PUBLIC VERSION UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

Transcription

1 Filed: May 16, 2018 UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD ARRIS INTERNATIONAL PLC Petitioner v. CHANBOND, LLC Patent Owner Case IPR Patent 8,984,565 PATENT OWNER S PRELIMINARY RESPONSE TO PETITION FOR INTER PARTES REVIEW OF U.S. PATENT NO. 8,984,565

2 TABLE OF CONTENTS I. Introduction... 1 II. Overview of U.S. Patent No. 8,984, III. Prior Proceedings... 7 IV. Argument...12 A. The Petition Is Time Barred Under 35 U.S.C. 315(b)...12 B. The Board Should Deny Institution Under 35 U.S.C. 314(a)...33 V. Conclusion...46 i

3 TABLE OF AUTHORITIES Cases Page(s) Abiomed, Inc. v. Maquet Cardiovascular, LLC, Case IPR (PTAB March 12, 2018) Alcatel-Lucent USA Inc. v. Oyster Optics, LLC, Case IPR (PTAB Feb. 28, 2018) Alere Inc. v. Rembrandt Diagnostics, LP, Case IPR (PTAB Sept. 28, 2017) Apple Inc. v. Achates Reference Publishing, Inc., Case IPR (PTAB June 2, 2014) ARRIS Group, Inc. v. C-Cation Techs., LLC, Case IPR (PTAB Nov. 24, 2014)... 32, 33 Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc., Case IPR (PTAB Feb. 20, 2015) Bros, Inc. v. W. E. Grace Mfg. Co., 261 F.2d 428 (5th Cir. 1958)... 25, 26 Cal. Physicians Serv. v. Aoki Diabetes Research Inst., 163 Cal. App. 4th 1506 (2008) In re ChanBond, LLC Patent Litigation, No. 1:15-cv RGA (D. Del. Apr. 24, 2018)... 11, 45 Cisco Systems, Inc., v. ChanBond LLC, Case IPR (PTAB Mar. 29, 2017)... 34, 36, 41 Cisco Systems, Inc. v. Hewlett Packard Enterprise Co., Case IPR (PTAB Mar. 16, 2018) ESET, LLC v. Finjan, Inc., Case IPR (PTAB Feb. 15, 2018)... 35, 40 FedEx Corp. v. Intellectual Ventures II LLC, Case IPR (PTAB Feb. 21, 2018) ii

4 FutureVision.com, LLC v. Cequel Commc ns, LLC, No. CV GMS-MPT, 2016 WL (D. Del. Feb. 1, 2016)... 10, 11 General Electric Co. v. TransData, Inc., Case IPR (PTAB Apr. 15, 2015)... 29, 30, 31 General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, Case IPR (PTAB Sept. 6, 2017)...passim Gonzalez v. Banco Cent. Corp., 27 F.3d 751 (1st Cir. 1994)... 16, 17, 25 Halyard Health, Inc. v. Kirn Med. Design, LLC, Case IPR (PTAB Mar. 8, 2018) Intel Corp. v. Alacritech, Inc., Case IPR (PTAB Nov. 30, 2017) Intel Corp. v. U.S. Int l Trade Comm n, 946 F.2d 821 (Fed. Cir. 1991) Mitsuba Corp. v. Intellectual Ventures II LLC, Case IPR (PTAB Apr. 23, 2018) Montana v. United States, 440 U.S. 147 (1979)... 17, 25 NetApp Inc. v. Realtime Data LLC, Case IPR (PTAB Oct. 12, 2017)... 39, 45 NetApp Inc. v. Realtime Data LLC, Case IPR (PTAB Jan. 25, 2018) One World Techs., Inc. v. The Chamberlain Group, Inc., Case IPR (PTAB Dec. 13, 2017)... 34, 43 RPX Corp. v. ChanBond LLC, Case IPR (PTAB May 25, 2017)... 9 RPX Corp. v. ChanBond LLC, No (Fed. Cir. Jan. 17, 2018)... 9 iii

5 RPX Corp. v. Virnetx Inc., Case IPR (PTAB June 5, 2014) Samsung Electronics Co., Ltd. v. Elm 3DS Innovations, LLC, Case IPR (PTAB Oct. 17, 2017)... 35, 40 Sorenson v. Sec y of Treasury of U.S., 475 U.S. 851 (1986) Taylor v. Sturgell, 553 U.S. 880 (2008)... 14, 26, 27, 28 Tidewater Patent Dev. Co. v. Kitchen, 421 F.2d 680 (4th Cir. 1970) Ventex Co., Ltd. v. Columbia Sportswear North America, Inc., Case IPR (PTAB July 26, 2017) Vulcan, Inc. v. Fordees Corp., 658 F.2d 1106 (6th Cir. 1981) WesternGeco LLC v. ION Geophysical Corp., No , 2018 WL (Fed. Cir. May 7, 2018)... 14, 26 Wi-Fi One, LLC v. Broadcom Corp., 887 F.3d 1329 (Fed. Cir. 2018)... 13, 26, 27 Statutes 35 U.S.C. 314(a) U.S.C U.S.C. 314(a)...passim 35 U.S.C. 315(b)...passim 35 U.S.C. 316(a)(11) U.S.C. 325(d) Other Authorities 37 C.F.R (a)... 1 iv

6 37 C.F.R (a) A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure 4451 (2d ed.)... 16, 25, Cong. Rec. S5432 (daily ed. Sept. 8, 2011) Trial Practice Guide, 77 Fed. Reg. 48,756 (Aug. 14, 2012)... 13, 16 v

7 EXHIBIT LIST Exhibit No. Description 2001 Cisco Systems, Inc. Form 10-K (Sept. 7, 2017) 2002 ARRIS International plc Form 10-K (Feb. 29, 2016) 2003 ARRIS International plc Form 10-K (March 1, 2017) 2004 ARRIS International plc Form 10-K (March 1, 2018) 2005 Stipulation and [Proposed] Order to Amend Scheduling Order, In re ChanBond, LLC Patent Litigation, No. 1:15-cv RGA (D. Del. Apr. 24, 2018) (so ordered Apr. 24, 2018) 2006 Summons and Proof of Service on Delaware Defendants (Oct. 1, 2015) 2007 ARRIS Corporate Terms and Conditions of Sale, vi

8 Atlantic Broadband Answer to the Complaint (Nov. 23, 2015); 2025 Mediacom Answer to the Complaint (Nov. 23, 2015) 2026 Wave Answer to the Complaint (Nov. 23, 2015) vii

9 2027 WOW Answer to the Complaint (Nov. 23, 2015) 2028 ARRIS s Objections and Responses to ChanBond s Subpoena for Documents (Jan. 16, 2017) 2029 ARRIS Group, Inc. s Objections and Responses to ChanBond s Subpoena to Testify at a Deposition (Jan. 22, 2018) 2030 Petitioner s Responses to Patent Owner s Requests for Additional Discovery (Apr. 13, 2018) 2031 ARRIS Press Release, ARRIS Acquires Motorola Home: Creates Premier Video Delivery and Broadband Technology Company (Apr. 17, 2013) 2032 New York Times, Motorola Completes General Instrument Acquisition (Jan. 6, 2000) viii

10 I. INTRODUCTION Pursuant to 37 C.F.R (a), Patent Owner, ChanBond, LLC, submits the following preliminary response to the Petition, setting forth reasons why no inter partes review should be instituted under 35 U.S.C This proceeding is the latest in a seemingly endless string of challenges to the validity of this patent family. Not even two months after Patent Owner initiated infringement litigation in Delaware District Court in 2015, RPX Corporation ( RPX ) filed a first, and ultimately unsuccessful, inter partes review petition against one of the asserted patents. This was followed less than a year later by a second salvo of eight inter partes review petitions filed by Cisco Systems, Inc. ( Cisco ) against each of the three patents asserted in the Delaware litigation. The Board, however, denied institution on seven of those eight petitions. This latest round of five petitions, again challenging all three asserted patents, was filed by Petitioner ARRIS International plc ( ARRIS ) just before issuance of a final written decision on the one Cisco petition that was instituted by the Board. These are not separate challenges by actors with independent interests. Cisco and ARRIS are suppliers of telecommunications equipment to the defendants in the Delaware litigation ( the Delaware Defendants ). Both Cisco and ARRIS are member companies of RPX. Cisco listed all of the Delaware 1

11 Defendants, as well as ARRIS, as real parties in interest in each of its IPR petitions. And as Petitioner ARRIS admitted in its filings to the U.S. Securities and Exchange Commission ( SEC ) and other public documents, it has a duty to indemnify the Delaware Defendants in case of a loss, and under the same indemnification agreements it also has a legal right to control the litigation. Under these facts, the Board should deny institution of trial for two separate reasons. First, Petitioner is in privity with the Delaware Defendants, who were served with a complaint for infringement of the challenged patent in Therefore, the petition is time-barred under 35 U.S.C. 315(b). Second, the Board should exercise its discretion to deny institution under 35 U.S.C. 314(a) because multiple, staggered petition filings, such as those here, are an inefficient use of the inter partes review process and the Board s resources. General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, Case IPR , slip op. at 21 (PTAB Sept. 6, 2017) (paper 19) (precedential). Petitioner and its allies should not be allowed to strategically stage their prior art and arguments in multiple petitions, using [the Board s] decisions as a roadmap, until a ground is found that results in the grant of review. Id. at 17. 2

12 II. OVERVIEW OF U.S. PATENT NO. 8,984,565 1 U.S. Patent No. 8,984,565 ( the 565 Patent, Ex. 1001) is directed to an intelligent device system and method for distribution of digital signals onto, and off of, a wideband signal distribution system. Ex. 1001, 565 Patent at 1: One of the problems the 565 Patent inventors intended to solve was the inability to download to individual users large quantities of digitized images (video, film, etc.), and to allow those digital images to be displayed with the enhanced quality such digital images can offer. Id. at 1: The transfer of such information typically clog[ged] data networks or severely degraded the network s performance. Id. at 1:36 37, 1:67 2:1. The inventors recognized that it was desirable to transport the digitized data on an analog carrier in a format that would allow for greater amounts of data to be carried at one time, such as by modulated RF. Id. at 2: The 565 invention offers the advantage that a high amount of throughput can be achieved in the transmission of digital and/or analog information on an RF carrier. Id. at 6: The inventors recognized that digital transmission systems often employ[ed] analog waveforms, such as RF carrier waveforms, as a physical-layer transport mechanism. Id. at 5:8 10. Fig. 5 of the 565 Patent (reproduced 1 Patent Owner provides an identical overview of the 565 Patent in its preliminary responses to IPR and IPR , filed concurrently. 3

13 below with annotations in color) depicts an intelligent device system for use in local sending of digital information and receiving of digital information using RF modulation[.] Id. at 4: Wideband Signal Distribution System The exemplary system of Fig. 5 is capable of both sending RF signals to, and receiving RF signals from, a wideband signal distribution system via broadband uniform distribution (BUD) unit 38. Id. at 7:10 11, 10:23 27, 10: The transmission and reception paths are annotated in blue and red, respectively. When sending data to the wideband signal distribution system (blue path in the annotated Fig. 5), the exemplary system of Fig. 5 receives digital information from a number of addressable devices 202 and modulates it onto an RF signal. The system of FIG. 5 preferably includes a plurality of addressable devices 202, such as Ethernet or NIC cards, or digital display devices. Id. at 4

14 10: The signals incoming from each of the addressable devices 202 are combined by a digital combiner 410, and passed through a traffic sensor 412, at least one modulator 414, and an RF converter section 418. Id. at 10: The output of the RF converter section 418 is preferably impedance matched to a BUD [broadband uniform distribution unit] 38, and feeds the signal exiting the RF converter section 418 to the BUD input port or ports. Id. at 10: The intelligent device system of Fig. 5 is capable of dynamically allocating multiple, separate RF channels for transmission based on the information throughput of the digital information. [T]he signal entering the modulator bank 414 is preferably measured via a traffic sensor 412 to determine if the information volume is greater than the normal capacity of, for example, a single modulator. If the volume is greater, the DSP 420 will, in turn, direct the incoming data to as many modulators as necessary to modulate all data from the combiner 410. Id. at 9: The digital signal processor (DSP) 420 determines the number of modulators, or the channel width or widths, needed to modulate the signal incoming to the traffic sensor 412, as well as the number of RF channels, and which RF channels, on which the output of the modulator or modulators is modulated. Note that, for example, where QAM modulation is used, QAM modulation is generally 40 megabits per second, per 6 MHz RF channel, thus requiring the use of two 6 MHz RF channels in order to modulate 80 megabits 5

15 per second coming from the digital combiner. The RF channel frequency is selected from at least two available frequency channels. Id. at 9:65 10:10. [A]n RF system channel detector [239] is preferably in communication with the DSP 420 in order to update the DSP 420 as to the RF channels in use and available. Id. at 10: When receiving data from the wideband signal distribution system (red path in the annotated Fig. 5), the exemplary system of Fig. 5 recombines the information carried by the separate RF channels into a digital stream for reception by the addressable devices. The signal entering the intelligent device is preferably split by at least one RF splitter 214, and is then differentiated according to the information frequency on the incoming carrier. Id. at 8: The IP portion of the modulated RF signal fed through a second bandpass filter 218 and the IP portion is then demodulated by at least one demodulator 220. The demodulator 220 strips the RF carrier signal from the digital baseband signal. Following demodulation, the digital signals may be combined by a digital combiner 212, such as a multiplexer, in order to effectuate a parallel to serial conversion. The output of the digital combiner 212 is a high speed serial digital output, on the order of, for example, up to, or in excess of, several Gbit/sec. The output of the digital combiner 212 is then preferably routed to a splitter, which 6

16 splitter feeds an outgoing signal to the input pin pairs of at least one addressable device 202. Id. at 11: III. PRIOR PROCEEDINGS 2 This is the third wave of challenges against the patents in this family. Over the last two and a half years, three petitioners, and numerous other real parties in interest and privies, have filed 14 separate petitions for inter partes review of the same three related patents. Of the nine petitions filed by RPX and Cisco, eight were unsuccessful. As discussed in Sections IV.A and IV.B below, the Board should deny institution on this latest salvo of five petitions because they are inextricably linked to those prior proceedings. On September 21, 2015, Patent Owner filed patent infringement actions in the U.S. District Court for the District of Delaware against several telecommunications companies ( the Delaware Defendants ). 3 In its complaints, 2 Patent Owner provides a substantially identical summary of prior proceedings in its preliminary responses to IPR and IPR , filed concurrently. 3 The Delaware Defendants are Atlantic Broadband Group, LLC ( Atlantic Broadband ) (No. 1:15-cv-00842); Bright House Networks, LLC ( Bright House ) (No. 1:15-cv-00843); Cable One Inc. ( Cable One ) (No. 1:15-cv-00844); 7

17 ChanBond alleged infringement of three related patents, namely, U.S. Patent Nos. 7,941,822 ( the 822 Patent ), 8,341,679 ( the 679 Patent ), and 8,984,565 ( the 565 Patent ), by the Delaware Defendants cable systems and services. The 565 Patent is at issue in this proceeding. On November 20, 2015, about two months after ChanBond filed its infringement complaints, RPX, a so-called patent risk management company, 4 filed the first petition for inter partes review of the 822 Patent. RPX Corp. v. ChanBond LLC, Case IPR ( the RPX IPR ). RPX purported to be Cablevision Systems Corporation and CSC Holdings, LLC ( Cablevision ) (No. 1:15-cv-00845); Cequel Communications, LLC and Cequel Communications Holdings I, LLC d/b/a Suddenlink Communications ( Cequel/Suddenlink ) (No. 1:15-cv-00846); Charter Communications, Inc. ( Charter ) (No. 1:15-cv-00847); Comcast Corporation and Comcast Cable Communications, LLC ( Comcast ) (No. 1:15-cv-00848); Cox Communications, Inc. ( Cox ) (No. 1:15-cv-00849); Mediacom Communications Corporation ( Mediacom ) (No. 1:15-cv-00850); RCN Telecom Services, LLC ( RCN ) (No. 1:15-cv-00851); Time Warner Cable, Inc. and Time Warner Cable Enterprises LLC ( TWC ) (No. 1:15-cv-00852); WaveDivision Holdings, LLC ( Wave ) (No. 1:15-cv-00853); and WideOpen West Finance, LLC ( WOW ) (No. 1:15-cv-00854). 4 See 8

18 acting independently of the Delaware Defendants as it only listed itself as real party in interest, and stated: RPX has complete, unilateral control of all aspects of this proceeding and is also solely responsible for all costs and expenses associated with this proceeding. Petition at 2, RPX Corp. v. ChanBond LLC, Case IPR (Nov. 20, 2015). After oral hearing, the Board issued a final written decision in Patent Owner s favor, determining that RPX had not shown by a preponderance of the evidence that any of the claims at issue were unpatentable. RPX Corp. v. ChanBond LLC, Case IPR , slip op. at 2 (PTAB May 25, 2017) (paper 28). RPX attempted to appeal the Board s decision, but the U.S. Court of Appeals for the Federal Circuit dismissed the appeal for lack of standing. RPX Corp. v. ChanBond LLC, No (Fed. Cir. Jan. 17, 2018). Between September 6 and September 28, 2016, while the RPX IPR was pending, Cisco filed eight more petitions for inter partes review of the 822, 679 and 565 Patents. Cisco Systems, Inc., v. ChanBond LLC, Cases IPR and IPR (filed Sept. 6, 2016), IPR , IPR and IPR (filed Sept. 26, 2016), IPR , IPR and IPR (filed Sept. 28, 2016) (collectively, the Cisco IPRs ). Cisco is a maker of telecommunications equipment, including cable modem termination systems (CMTSs) used by telecommunications companies such as the Delaware Defendants. Ex. 2001, Cisco Form 10-K at 6 (Sept. 7, 2017). Unlike RPX, Cisco 9

19 listed all of the Delaware Defendants as real parties in interest in each of its IPR petitions. See, e.g., Petition at 2, Cisco Systems, Inc., v. ChanBond LLC, Case IPR (Sept. 6, 2016). In addition, Cisco, out of an abundance of caution based on certain decisions from the PTAB describing the test for real parties-in-interest, identified ARRIS Group, Inc., the predecessor-in-interest to the Petitioner in this proceeding, 5 as a real party in interest in each of its IPR petitions. Id. Cisco s challenge was marginally more successful than RPX s, because the Board denied institution on seven out of eight petitions filed by Cisco. Having instituted trial on the sole surviving petition, the Board issued a final written decision determining that certain claims of the 822 Patent were unpatentable. Cisco Systems, Inc., v. ChanBond LLC, Case IPR (PTAB Feb. 23, 2018) (paper 28). That decision is currently on appeal to the U.S. Court of Appeals for the Federal Circuit. ChanBond, LLC v. Cisco Systems, Inc., No (filed Apr. 25, 2018). This third wave of challenges involves five inter partes review petitions, this time filed by Petitioner ARRIS and, once again, targeting the 822, 679 and 565 Patents. ARRIS International plc v. ChanBond, LLC, Cases IPR , IPR , IPR , IPR , and IPR ARRIS 5 See Ex. 2002, ARRIS Form 10-K at 2 (Feb. 29, 2016). 10

20 filed its five petitions on February 2, 2018, just three weeks prior to issuance of the final written decision in the Cisco IPRs. Like Cisco, ARRIS is a maker of telecommunications equipment used by the Delaware Defendants. As ARRIS stated in its filings to the SEC, if ChanBond prevails in the district court litigation ARRIS may be required to indemnify the [Delaware Defendants] and/or pay damages for utilizing certain technology. Ex. 2002, ARRIS Form 10-K at 31 (Feb. 29, 2016). As a result of these endless, staggered challenges by the Delaware Defendants, their suppliers Cisco and ARRIS, and alleged third party RPX, 6 there has not been a single day since November 2015 when Patent Owner has not had to litigate at least one, if not multiple PTAB proceedings in parallel with the infringement litigation against the Delaware Defendants. Fact discovery in the Delaware litigation will close on June 1, 2018, and the case is expected to go to trial by early Ex. 2005, Stipulation and [Proposed] Order to Amend Scheduling Order, In re ChanBond, LLC Patent Litigation, No. 1:15-cv RGA (D. Del. Apr. 24, 2018) (so ordered Apr. 24, 2018). 6 It is public knowledge that both Petitioner ARRIS and prior Petitioner Cisco are member companies of RPX. See FutureVision.com, LLC v. Cequel Commc ns, LLC, No. CV GMS-MPT, 2016 WL , at *2 (D. Del. Feb. 1, 2016). 11

21 IV. ARGUMENT 7 As explained below, the Board may not institute an inter partes review because Petitioner is time barred under 35 U.S.C. 315(b). In the alternative, the Board should exercise its discretion to deny institution under 35 U.S.C. 314(a). A. The Petition Is Time Barred Under 35 U.S.C. 315(b) Under 35 U.S.C. 315(b), [a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. Patent Owner served the Delaware Defendants with a complaint alleging infringement of the 565 Patent on October 1, 2015, more than one year before the present petition was filed. See Ex. 2006, Summons and Proof of Service on Delaware Defendants (Oct. 1, 2015). Because, as explained below, Petitioner was in privity with the Defendants in the Delaware litigation, the petition is time barred under 315(b). 1. Involvement in a Prior Litigation Creates Privity with the Defendants The Section 315(b) one-year time bar is triggered by service of a complaint on any privy of Petitioner. The use of the familiar common law terms privy 7 Patent Owner provides substantially identical arguments in its preliminary responses to IPR and IPR , filed concurrently. 12

22 and real party in interest indicate that Congress intended to adopt common law principles to govern the scope of the section 315(b) one-year bar. Wi-Fi One, LLC v. Broadcom Corp., 887 F.3d 1329, 1335 (Fed. Cir. 2018). While a determination of privity is a fact-dependent question, the applicable authorities provide a few reliable guidelines, starting with the Office Trial Practice Guide and authorities cited therein. First, the Section 315(b) time bar may be triggered by Petitioner s involvement with the Delaware litigation, even if Petitioner was not a named defendant. Privity is essentially a shorthand statement that collateral estoppel is to be applied in a given case. The concept refers to a relationship between the party to be estopped and the unsuccessful party in the prior litigation which is sufficiently close so as to justify application of the doctrine of collateral estoppel. Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (Aug. 14, 2012) (quoting 154 Cong. Rec. S9987 (daily ed. Sept. 27, 2008) (statement of Sen. Kyl)). [T]he privity inquiry naturally focuses on the relationship between the named IPR petitioner and the party in the prior lawsuit. For example, it is important to determine whether the petitioner and the prior litigant s relationship as it relates to the lawsuit is sufficiently close that it can be fairly said that the petitioner had a full and fair opportunity to litigate the validity of the patent in that lawsuit. 13

23 WesternGeco LLC v. ION Geophysical Corp., No , 2018 WL , at *6 (Fed. Cir. May 7, 2018). Second, Petitioner s relationship with the Delaware Defendants supports a finding of privity. Taylor v. Sturgell, 553 U.S. 880 (2008) provides a nonexhaustive list of six categories of qualifying relationships. For example, a nonparty is bound by a judgment if she assumed control over the litigation in which that judgment was rendered. Because such a person has had the opportunity to present proofs and argument, he has already had his day in court even though he was not a formal party to the litigation. Taylor, 553 U.S. at 895 (internal citations and quotation marks omitted). However, [w]hile control over the prior action is commonly present in applications of collateral estoppel, it is not essential: preclusion can apply even in the absence of such control. The question is whether, under the circumstances as a whole, the party to be estopped should reasonably have expected to be bound by the prior adjudication. Cal. Physicians Serv. v. Aoki Diabetes Research Inst., 163 Cal. App. 4th 1506, (2008). Thus, nonparty preclusion may be justified based on a variety of pre-existing substantive legal relationships between the person to be bound and a party to the judgment ; also, a nonparty may be bound by a judgment because she was adequately represented by someone with the same interests who was a party to the suit. Taylor, 553 U.S. at 894 (internal citations and quotation marks omitted). 14

24 Moreover, the legislative history of the America Invents Act supports a construction of privy as a party that has a direct relationship to the petitioner with respect to the allegedly infringing product or service, including for example customers of the petitioner [that] had been sued for infringement. 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer). 8 Third, to the extent control over the prior litigation is a relevant factor in a determination of privity, complete control is not a requirement. Preclusion is fair so long as the relationship between the nonparty and a party was such that the nonparty had the same practical opportunity to control the course of the proceedings that would be available to a party. The appropriate measure of control does not require that the named party or parties totally abandon control to the nonparty. Instead, it should be enough that the nonparty has the actual measure of control or opportunity to control that might reasonably be expected between two formal coparties. Such relationships between a party and a nonparty are most often found when an indemnitor participates in defending an action brought against 8 While Sen. Schumer s statement was in the context of Covered Business Method review proceedings, it is a rule of statutory construction that identical words used in different parts of the same act are intended to have the same meaning. Sorenson v. Sec y of Treasury of U.S., 475 U.S. 851, 860 (1986) (quoting Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87 (1934)). 15

25 its indemnitee. 18A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure 4451 (2d ed.) ( Wright & Miller ). Fourth, it is not necessary that Petitioner actually exercised any control over the prior proceeding; a legal right to control the litigation may be sufficient to establish privity. A common consideration is whether the [Petitioner] exercised or could have exercised control over a party s participation in a proceeding. Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (Aug. 14, 2012) (emphasis added). If a nonparty either participated vicariously in the original litigation by exercising control over a named party or had the opportunity to exert such control, then the nonparty effectively enjoyed his day in court, and it is appropriate to impute to him the legal attributes of party status for purposes of claim preclusion. Gonzalez v. Banco Cent. Corp., 27 F.3d 751, 758 (1st Cir. 1994) (emphasis added). [A]ctual assumption of control of the lawsuit is not necessary for a finding of privity; the opportunity, or legal right, to assume control is sufficient. Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc., Case IPR , slip op. at 14 (PTAB Feb. 20, 2015) (paper 13) (emphasis in original). Fifth, the determination of privity looks to substance over form. The nonparty s participation may be overt or covert, and the evidence of it may be direct or circumstantial so long as the evidence as a whole shows that the nonparty possessed effective control over a party s conduct of the earlier litigation 16

26 as measured from a practical, as opposed to a purely theoretical, standpoint. Gonzalez, 27 F.3d at 759. Thus, the relevant question is whether Petitioner had a sufficient laboring oar in the conduct of the [prior] litigation to actuate principles of estoppel. Montana v. United States, 440 U.S. 147, 155 (1979). 2. Petitioner Had Substantial Control over the Delaware Litigation Under controlling principles of privity, Petitioner is time-barred under 315(b) at least because it had a right to substantially control the Delaware litigation for years prior to the filing of the present petition. Petitioner s involvement with the Delaware litigation is largely a matter of public record. As Petitioner admitted in its SEC filings: On September 21, 2015, [Patent Owner] ChanBond filed suit against several MSOs [Multiple Systems Operators] alleging infringement of three US Patents. Certain of our customers have requested that we provide indemnification. In the event of an unfavorable outcome, ARRIS may be required to indemnify the MSOs and/or pay damages for utilizing certain technology. Ex. 2002, ARRIS Form 10-K at 31 (Feb. 29, 2016); see also id. at 5 (definition of MSO ). Thus, Petitioner s own public filings establish the existence of indemnification agreements with at least some of the Delaware Defendants, and the fact that at least some of the Delaware Defendants had exercised their rights under those agreements at least as early as February 29,

27 Other public documents show that under the indemnification agreements with the Delaware Defendants, Petitioner has a legal right to control the litigation. Petitioner s Corporate Terms and Conditions of Sale include the following indemnification provision: 22. INDEMNIFICATION. ARRIS will defend and hold Customer harmless against damages finally awarded and will, at ARRIS expense, defend any third party claim, suit, or proceeding ( Claim ) brought against Customer insofar as such Claim is based on an allegation that a Product as provided to Customer directly infringes a valid patent or copyright. ARRIS will pay Damages as the result of the Claim provided that (i) Customer promptly notifies ARRIS of the Claim, (ii) Customer gives ARRIS all applicable evidence in Customer s possession, custody or control, and (iii) Customer gives ARRIS reasonable assistance in and sole control of the defense and all negotiations for its settlement or compromise. Ex. 2007, ARRIS Corporate Terms and Conditions of Sale 9 at 2. In order to trigger Petitioner s obligation to pay damages (as Petitioner acknowledged in its SEC filings), at least one of the Delaware Defendants had to have give[n] ARRIS reasonable assistance in and sole control of the defense and all negotiations for its settlement or compromise. Id. (emphasis added)

28 Documents produced by Petitioner in discovery in this proceeding 10 not only confirm the existence of indemnification agreements, 10 The parties have agreed to limited additional discovery regarding Petitioner s involvement in the Delaware litigation, but disagreements remain concerning the scope of further additional discovery. Patent Owner plans to seek Board authorization to move for additional discovery, and to supplement this preliminary response should Petitioner produce discovery relevant to the issues addressed herein. 11 Petitioner produced Exhibits 2008, 2015 and 2017 in heavily redacted form, as attached hereto. Patent Owner has requested Petitioner to produce those documents again with more limited redactions but Petitioner has not yet made such a production. Patent Owner plans to seek Board authorization to supplement this preliminary response if necessary to address such production. 19

29 20

30 12 NextLevel Systems, Inc. (under the name General Instrument Corp.) was acquired by Motorola in 2000, and the relevant unit of Motorola was acquired by ARRIS in Ex. 2031, ARRIS Press Release, ARRIS Acquires Motorola Home: Creates Premier Video Delivery and Broadband Technology Company (Apr. 17, 2013); Ex. 2032, New York Times, Motorola Completes General Instrument Acquisition (Jan. 6, 2000). 21

31 22

32 As explained above, Cisco is also a supplier of equipment to the Delaware Defendants, and also a non-party IPR petitioner; however, Cisco readily conceded that all of the Delaware Defendants were real parties in interest with respect to its petitions on the same patents. 15 On the law firm Winston & Strawn LLP, filed a nearly identical answer to the complaint in the Delaware litigation on behalf of each of those Defendants. See, e.g., Ex. 2024, Atlantic Broadband Answer (Nov. 23, 2015); Ex. 2025, Mediacom Answer (Nov. 23, 2015); Ex. 2026, Wave Answer (Nov. 23, 2015); Ex. 2027, WOW Answer (Nov. 15 Because Cisco filed its IPR petitions less than one year after service of the complaints, it did not have to concern itself with a potential 315(b) time bar. 23

33 23, 2015). And Petitioner s later conduct shows that Petitioner has maintained a close coordination with the Defendants through the course of the Delaware litigation. For example, the same litigation counsel at Winston & Strawn LLP has been representing both Defendants and Petitioner with respect to subpoenas served on Petitioner in the Delaware litigation. See Ex. 2028, ARRIS s Objections and Responses to ChanBond s Subpoena for Documents at 16 (Jan. 16, 2017); Ex. 2029, ARRIS Group, Inc. s Objections and Responses to ChanBond s Subpoena to Testify at a Deposition at 17 (Jan. 22, 2018). Further, in its discovery responses Petitioner did not deny the existence of privileged discussions relating to the Delaware litigation. Ex. 2030, Petitioner s Responses to Patent Owner s Requests for Additional Discovery at 7 (Apr. 13, 2018). In summary, the evidence shows that Petitioner had a contractual right to control the Delaware litigation as early as The same law firm represented both Defendants and Petitioner throughout the litigation. 24

34 Under these facts, Petitioner was in privity with the Delaware Defendants. One who prosecutes or defends a suit in the name of another to establish and protect his own right, or who assists in the prosecution or defense of an action in aid of some interest of his own is as much bound as he would be if he had been a party to the record. Montana v. United States, 440 U.S. 147, 154 (1979) (quoting Souffront v. Compagnie des Sucreries, 217 U.S. 475, (1910); internal quotation marks omitted) (holding U.S. government in privity with plaintiff in prior litigation, where the government funded and directed the litigation). The fact that Petitioner may have shared that control with Defendants is of no import, because what matters is whether Petitioner had the actual measure of control or opportunity to control that might reasonably be expected between two formal coparties, as is most often found when an indemnitor participates in defending an action brought against its indemnitee. Wright & Miller In plain language, Petitioner had the power whether exercised or not to call the shots. Gonzalez, 27 F.3d at 758. Thus, the Delaware Defendants time bar under 315(b) extends to Petitioner. This result is consistent with the application of claim and issue preclusion in patent cases. In Bros, Inc. v. W. E. Grace Mfg. Co., 261 F.2d 428 (5th Cir. 1958), a manufacturer was held to be bound by a prior judgment of infringement in an action brought against a distributor of its products, because the defense of that 25

35 earlier suit had been taken over lock, stock and barrel by the manufacturer. 261 F.2d at The court reasoned that [w]here the non-party actively and avowedly conducts the defense, manages and directs the progress of the trial at its expense and under its supervision, the outcome, which if favorable would have redounded to his benefit, if adverse becomes sauce for goose and gander alike, and binding under principles of res judicata. Id. at 430. See also Tidewater Patent Dev. Co. v. Kitchen, 421 F.2d 680, 681 (4th Cir. 1970) (adverse judgment of patent infringement against customer would be fully binding upon manufacturer who undertook the defense of the action, assumed its management and control, and undertook the burden of compensation of counsel). Conversely, indemnitors were found not to be in privity with accused infringers where the evidence, unlike here, did not show that the indemnitor had a right to control the litigation. See WesternGeco LLC v. ION Geophysical Corp., No , 2018 WL , at *7 8 (Fed. Cir. May 7, 2018); Wi-Fi One, LLC v. Broadcom Corp., 887 F.3d 1329, (Fed. Cir. Apr. 20, 2018). 3. Indemnification Is a Substantive Legal Relationship that Creates Privity with the Delaware Defendants In addition to having a legal right to control the Delaware litigation, Petitioner has a sufficient legal relationship with the Delaware Defendants to support a finding of privity. Under Taylor v. Sturgell, nonparty preclusion may 26

36 be justified based on a variety of pre-existing substantive legal relationships between the person to be bound and a party to the judgment. 553 U.S. at 894 (2008) (internal citations and quotation marks omitted). While Taylor does not expressly list indemnification as one of those relationships, courts have found indemnification to constitute a close legal relationship that creates privity between indemnitor and indemnitee. [I]t is well established that one interest sufficient to bring a non-party within the ambit of res judicata is a legal duty, right, or interest dependent wholly or in part on the outcome of a lawsuit. Vulcan, Inc. v. Fordees Corp., 658 F.2d 1106, 1110 (6th Cir. 1981) (finding nonparty to prior litigation to be bound by judgment of patent infringement, based inter alia on [b]oth [its] right to indemnity and its duty to indemnify [which] depended in part on the pending litigation ). See also Intel Corp. v. U.S. Int l Trade Comm n, 946 F.2d 821, (Fed. Cir. 1991) (finding party in privity with inventor for purposes of assignor estoppel, based inter alia on an indemnity agreement between the inventor and the party that created a significant relationship between them ); Wi-Fi One, 887 F.3d at 1353 (Reyna, dissenting) ( Substantive legal relationships may take a variety of forms, including indemnitee and indemnitor. ). 4. Petitioner Was Adequately Represented in the Delaware Litigation An additional basis for a finding of privity between Petitioner and the Delaware Defendants is that Petitioner was adequately represented in the district 27

37 court litigation. Under Taylor v. Sturgell, a nonparty may be bound by a judgment because she was adequately represented by someone with the same interests who was a party to the suit. 553 U.S. at 894 (internal citations and quotation marks omitted). Specifically, [a] party s representation of a nonparty is adequate for preclusion purposes only if, at a minimum: (1) The interests of the nonparty and her representative are aligned; and (2) the party understood herself to be acting in a representative capacity. In addition, adequate representation sometimes requires (3) notice of the original suit to the persons alleged to have been represented. Id. at 900 (internal citations and quotation marks omitted). The conditions for adequate representation outlined in Taylor are met here. Petitioner cannot dispute that the first and third factors are met, because Petitioner s potential damages liability depends on the portion of Defendants damages liability attributable to its products, and Petitioner was on notice of the original suit at least as early as Delaware Defendants. In addition, when the, they became nominal Defendants acting in a representative capacity for Petitioner. Because Defendants expected to be fully indemnified by Petitioner with respect to liability arising from 28

38 Petitioner s products, they became mere intermediaries or representatives of Petitioner in the Delaware litigation. 5. The Board Has Denied Institution Under Similar Facts Under the facts in this case, Petitioner fits the profile of a nominal plaintiff with no substantial interest in these IPR challenges apart from those of its [customers], the Delaware Defendants. RPX Corp. v. Virnetx Inc., Case IPR , slip op. at 9 (PTAB June 5, 2014) (paper 49). The Board has previously denied institution under similar facts. In General Electric Co. v. TransData, Inc., Case IPR (PTAB Apr. 15, 2015) (paper 34), the Board denied institution based on an indemnification agreement between the Petitioner and one of its customers, which had been previously sued for patent infringement and was thus time-barred under 315(b). The agreement granted Petitioner sole authority to direct and control all defense, settlement, and compromise negotiations, but required it to solicit [the customer s] input and assent on all material decisions in the case. Id. at 8 9, 10. The Board found that such an agreement created privity in the infringement litigation because Petitioner had the opportunity to control any litigation arising from the service on [its customer] of a complaint alleging infringement of the [challenged] patent. Id. at 10. The Board rejected Petitioner s argument that it never had actual control of the [infringement] lawsuit, [because] the presence or 29

39 absence of actual control is immaterial to the privity determination. Id. Indeed, actual control is not required; the opportunity to exert the appropriate level of control is sufficient. Id. at 8. Nor was it dispositive that Petitioner s right of control was less than total, because courts have found privity where an entity s control over the litigation was substantial, even though not complete. Id. at 9. The Board also rejected Petitioner s argument that it was not in privity with its customer with respect to the PTAB proceeding (as opposed to the district court litigation), because the focus is on the relationship of the later proceeding s petitioner to the earlier proceeding s parties. Id. at Thus, 315(b) bar[s] institution of a later proceeding when the later proceeding s petitioner and an entity involved in earlier litigation are privies with respect to the earlier litigation. Id. at 12. More recently, in Cisco Systems, Inc. v. Hewlett Packard Enterprise Co., Case IPR (PTAB Mar. 16, 2018) (paper 9), the Board denied institution based on a longstanding relationship between Petitioner and a thirdparty company which was time barred under 315(b). Cisco, slip op. at 15. Specifically, Petitioner had invested in the third-party company, acquired boardlevel representation, and ultimately acquired the company after the petition was filed. Id. at 10, 14. Despite the fact that at the time the petition was filed the two companies were still separate, the Board found that such longstanding 30

40 relationship can be evidence that [Petitioner] is representing [the third party s] interest, rather than its own and, thus, it is pursuing its Petition as a proxy for [the third party]. Id. at 14. Notably, the Board denied institution without any record evidence of control or funding of the inter partes proceeding by the third-party company, or any evidence of Petitioner s control over the third-party company s infringement litigation. In fact, the Board noted that a non-party may be a [real party in interest] even in the absence of control or an opportunity to control. Id. at 16. The present facts follow a similar pattern as the General Electric decision, and support application of the policies stated in Cisco. The terms of the indemnification agreement between Petitioner and the Delaware Defendants are indistinguishable from those that were found to create privity in General Electric. And because Petitioner is not a defendant in the infringement litigation, but would be facing indemnification liability, Petitioner s interest in this proceeding is derived from that of [the Delaware Defendants] rather than any interest independent of [them]. Cisco, slip op. at 15. Thus, the Board should deny institution under 35 U.S.C. 315(b) because Petitioner does not have 31

41 an independent reason to file the IPR aside from being in privity with the Delaware Defendants. Id. at 16. Conversely, cases where the Board rejected a privity argument based on indemnification can be distinguished at least because in those cases, unlike here, there was no record evidence of control by the nonparty. See, e.g., Apple Inc. v. Achates Reference Publishing, Inc., Case IPR , slip op. at 12 (PTAB June 2, 2014) (paper 90) (indemnification agreement does not give the [indemnitor] the right to intervene or control [the indemnitee s] defense to any charge of patent infringement ); Ventex Co., Ltd. v. Columbia Sportswear North America, Inc., Case IPR , slip op. at 7 (PTAB July 26, 2017) (paper 17) ( The mere existence of an indemnity obligation, standing alone, does not establish privity or that Petitioner had the ability to present arguments and evidence in the district court litigation. ); Intel Corp. v. Alacritech, Inc., Case IPR , slip op. at 22 (PTAB Nov. 30, 2017) (paper 11) ( we are not persuaded that [the indemnitee] exercised or could have exercised control. ). Likewise, in a prior proceeding involving the same Petitioner 16 and indemnification agreements with some of its customers, the Board rejected Patent Owner s privity argument because 16 The Petitioner in the C-Cation proceeding (ARRIS Group, Inc.) was the predecessor in interest of the current Petitioner (ARRIS International plc). See Ex. 2002, ARRIS Form 10-K at 2 (Feb. 29, 2016). 32

42 in that proceeding Patent Owner [did] not provide evidence sufficient to demonstrate that [Customer] provided prompt notification to Petitioner, and that Petitioner exercised sole control or full authority according to the Agreements. Notably absent is evidence of Petitioner s conduct in the district court proceeding from which we could infer that Petitioner exercised control or could have exercised control as provided for in the Agreements. ARRIS Group, Inc. v. C-Cation Techs., LLC, Case IPR , slip op. at 10 (PTAB Nov. 24, 2014) (paper 22). Such evidence, however, is available here. Moreover, as discussed above, sole control or full authority is not required for a determination of privity. [I]t should be enough that the nonparty has the actual measure of control or opportunity to control that might reasonably be expected between two formal coparties. Wright & Miller B. The Board Should Deny Institution Under 35 U.S.C. 314(a) Separately and independently from whether Petitioner is in privity with the Delaware Defendants, institution of trial on this strategically-delayed third wave of petitions would be unfair to Patent Owner and an inefficient use of Board and other judicial resources. Thus, the Board should exercise discretion to deny institution under 35 U.S.C. 314(a). The precedential opinion in General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, Case IPR (PTAB Sept. 6, 2017) (paper 19) provides 33

43 a non-exclusive list of seven baseline factors that the Board should consider when applying 314(a). [N]ot all the factors need to weigh against institution for [the Board] to exercise [its] discretion under 314(a). One World Techs., Inc. v. The Chamberlain Group, Inc., Case IPR , slip op. at 5 (PTAB Dec. 13, 2017) (paper 10). And at any rate, as discussed below, each of the seven factors weights in favor of denying institution. 1. Whether the same petitioner previously filed a petition directed to the same claims of the same patent The present petition challenges claims 1 and 11 of the 565 Patent. The same claims were challenged in one of the Cisco IPRs. Petition at 1, Case IPR (Sept. 26, 2016) (paper 1). Cisco identified Petitioner ARRIS as a real party in interest in that petition. Id. at 2. The Board denied institution of inter partes review as to all challenged claims. Cisco Systems, Inc., v. ChanBond LLC, Case IPR , slip op. at 2 (Mar. 29, 2017) (paper 10). Petitioner is simply incorrect when it states that [t]he facts that ARRIS has not previously filed a petition, nor is a real party-in-interest to a previously filed petition, directed to the 679 [sic; 565] Patent, should be dispositive that the Board should not exercise its discretion to deny institution. Pet. at 7. The Board s discretion under 35 U.S.C. 314(a) is not limited to situations where the same party files multiple petitions, and the General Plastic factors provide a useful 34

44 framework for analyzing the facts and circumstances present in this case, in which a different petitioner filed a petition challenging a patent that had been challenged already by previous petitions. NetApp Inc. v. Realtime Data LLC, Case IPR , slip op. at 9 (PTAB Jan. 25, 2018) (paper 17). For example, in NetApp the Board noted that the petitioner cite[d] no authority in support of its position that the first [General Plastic] factor is dispositive, and ultimately declined to institute trial under 314(a) despite the fact that the two prior petitions against the same patent had been filed by different petitioners. Id. at Similarly, in Samsung Electronics Co., Ltd. v. Elm 3DS Innovations, LLC, Case IPR (PTAB Oct. 17, 2017) (paper 11), the Board exercised discretion to deny institution under 314(a) where earlier petitions against the same patents had been filed by parties other than the petitioner; despite the fact that at the time those earlier petitions had been filed the petitioner was not even accused of infringing the patent at issue. Samsung, slip op. at And in ESET, LLC v. Finjan, Inc., Case IPR (PTAB Feb. 15, 2018) (paper 12) the Board denied institution where a nonparty to two previous proceedings filed a third IPR petition challenging the same patent and moved for joinder. Quoting General Plastic, the Board expressed concern for undue inequities and prejudices to Patent Owner, and recognize[d] that shifts in arguments and the use of multiple, staggered petitions challenging the same patent and same claims raise the potential for abuse. ESET, slip op. at 5 35