`571-272-7822
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`Paper No. _37
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
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`RED DIAMOND, INC.,
`Petitioner,
`
`v.
`
`SOUTHERN VISIONS, LLP,
`Patent Owner.
`____________
`
`PGR2019-00045
`Patent 10,071,852 B2
`____________
`
`Record of Oral Hearing
`Held: August 11, 2020
`____________
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`
`
`Before CHRISTOPHER L. CRUMBLEY, JEFFREY W. ABRAHAM, and
`CHRISTOPHER C. KENNEDY, Administrative Patent Judges.
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`PGR2019-00045
`Patent 10,071,852 B2
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`APPEARANCES:
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`ON BEHALF OF THE PETITIONER:
`
`
`JAMAICA SZELIGA, ESQUIRE
`Seyfarth Shaw, LLP
`975 F Street, NW
`Washington, D.C. 20004
`
`
`
`JAMES ROBERTSON, ESQUIRE
`JM Robertson, LLP
`2140 11 Avenue South
`Birmingham, AL 35205
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`
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`ON BEHALF OF THE PATENT OWNER:
`
`RAYMOND AREAUX, ESQUIRE
`JOSEPH MILLER, ESQUIRE
`Carver, Darden, Koretsky, Tessier, Finn, Blossman & Areaux, LLC
`Energy Centre, Suite 3100
`1100 Poydras Street
`New Orleans, LA 70163
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`The above-entitled matter came on for hearing on Tuesday, August 11,
`2020, commencing at 1:00 p.m., EDT, by video/by telephone.
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`P R O C E E D I N G S
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`JUDGE KENNEDY: We can go on the record. Good afternoon and
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`welcome to the Patent Trial and Appeal Board. This is an oral hearing in
`case PGR2019-00045 between Petitioner Red Diamond and Patent Owner
`Southern Visions. The challenged patent is patent number 10,071,852 B2.
`I'm Judge Kennedy and joining me are Judges Crumbley and Abraham. I
`believe we should all be visible over a video feed. I will observe that I am
`only seeing counsel for -- for one party. So, we'll start with counsel
`introductions. It looks like we may be missing somebody but let's start with
`Petitioner. Who is present for Petitioner?
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` MR. ROBERTSON: Thank you, Your Honor. This is James
`Robertson present for Petitioner.
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`JUDGE KENNEDY: And is anybody with you, Mr. Robertson or is it
`just you?
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`MR. ROBERTSON: Yes, Your Honor. So, our lead counsel, Jamaica
`Szeliga, is monitoring from her home via audio only pursuant to the request
`from the Board's technical expert to preserve bandwidth. And present with
`me at table is our co-counsel, Marcus Chatterton of Balch and Bingham.
`And listening on the line is Red Diamond's litigation counsel, Collen
`Rodgers also with the firm of Balch and Bingham.
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`JUDGE KENNEDY: Thank you. And is anybody on the line for
`Patent Owner?
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`MR. AREAUX: This is Ray Areaux and I -- I have a video
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`connection and I can see Jim Robertson but I do not see anyone else. I do
`not see you, Judge Kennedy or you, Judge Crumbley or anybody else. And I
`also have on the line with me, my colleague, Matt Miller who is connected
`by audio only.
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`JUDGE KENNEDY: Okay, thank you.
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`MR. ROBERTSON: Your Honor, Petitioner also has no video feed of
`the Board.
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`JUDGE KENNEDY: Okay. So, when --when Mr. Areaux spoke, I
`was able to see him then. So, it appears that --that we can see both of you
`when you are speaking but it sounds like neither of you can see -- I'll start
`with Petitioner. Petitioner, can you see any of the three of the Judges or
`nobody?
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`MR. ROBERTSON: We don't see anyone, Your Honor, except Mr.
`Areaux.
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`JUDGE KENNEDY: Okay and Mr. Areaux, do you see any -- you
`also see none of the Judges but you can see Mr. Robertson?
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`MR. AREAUX: Correct.
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`JUDGE KENNEDY: I believe typically you're able to see us. Let's
`just take one -- let's take a brief moment and see if our technical folks can
`get this fixed. And if they can’t, then at least both of you are in the same
`position so there wouldn't be any, you know, unfair advantage to one of you
`or the other. One moment.
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`CLERK: One moment, Judges, this is Alex with CUCILync. Let me
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`consult with my colleagues if there is anything that can be done on this one.
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`JUDGE KENNEDY: All right, thank you, Alex.
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`(Technical Difficulties)
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`JUDGE KENNEDY: Great. Now that we have that resolved and
`we've confirmed that we have the court reporter on the line, we've already
`had counsel introductions, we've already announced the case so just a few
`housekeeping items before we hand it over to counsel. As provided in the
`hearing order, each side has a total of 60 minutes to present arguments. I'm
`going to be monitoring the time and I will try to let you know when you've
`got 5 minutes left. But I'm going to hold us strictly to 60 minutes per side. I
`think that should be plenty for this case.
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`And this is a little bit unusual because Petitioner didn't request a
`hearing but it's our typical practice for Petitioner to go first. And as we
`indicated in the hearing order, we're going to follow that practice today. So,
`Petitioner will go first and then Patent Owner, and then if Petitioner reserves
`time for rebuttal, Petitioner will present that. And then if Patent Owner
`reserves time for surrebuttal, Patent Owner will present its surrebuttal. So,
`let me start by asking Petitioner, would you like to reserve any time for
`rebuttal?
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`MR. ROBERTSON: Yes, Your Honor, Petitioner would like to
`reserve 30 minutes for rebuttal, please.
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`JUDGE KENNEDY: Okay. And Patent Owner, would you like to
`reserve any time for surrebuttal?
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`MR. AREAUX: Yes, we would like to reserve 30 minutes as well.
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`JUDGE KENNEDY: All right. For clarity of record, please make
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`sure to identify the current slide number for demonstratives. I believe we
`only received demonstratives from Patent Owner. But also, to the extent
`you're referring to exhibits and page numbers, et cetera, please do that
`clearly. And also, when you're speaking, make sure that you're speaking
`into your phone or microphone pretty directly because sometimes if the
`microphone gets just a little jostled, it can really reduce the clarity.
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`All panel members have a set of demonstratives as well as access to
`the complete record for these proceedings. So, we should have in front of us
`anything that you refer to. And last note before we begin is that we want to
`keep arguments focused on the merits so counsel are encouraged not to
`interrupt the other side with objections. And to the extent you believe there's
`an objection that simply has to be made at this hearing, you should generally
`wait until it's your turn to speak and you can raise any objection at that time.
`And so, with that in mind, I will turn it over to Petitioner and Petitioner may
`begin.
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`MR. ROBERTSON: Thank you, Honor, may it please the Board. As
`was already noted, the Petitioner did not request an oral hearing in this
`particular matter. Accordingly, we don't have very many points to make.
`But since we're here, there are just a few things that we would like to raise
`and address. And the first matter is actually one that's a bit more procedural
`in nature. And with the understanding and recognition that the Board is not
`locked in to anything that it's done in the past, we feel like the Board has
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`really done the majority of the heavy lifting in this case already through the
`Institution Decision and preliminary documents. And let me explain what
`we think the implications of that are.
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`This is a rather unusual situation in which all that's pending in from of
`the Board right now is a -- the Patent Owner's revised motion to amend.
`And if the Board will recall, prior to the filing of the original motion to
`amend during the hearing permit that the Patent Owner was asked whether
`or not his motion to amend would be contingent or non-contingent. And at
`that time, Patent Owner indicated that the motion to amend would be non-
`contingent.
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`Therefore, and subsequent to that, the Patent Owner did not file a
`reply to the original petition. So, this motion to amend does a few two
`things. Motion to amend asks the Board to cancel the challenged claim. It
`also asks the Board to institute new substitute claims in their -- in their place.
`Those are the only two things that the motion asks for.
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`In terms of the request for cancelling claims, we think that's the Patent
`Owner's prerogative and that there are fully able to do that as they wish.
`Now, of course, we do object to the amended claim, the proposed amended
`claim on the basis that we believe that that includes impermissible new
`matter and therefore would be outside the scope of the written description
`within the application that was filed.
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`So, where the Petitioner believes that leads us is the original claim has
`not been cancelled at the request of the Patent Owner and a pending motion
`to amend, including claims that include what we believe are this new matter.
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`So, the Board in its preliminary evaluation mitigates the Patent Owner
`would have a really very, very similar claim in Patent Owner. In fact, the
`claims all contain limitations regarding the percentage of sugar that would
`need to be within certified range that the Board gave a preliminary
`indication would be outside the scope of the written description and
`therefore, impermissible.
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`The Patent Owner, of course, has a right to provide a revised motion
`to amend which it did but the new motion to amend really includes those
`same issues. One of the claims is a bit different to the other. It includes
`these features. Under those conditions, we feel like the Board is faced with
`a situation where likely the amendment, the motion to amend could not be
`granted except for the portion to cancel the claim thereby leaving really no
`issue left for consideration on the merit.
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`Now, of course, that’s certainly the Board's prerogative as to what it
`does with that but ultimately the rules don't seem to contemplate the issue
`and substantive opinions on claims that can be entered. Of course, the Board
`would have to rule on that motion to redo that determination. So, that's our
`initial point which is really on a procedure and where we think the case
`might merit the original claim to be cancelled. None of the proposed
`substitute claims can be entered and therefore there is no basis for
`considering the possibility of those claims.
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`JUDGE KENNEDY: Counsel, quick question. You are aware that
`the preliminary guidance was, in fact, just preliminary guidance, right? And
`that's it's not binding on us? So, we haven't actually made a determination
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`yet that -- we haven't made a final determination yet as to whether the
`proposed substitute claims comply with the statutory and regulatory
`requirements.
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`MR. ROBERTSON: You're completely right and if I didn't
`acknowledge the Board's complete discretion there, that was my error. We
`do understand that, Your Honor. So, this would be in the event that the
`Board maintained that position that was provided in preliminary guidance
`and makes a determination.
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`JUDGE KENNEDY: So, your position is that if we were to maintain
`the preliminary determination, that the proposed substitute claims include
`new matter, you're saying that we need not consider obviousness?
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`MR. ROBERTSON: That's exactly our position, Your Honor. And in
`support of that, I'd like to refer -- I think the support for that comes from a
`couple places and probably the best place is in actually the enabling statute.
`I'm sorry, code section 328 requires that the Trials Appeal Board would
`issue a final written decision with the respect to the patentability of any
`patent claim shall by petitioner and any new claim added under 326(b). And
`rule 326(b) each requires that each amended claim cannot add a new matter.
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`So, in essence, if these proposed claims had done that, they can't be
`entered into. The rule doesn't contemplate that they would be added into the
`patent. And therefore, a ruling on the obviousness of those claims would be
`in some way an advisory issue because they're not (inaudible) that's under
`litigation. The Board has full discretion to address or not to address
`anything that it wishes. But we do think it's a combination of 35 USC 328
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`and 35 USC 326(b) directs the Board to that result. Which is why I say that
`we think the Board has really already done the heavy lifting in this case.
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`The second point that we'd like to make is that there seems to be some
`confusion or disagreement on the part of the parties in this case. We're not
`looking for burden of proof in this case. And I'm going to do something a
`little bit unusual and I'm going to refer the Board to the Patent Owner's
`demonstrative, in particular, and that's exhibit 2074 at page 7.
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`And what we see there is the assertion that the Petitioner bears the
`burden of proof and we fully acknowledge that under Aqua Products even if
`under for amended claims, Petitioner carries the burden of proof with respect
`to patentability. But I think we have to back up one step before that to the
`burden of proof for a motion amending a PGR can only come in under
`motion and a motion to amend the claim would only be permissible if the
`claims meet the statutory requirements of not adding new matters.
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`The burden under the proceedings for any motion, is on the moving
`party. So, the moving party here to have the motion entered is, in fact, the
`Patent Owner. Now that we're at this stage, they have to go through that
`door or over that hurdle, whatever you want to say, in order to get into the
`examination. So, in fact, the burden to show that there's full compliance
`with the requirement for an amendment is initially with the Patent Owner. It
`doesn't rest with the Petitioner. And it's not the petitioner's burden, it's a
`burden by the preponderance of the evidence which is the default burden of
`proof in all these proceedings.
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`So, what Patent Owner has cited here is, is it not correct for an
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`original examination. If the Patent Owner were in front of an examiner and
`the examiner said you don't have written description support then precisely
`that examiner would bear the burden of proof of showing a lack of written
`description support. But this isn't original examination, this is a trial and
`that burden is really different.
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`So, why is that important? It's important for a couple reasons. One of
`them is that if we look at the evidence and the case law, a lot of the case law
`that we looked at is going to be situations where that burden was on Patent
`Examiner in terms of a review of a rejection. Or an even lighter burden
`where the review is a lower court proceeding where it might just be
`substantial evidence.
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`Here in this proceeding, as we read through the cases, it's important to
`keep in mind that what might have passed muster during regular
`examination and certainly on review of a jury verdict or a court
`determination which is only reviewed for substantial evidence. That same
`fact pattern may not pass muster in a PGR. So, that's our second point, Your
`Honor, is we just ask that the Board be cognizant as it reviews the case law
`and argument that -- in determining whether or not the motion to amend can
`even be granted. The burden rests clearly on the Patent Owner.
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`The third point we have, Your Honor, is we had a bit procedural and
`possibly a bit touchy but, if we look through the record, we will see that a
`significant portion of Patent Owner's arguments and position were raised
`really for the very first time and never applied until less than a month ago.
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`There are two brand new declarations. One from a Mr. Prentice which is I
`believe exhibit 2062 and another one from Mr. Ebersole, exhibit 2059.
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`But both of those, as you can see from our surreply, were prepared
`and completed before the Petitioner even filed its opposition. It couldn't
`have been prepared in reply to the Petitioner's opposition. And that belated
`introduction of evidence is, of course, within the discretion of the Board to
`consider but when we look to a trial practice guide as a model, in replying,
`we really should only reply to the preceding paper and it's not really a place
`for new evidence and theories to come in. So, we would just ask that the
`Board to be cognizant of the timing of new arguments and with respect for
`notice of the substance. Many of those arguments came in belatedly.
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`But at the end of the day, what the Board decides to fully consider this
`argument. We feel like this is a case where the Patent Owner is merely
`asking this panel to go well beyond anything that -- any reported case has
`ever approved. In that review now, was the panel being asked to find
`written description support based on the possibility that a person of ordinary
`skill in the art would read a very broad (inaudible). And from that, be able
`to whittle that down all the way to very specific percentages in the claim.
`And quite honestly, we didn't see any case where that's ever been permitted,
`Your Honors.
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`And let me just go through what that analysis would have to be. First
`and foremost, a person of skill in the art would read the specifications would
`have to essentially ignore the actual statement in the patent that the Patent
`Owner has relied on. So, if I could just look to the earlier patent which is the
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`222 patent and that's what Patent Owner is deriving its requirement from.
`And that's our exhibit 1009 and I believe it is page 9. And where it says, and
`this is the statement, one reason the sugar works in the present invention is
`the granular size retained by US mesh sieves 3 to 35. That nexus is white
`sugar in the raw but bigger and Patent Owner is putting all of this emphasis
`on that statement. It is white sugar in the raw but then --
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`JUDGE KENNEDY: Counsel, let me ask you a question about that
`sentence. As I read that sentence, it seems to be saying that mesh sieve 3 to
`35 is bigger than sugar in the raw. Is that how you read it?
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`MR. ROBERTSON: Your Honor, that's -- that's my point exactly.
`It's step one in the -- Patent Owner's argument is that a person of skill in the
`art has to read that sentence and ignore the first portion. They have to read
`those two sentences together and basically describes how the first sentence
`and so, that's exactly how we read it, Your Honor. But even if you ignore
`that sentence, if you just read it and give the Patent Owner every inference
`from the second one. What that still requires then the person of skill in the
`art has to decide well, what does bigger mean. And there is no indication in
`the patent itself that the one bigger, what would be bigger and what would
`be smaller.
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`After that, Patent Owner would have to -- a person of skill in the art
`would then have to decide which stance am I going to give you, for what
`ranges do I think are important here. What Brix level am I going to test for?
`That is what describes -- is what's in the patent. And if I didn't have to
`design and carry out pretty complex testing, if we look to Mr. Ebersol's
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`declaration, we see that it took him nearly a month to conduct his test in
`order to finally come up with what support the claimed ranges.
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`That's the purview of Your Honors. That's not written description.
`But the requirement for written description is to allow somebody to
`immediately discern that the claimed subject matter is present. Once you
`have to start going down the road of testing and evaluation, it really moved
`away from written description into enablement. And those are two
`completely different standards, as you know.
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`So, so I think it further for the Board to look at in look at something
`like that with the Knowles Electronics case. That was a case where there
`was a very general description of an electrical connection and the Patent
`Owner Himenez (phonetic) and tried to amend the claim to recite much
`more specific configuration and but the board and the Circuit said, no, that's
`not enough. I think that's probably their most positive case and there's really
`no case that takes an inventor, that takes a POSITA in the position of
`basically becoming a co-inventor of the proposed claim.
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`And so, that, you know, we think that all of these considerations
`warrant and require the rejection of the proposed motion to amend. Which
`that leaves us with nothing at all, but if you did and we don't think the Board
`should allow this amendment to be entered, we still think that the proposed
`claims would be obvious for the reasons that we put forth in our brief. I
`mean, and specifically, we base this on the teachings in the reference.
` So sorry, there's a secondarily to the Australian reference. What that
`reference teaches is that blended tea and sugar in the bag and the sugar can
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`be anything from white sugar all the way up to rock sugar. And so, at some
`point, one would take that and use it in brewing a large quantity of tea, you
`would simply need more tea and more sugar. That seems pretty
`straightforward, Your Honor. And it would use the sugar that allowed the
`water to permeate through the bag. There's no mystery to that. A
`requirement of brewed tea is it has to contact the water.
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`So, really once you get into the realm of looking even at the claimed
`invention, you know, it's a matter of reaching design choice and
`optimization. So, that is our -- presenting these papers speak for themselves.
`Of course, we're now going to answer questions and I'll turn this over to --
`and concede the remainder of our initial 30 minutes.
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`JUDGE KENNEDY: Thank you, counsel. I don’t have any further
`questions for you. Judges Crumbley or Abraham, do you have any further
`questions?
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`JUDGE CRUMBLEY: I don't, thank you.
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`JUDGE ABRAHAM: I don't either.
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`JUDGE KENNEDY: All right. Mr. Areaux, we will turn it over to
`you. Please begin when you're ready.
`
`MR. AREAUX: Thank you. Thank you for your time today, Judges
`Kennedy, Abraham and Crumbley. And I appreciate the time you put in to
`prepare for this and for, you know, granting the oral arguments today. I
`think I'll go straight to the PowerPoint if I could and walk through that with
`you and then hopefully, we can address some of the issues that counsel,
`opposing counsel raised.
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`So, if we turn to slide 2, which is on page 5, I guess, what is the
`
`invention here? Sifting large amounts of sugar, enough to sweeten this
`restaurant batch, right, this large batch and it goes to some of the issues that
`counsel was just talking about with the Chegodaev reference. The largest
`sugar granule so that the sugar dissolves, that was the heart of the invention,
`right. Together with loose tea in a mesh bag used with commercial iced tea
`brewing machine and this amazing improvement for the restaurant industry.
`And it truly was, it truly is.
`
`So, who are the inventors? If you turn to slide three, this is young
`Adam Stewart and his dad, Paul Stewart and there they are with their
`invention. That is the invention that they're holding in their hands and I can
`-- I have here and I will blow it -- it's pretty hard to blow up but this is it. I
`don’t know if you can see this, this is three pounds of sugar in a bag, big
`sugar in a bag that goes into that brewing basket that young Adam Stewart is
`holding.
`
`And I can tell you when he walked into restaurants and said here, put
`this big old bag of three pounds of sugar and brew that in your bag, people
`were -- said you're crazy, right, this isn't gonna work. All sorts of stuff but
`we'll get to that. So anyway, does a person of ordinary skill in the art --
`pardon me, I'm going on to slide number 4. You know, what's this case
`about. Is it about the section 112 issues. I don't think there's any issue that
`this a patentable invention, that claim as presented get over the prior art.
`There's all sorts of secondary considerations and we'll talk about that more.
`I think this is an issue, the 112 issue, the written description issue.
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`So, does a person of ordinary skill in the art believe that these
`
`inventors, Adam and Paul Stewart invented what is now claimed?
`Absolutely a person of ordinary skill believes that and that is the key issue.
`And so, one of the questions that you asked as the panel, I’m on slide 5,
`what's this case about. Well, what does a person of ordinary skill in the art
`know and there's a lot that a person of ordinary skill knows in this field,
`right. If you think about it this is brewing tea, right. But nobody knew that
`large sugar worked. Once you get to that, if you add in, mix in, if you'll
`allow me, the skill of the person of ordinary skill in the art, that's where we
`believe the claims are certainly -- meets the written description requirement.
`
`So, does the law allow, I'm still on slide 5, right. Does the law allow a
`range of percent not expressed disclosed to be derived, right, to be derived
`and can the person of skill in the art readily derive the claimed percentages
`from disclosure. The answer to all three of those questions is yes or the last
`two and the POSITA knows a lot.
`
`So, the law is -- going on to slide 6, please. The law allows you to
`find the support for this. The issue is whether one of ordinary skill in the art
`could derive the claimed ranges from the percent disclosure. And that is
`used in the Unocal case. It's not about enablement, it is about written
`description. The written description, going on to the second block there, the
`written description requirement may be satisfied through disclosure of
`function and minimal structure. This is the Enzo case that was originally in
`the MPEP and Enzo endorsed it and of course now Enzo is cited in the
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`MPEP for this. So, either one of those and I actually think both of those are
`present here allows you to find support for this.
`
`And then third here, the level of detail required to show possession is
`very low. It does not require exact examples. It does not require these
`examples. So, turning to page, slide 7, right. The law empowers the three of
`you to find support for this. The analysis is a highly fact intensive inquiry
`left to case-by-case review. If you look at the case law it says, no one rule,
`right, intense factual. You know, get your fingernails dirty, get down into it,
`into deep facts. And I will say one thing as to what my opposing counsel
`said, he said oh, what's going on here is well beyond any reported case. That
`actually is against the law.
`
`If you look at Rambus and Rea and the other cases, they say precedent
`here really doesn't matter. What really matters are the facts, factual matters,
`getting into the facts and finding that yes, there's enough science here to
`show written description. That written description is satisfied.
`
`So, the next block there, claiming a narrower range, that does not
`generally violate the written description requirement if there is sufficient
`reasons, you know. Unless there's some sufficient reason then yeah which
`there isn't here. And, of course, as my opposing counsel addressed it, we
`believe that Petitioner does bear the burden of proof. If we all read Aqua
`Products and the guidance that came out from the PTAB back in November
`2017 about Aqua Products and what that means, maybe it means there's
`preponderance of the evidence for us, I don’t know. I actually still think it's
`the Petitioner's burden. But even if it's preponderance of the evidence, I
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`would suggest that the tie goes to the runner and we're the runner, we're the
`Patent Owner. So, I'll leave that for what it is at the moment.
`
`So, on to slide 8, if you will, please. What does a person of ordinary
`skill know? Well, they know a lot. Think of this industry, right, we're
`brewing iced tea. Adam and Paul Stewart are in the business of providing
`sweeteners to the restaurant industry, right. What -- and this is all in the
`record, right. What does a person know? They know about sugar
`distribution per weight. They know that's how these things are talked about,
`how they're specified. They know how to do a Ro-tap analysis which I think
`you probably have seen that in the record. That's the way you sift the sugar
`to figure out, you know, where the different sugars fall through the strain,
`right, to figure out how much at each sieve level.
`
`The Brix measurement, right, that's a measure of sweetener, right.
`The industry, the POSA know that. The size of sugar in groceries, the peer
`derived, you know that, a POSA knows that. The size of the EFG sugar, the
`POSA knows that. The size of the sugar in the raw, they know that. Large
`sugars, bigger than sugar in the raw, right, large sugar available from
`Domino. Domino sells a product called, they call it standard sugar, that's
`their name for it but it's large sugar. It's a product readily available. It has
`been readily available all this time going back to the date of the invention.
`So, the POSA knows about that product and Petitioner's expert admitted
`that.
`So, what is it they don't know, right, what is it they don't know?
`
`That's slide 9. They didn't know that sugar with significant amounts of large
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`granules would work. Nobody knew that. I mean again, if you're running a
`restaurant and you're having all these issues with trying to get consistent
`sweet tea and one waiter is making it one another waitress is making it
`another way. You've got sugars all over the counter and it's all messed up
`and you can't ever get it right, right.
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`Someone walks in with that three pound bag and says, all you gotta do
`is put this in there and you'll get the same iced tea every time and everyone
`says, you're crazy, that's not going to work and it does. O