ECF No. 461
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`2014
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`Joint Motion to Modify Scheduling Order, RAI Strategic Holdings, Inc.
`v. Altria Client Services LLC, No. 1:20-cv-00393-LO-TCB (E.D. Va.
`Mar. 30, 2021), ECF No. 534
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`2015 Order, RAI Strategic Holdings, Inc. v. Altria Client Services LLC, No.
`1:20-cv-00393-LO-TCB (E.D. Va. Mar. 31, 2021), ECF No. 535
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`2016 Order, RAI Strategic Holdings, Inc. v. Altria Client Services LLC, No.
`1:20-cv-00393-LO-TCB (E.D. Va. May 20, 2021), ECF No. 634
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`2017 Minutes Entry for Final Pretrial Conference, RAI Strategic Holdings,
`Inc. v. Altria Client Services LLC, No. 1:20-cv-00393-LO-TCB (E.D.
`Va. May 21, 2021), ECF No. 657
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`2018 Petitioner’s Reply to the Patent Owner Preliminary Response, Philip
`Morris Products, S.A. v. RAI Strategic Holdings, Inc., IPR2020-00921,
`Paper 7 (Sept. 18, 2020)
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`2019 Patent Owner’s Sur-Reply to Petitioner’s Reply to Patent Owner’s
`Preliminary Response, Philip Morris Products, S.A. v. RAI Strategic
`Holdings, Inc., IPR2020-00921, Paper 8 (Sept. 29, 2020)
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`2020 Decision, Philip Morris Products, S.A. v. RAI Strategic Holdings, Inc.,
`IPR2020-00921, Paper 9 (Nov. 16, 2020)
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`2021 Petitioner’s Reply to the Patent Owner Preliminary Response, Philip
`Morris Products, S.A. v. RAI Strategic Holdings, Inc., IPR2020-01094,
`Paper 7 (Nov. 25, 2020)
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`PO’s Supplemental Response
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`Ex.
`Description
`2022 Patent Owner’s Sur-Reply to Petitioner’s Reply to Patent Owner’s
`Preliminary Response, Philip Morris Products, S.A. v. RAI Strategic
`Holdings, Inc., IPR2020-01094, Paper 8 (Dec. 10, 2020)
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`2023 Decision Denying Institution, Philip Morris Products, S.A. v. RAI
`Strategic Holdings, Inc., IPR2020-01094, Paper 9 (Jan. 25, 2021)
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`2024 RESERVED
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`2025
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`Invalidity Expert Report of Dr. Jeffrey C. Suhling Regarding Invalidity
`of U.S. Patent No. 9,814,265, RAI Strategic Holdings, Inc. v. Altria
`Client Services LLC, No. 1:20-cv-00393-LO-TCB (E.D. Va. Feb. 24,
`2021)
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`2026 RESERVED
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`2027 Transcript of Deposition of Jeffrey C. Suhling, RAI Strategic Holdings,
`Inc. v. Altria Client Services LLC, No. 1:20-cv-00393-LO-TCB (E.D.
`Va. May 28, 2021)
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`2028 U.S. Patent No. 6,634,864
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`2029 Decision Granting Request for Rehearing and Granting Institution of
`Inter Partes Review, Philip Morris Products, S.A. v. RAI Strategic
`Holdings, Inc., IPR2020-00921, Paper 13 (Aug. 5, 2021)
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`IPR2021-00826 (USP 9,814,265)
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`PO’s Supplemental Response
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`The Board should deny institution. At some point before the trial starts in a
`concurrent district-court case, a Sotera stipulation is no longer enough to outweigh
`all of the other Fintiv factors. This case has passed that point, and it has done so
`solely due to Petitioner’s ten-month delay after the counterclaim alleging
`infringement, and seven months after initial infringement contentions. Further,
`this case is ready for trial, which will occur well over seven months before the
`final written decision. And unlike related IPR2021-00585, Petitioner obtained an
`unfair tactical advantage by waiting to file this IPR until after it received (on
`March 24, 2021) Patent Owner’s expert report rebutting Petitioner’s invalidity
`report. Apparently disappointed with its validity case in district court, Petitioner
`now seeks a do-over at the PTAB. The Board should not tolerate such behavior.
`Sotera does not excuse such delay. In Sotera, the jury trial was scheduled
`within one day of the Board’s final written decision, and the case was still at an
`early stage. Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 at 15
`(Dec. 1, 2020) (precedential). Sotera filed its petition just two months after initial
`invalidity contentions, so Markman had not occurred (and the court had vacated all
`Markman deadlines), fact discovery was still in progress, and expert discovery had
`not yet begun. Sotera at 16. As a result, Sotera’s stipulation reduced the amount of
`overlap (factor 4) by the maximum amount practically possible—expert reports,
`expert rebuttal reports, expert depositions, and dispositive motions had not been
`completed. Elimination of this overlap plus the trial itself (factor 4) strongly
`favored institution. Sotera at 16-19. All of the other Fintiv factors in Sotera except
`factor 5 (same party) were neutral or favored institution: factor 1 (stay) was
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`IPR2021-00826 (USP 9,814,265)
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`PO’s Supplemental Response
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`neutral, factor 2 (trial date) was neutral because the one-day difference between the
`court’s trial date the final written decision date, factor 3 (investment) favored
`institution because there was “relatively little investment,” and factor 6 did not
`move the needle. Sotera at 14-20. Thus, Sotera’s minimal overlap and minimal
`investment easily outweighed the “same party” factor. Sotera at 20.
`A Sotera stipulation is not an unrestricted license to delay. For example, the
`Board denied institution despite a Sotera stipulation in Cisco Sys., Inc. v. Estech
`Sys., Inc., IPR2021-00329, Paper 13 (July 6, 2021). The Cisco case was further
`along than Sotera’s case: fact and expert discovery were complete, the Markman
`hearing had been held, and trial was scheduled in about a month. Cisco at 10-11.
`As a result, the case’s “trial date and investment” (factors 2 and 3) strongly favored
`denial, and the same-parties factor 5 also favored denial—outweighing Cisco’s
`Sotera stipulation (factor 4, overlap) and the merits (factor 6). Cisco at 12-15
`(factor 1 was neutral).
`The undisputed facts here present an even stronger case for denial than in
`Cisco. Here, Fintiv factors 1-3, 5, and 6 all favor or strongly favor denial. Unlike
`Cisco, a stay is unlikely, favoring denial. POPR 34-35 (factor 1). The case is ready
`for trial, which will occur seven months before the Board’s final written decision,
`strongly favoring denial. POPR 36 (factor 2). Investment could not be any higher
`unless the case was presently at trial, strongly favoring denial—especially in view
`of the unfair tactical advantage Petitioner obtained by delaying. POPR 32, 36-39
`(factor 3, including Markman). The parties are the same, favoring denial. POPR 42
`(factor 5). And the merits are weak, also favoring denial. POPR 42 (factor 6).
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`IPR2021-00826 (USP 9,814,265)
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`PO’s Supplemental Response
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`Instituting here would subvert Sotera’s stated goal of ensuring IPR is “a
`‘true alternative’ to the district court proceeding,” and also Fintiv’s goals of
`“efficiency” and “fairness.” Sotera at 19; Apple Inc. v. Fintiv, Inc., IPR2020-
`00019, Paper 11 at 5 (Mar. 20, 2020) (precedential). Petitioner’s stipulation does
`not change the fact that the parties’ and the Court’s investment is at the maximum
`possible, absent starting the jury trial before IPR institution. See Sotera at 16-19
`(stipulation does not affect investment factor, only overlap factor). Likewise,
`Petitioner’s stipulation does not change the fact that Petitioner gained an unfair
`advantage by delaying its IPR until it received Patent Owner’s expert reports.
`Petitioner’s gamesmanship is not curable with a Sotera stipulation. Fintiv
`explained that waiting until “patent owner responds to petitioner’s invalidity
`contentions” favored denial. Fintiv at 12. Here, Petitioner waited long after Patent
`Owner responded to Petitioner’s contentions, and until it received Patent Owner’s
`opening (infringement) and rebuttal (validity) expert reports. Apparently unhappy
`with its validity case in court, it now seeks a do-over before the PTAB. Notably,
`Petitioner did not obtain such an egregious tactical advantage through its delay in
`related IPR2021-00585, which it filed in February, about the time opening expert
`reports were exchanged.
`The Board should deny this petition. Instituting with these facts would
`demonstrate that a Sotera stipulation is a “get out of jail free card” excusing any
`tactical delay, and establish the PTAB as a do-over venue rather than an alternative
`venue as intended.
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`PO’s Supplemental Response
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`Respectfully submitted,
`By: / Jonathan M. Strang /
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`Jonathan M. Strang (Reg. No. 61,724)
`jonathan.strang@lw.com
`Latham & Watkins LLP
`555 Eleventh Street, NW, Ste. 1000
`Washington, D.C. 20004-1304
`Telephone: 202.637.2200
`Fax: 202.637.2201
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`Counsel for Patent Owner
`Philip Morris Products S.A.
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`Dated: October 8, 2021
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`PO’s Supplemental Response
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6(e), I certify that on this 8th day of October,
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`2021, a true and correct copy of the foregoing Patent Owner’s Supplemental
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`Response was served by electronic mail on Petitioner’s lead and backup counsel at
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`the following email addresses:
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`Matthew W. Johnson (Reg. No. 59,108)
`JONES DAY
`500 Grant Street, Suite 4500
`Pittsburgh, PA 15219-2514
`Telephone: 412.394.9524
`Email: mwjohnson@jonesday.com
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`David B. Cochran (Reg. No. 39,142)
`JONES DAY
`North Point
`901 Lakeside Ave.
`Cleveland, OH 44114
`Telephone: 216.586.7029
`Email: dcochran@jonesday.com
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`William Devitt (pro hac vice to be filed)
`JONES DAY
`77 W. Wacker, Suite 3500
`Chicago, IL 60601-1692
`Telephone: 312.269.4240
`Email: wdevitt@jonesday.com
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`By: / Jonathan M. Strang /
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`Jonathan M. Strang (Reg. No. 61,724)
`jonathan.strang@lw.com
`Latham & Watkins LLP
`555 Eleventh Street, NW, Ste. 1000
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`IPR2021-00826 (USP 9,814,265)
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`PO’s Supplemental Response
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`Washington, D.C. 20004-1304
`Telephone: 202.637.2200
`Fax: 202.637.2201
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`Counsel for Patent Owner
`Philip Morris Products, S.A.
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