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DEFENDANTS’ REPLY IN SUPPORT
OF MOTION TO STAY PENDING
APPEAL
DEMAND FOR JURY TRIAL
Hearing Date: Dec. 20, 2013, 1:30 pm
Assigned to: Hon. Dana M. Sabraw
Courtroom: 13A
In re e.Digital Cases
D
EFENDANTS’ REPLY IN SUPPORT OF MOTION TO STAY
1
I. Introduction
Staying the
In re e.Digital cases pending the outcome of Plaintiff’s appeal of the
Collateral Estoppel Order will conserve the Court’s and the parties’ resources, and avoid
multiple
Markman hearings—and related briefing—and other disruptions that would
otherwise significantly slow the progress of these consolidated cases. These cases are in
their infancy, with all discovery other than claim construction-related discovery having
been previously stayed, and nothing, including trial, having been scheduled after the mid-
March, 2014
Markman hearing. No depositions—even those related to claim
construction—have been scheduled or taken, and the only document discovery that has
taken place is that which is required by the Local Patent Rules and requests relating to
claim construction issues. The parties’ opening claim construction briefs are not due until
two months from now—February 11, 2014—and the
Markman hearing is scheduled for
March 18, 2014. According to the Federal Circuit’s own published statistics, Plaintiff’s
appeal of the Collateral Estoppel Order likely will be resolved less than a year after it was
docketed, and possibly much sooner—as early as July, 2014. Moreover, Plaintiff cannot
seek injunctive relief because it does not make or sell any products covered by any of the
patents-in-suit, including the ‘774 and ‘108 patents that are at issue in the appeal, and any
money damages will accrue during the stay, at least until the patents-in-suit expire in
2014. Thus, these cases are just beginning, and a stay at this stage will provide neither an
advantage to Defendants nor a disadvantage to Plaintiff. Rather, staying the cases will
prevent the Court and the parties from having to waste time and resources litigating claim
construction issues multiple times.
The Court consolidated the present cases for purposes of the Collateral Estoppel
issue, claim construction and discovery in order to provide a measure of economy and
focus for the Court and the parties. There is no reason to separate them now by staying
only certain cases and proceeding with other cases, so that they would be procedurally
staggered, as Plaintiff proposes. Indeed, such a division would defy the Court’s purposes
for consolidating these cases. Instead, the Court should stay all of these consolidated
cases until the Federal Circuit resolves Plaintiff’s appeal of the Collateral Estoppel Order.
1
II. Argument
A. The
In re e.Digital Cases Remain In The Earliest Stages Of Litigation
The Court consolidated these cases for purposes of the Collateral Estoppel issue,
claim construction and discovery. (Dkt. No. 21, CMO, at ¶¶ 1, 6; Dkt. No. 22 Discovery
Order; Dkt. No. 40, Order re Oral Argument for hearing on the Collateral Estoppel
Motion.) The Court also stayed all discovery other than discovery relating to claim
construction issues until after the claim construction ruling. (Dkt. No. 21, CMO, at ¶ 9.)
Since Defendants filed the Opening Brief, the parties have exchanged proposed
claim terms and constructions, and filed a Joint Claim Construction Chart, Worksheet and
Hearing Statement. (Dkt. No. 62.) In their Joint Hearing Statement, the parties agreed
that the
Markman hearing can be conducted in one day, subject to the Court’s schedule.
(
Id. at 11-12.) The parties’ are scheduled to exchange opening claim construction briefs
on February 11, 2014, and responsive claim construction briefs on February 25, 2014.
(Dkt. No. 42 at 2.) While the
Markman hearing was originally scheduled for two days—
March 18 and 19, 2014—when there were four patents at issue, the parties now anticipate
that the hearing will be a single day. (
Id.; Dkt. No. 62 at 11-12.)
Plaintiff relies on a class action case to argue that the early stage of these cases is
somehow not relevant to the present issue. (Dkt. No. 65, Oppn., at 9 (
citing Doe 1 v. AOL
LLC
, 719 F. Supp. 2d 1102 (N.D. Cal. 2010)).) But the In re e.Digital cases are not a
class action, and the Collateral Estoppel Order is based on a single legal issue, rather than
any factual issues that are unique to only one of these consolidated cases. Therefore, the
1
Many of Plaintiff’s arguments in its Opposition mirror the arguments that Plaintiff raised
in its opposition to the co-pending Defendants’ Motion to Amend the Stipulated Partial
Judgments. (
See, e.g., Dkt. No. 65, Oppn., at 2.) Rather than burden the Court with
repetitive arguments and discussion, Defendants incorporate the relevant pleadings. (
See,
e.g., Apple
, Case No. 13-cv-00785-DMS-WVG, Dkt. Nos. 53 (Motion to Amend) and 66
(Rely in Support of Motion to Amend), and related pleadings.)
Collateral Estoppel Order, and the Federal Circuit’s consideration of it, is equally relevant
in all of the
In re e.Digital cases, and the early stage of these cases is material to the
Court’s consideration of whether to stay these cases.
Cf. Tierravision, Inc. v. Google,
Inc.
, No. 11-cv-2170 DMS (BGS), 2012 WL 559993, at *2 (S.D. Cal. Feb. 21, 2013). In
Tierravision
, this Court granted a motion to stay even though the “case is not in its infancy
[and the] parties have already put forth a great deal of time and effort by completing their
preliminary infringement and invalidity contentions and discovery related to claim
construction.”
Id. The Court also noted that, while claim construction briefing and
argument were “rapidly approaching,” the case was “not so advanced that a stay is
inappropriate. Rather, considering the general time line of patent litigation,
there is more
work ahead of the parties and the Court than behind the parties and the Court
.
” Id.
(emphasis added).
2
The early stage of the consolidated
In re e.Digital cases supports staying the cases
pending the Federal Circuit’s consideration of the Collateral Estoppel Order.
B. The
ZTE, BlackBerry, Pantech and SanDisk Cases Should Be Stayed
Along With All Of The
In re e.Digital Cases
Plaintiff correctly notes that the ‘774 patent has been dismissed, with prejudice,
from the
SanDisk case, and that the ‘108 patent has not been asserted against SanDisk.
(Dkt. No. 65, Oppn., at 3-4.) Plaintiff is also correct that SanDisk, ZTE, BlackBerry and
Pantech have joined the present motion but have not joined the co-pending Motion to
Amend. (
Id. at 4.) However, that does not divest the Court of jurisdiction to stay any of
those cases, all of which were consolidated with the other
In re e.Digital cases, pending
the outcome of Plaintiff’s appeal. (
Id.) To the contrary, the parties agree that the Court’s
2
The ‘108 patent is also asserted in the 39 new cases that Plaintiff filed in this Court
during the last week. Thus, each of those new cases may be affected by the
Huawei
appeal and there is certainly “more work ahead of the parties and the Court than behind
inherent power to control its docket provides broad discretion to stay proceedings. (Dkt.
No. 54-1, Opening Brief, at 5; Dkt. No. 65, Oppn., at 5.)
There is no reasonable basis for staying only some of the consolidated
In re
e.Digital
cases and continuing forward with others, as Plaintiff suggests. (Dkt. No. 65,
Oppn., at 2-4 (proposing that the Court not stay certain of the
In re e.Digital cases).)
Indeed, staggering the cases would undermine the purpose for which the Court
consolidated these cases in the first place. (Dkt. No. 21, CMO, at ¶ 1 (“The Court finds
these cases will be most efficiently managed by coordinating them for purposes of initial
infringement and invalidity contentions and claim construction. Therefore, these cases are
deemed consolidated for discovery and claim construction purposes.”).) The Court should
stay
all of these consolidated In re e.Digital cases pending the outcome of Plaintiff’s
appeal of the Collateral Estoppel Order, so that the cases can remain aligned and the Court
and the parties avoid unnecessary multiple proceedings.
3
C. Plaintiff Relies On Inapposite Cases Involving Criminal Appeals, And
Preliminary Injunctions Rather Than Patent Issues
Defendants explained in the opening brief that this Court has held that when
deciding a motion to stay, district courts have considered such factors as “(1) whether a
stay will simplify the issues in question and trial of the case; (2) whether discovery is
complete and whether a trial date has been set; and (3) whether a stay would unduly
prejudice or present a clear tactical disadvantage to the nonmoving party.” (Dkt. No. 54-
1, Opening Brief, at 5 (
quoting Tierravision, 2012 WL 559993 at *1)); see also Software
Rights Archive, LLC v. Facebook, Inc.
, Case No. C-12-3970 RMW, 2013 WL 5225522, at
*2 (N.D. Cal. Sept. 17, 2013);
Semiconductor Energy Lab. v. Chimei Innolux Corp., No.
SACV 12-21-JST (JPRx), 2012 WL 7170593, at *1 (C.D. Cal. Dec. 19, 2012).
Defendants addressed each of these points in the Opening Brief and showed that in the
present situation all three factors support a stay. (
Id. at 6-9.)
3
The parties have settled Mach Speed, Philips, JVC, Motorola and FUJIFILM, and some
Plaintiff responds by reciting five factors set forth in
Keating v. Office of Thrift
Supervision
, 45 F.3d 322, 324-325 (9th Cir. 1995). (Dkt. No. 65, Oppn., at 6.) However,
in
Keating, the court addressed the narrow issue of “whether to stay civil proceedings in
the face of a parallel criminal proceeding.”
Keating, 45 F.3d at 324. The court directed
decision makers to “consider ‘the extent to which the defendant’s fifth amendment rights
are implicated” and set forth the factors quoted in Plaintiff’s Opposition as additional
factors to be considered.
Id. at 324-25. Thus, Keating has no relevance to the present
situation.
Plaintiff also argues that Defendants must meet essentially the same requirements
as are required for a preliminary injunction. (Dkt. No. 65, Oppn., at 6-7, 8 (
citing Humane
Soc’y of the U.S. v. Gutierrez
, 558 F.3d 896 (9th Cir. 2009)).) In Gutierrez, appellant
moved the appellate court for a stay of an administrative ruling pending appeal.
Gutierrez
, 558 F.3d at 896 (citing Winter v. Natural Resources Defense Council, Inc., ---
U.S.---, 129 S.Ct. 365, 364 (2008)). In
Winter, the Supreme Court addressed the propriety
of a preliminary injunction pursuant to the traditional preliminary injunction factors, and
did
not address the standards for a motion to stay. Winter, 129 S.Ct. at 364. Moreover,
Gutierrez
involved an appeal from a final judgment in a single administrative matter.
Here, Plaintiff has filed an interlocutory appeal, without first seeking Rule 54(b)
certification, from one of a group of consolidated cases, to allow the Federal Circuit an
opportunity to immediately review the Collateral Estoppel Order. If the Federal Circuit
reverses the Collateral Estoppel Order, Plaintiff will seek leave to apply that ruling in all
of the
In re e.Digital cases. Thus, the present situation is analogous to Tierravision,
Software Rights Archive
and Semiconductor Energy Lab. In each of those cases, the
Court stayed the case pending review of the patents-in-suit, because the review would
simplify and focus issues such as invalidity.
See Tierravision, No. 11-cv-2170 DMS
(BGS), 2012 WL 559993, at *1-*2;
Software Rights Archive, No. C-12-3970 RMW, 2013
WL 5225522, at *2-*4;
Semiconductor Energy Lab., No. SACV 12-21-JST (JPRx), 2012
WL 7170593, at *2-*3. Like those cases, Plaintiff’s appeal of the Collateral Estoppel
Order will at a minimum provide guidance on claim construction issues, and could moot
the current litigation entirely by confirming the construction of the disputed “sole
memory” limitation of the ‘774 patent. As discussed in Defendants’ Opening Brief, the
‘737 and ‘170 patents, which remain at issue in these consolidated cases, claim priority to
the ‘774 patent, which is at issue in the
Huawei appeal. (Dkt. No. 54, Opening Brief, at 1-
2, 6-7.) Therefore, the Federal Circuit’s decision regarding the ‘774 patent will also have
a direct effect on the scope of the ‘737 and ‘170 patents. For example, if the Federal
Circuit affirms the Collateral Estoppel Order and holds Plaintiff to the construction of the
“sole memory” limitation entered in the Colorado case, this Court and the parties will be
able to rely on that decision to abbreviate their review of the ‘774 patent for purposes of
determining the scope of the ‘737 and ‘170 patents. Notably, Plaintiff did not contest in
its Opposition either the relationship of the ‘774 patent to the ‘737 and ‘170 patents or the
relevance of those relationships to the present motion.
D. Plaintiff Will Not Be Prejudiced By A Stay
Plaintiff’s sole argument regarding a purported prejudice is that these cases will be
delayed. (Dkt. No. 65, Oppn., at 16-17.) While a stay will pause the pending cases,
“delay alone is insufficient to demonstrate prejudice.”
Tierravision, No. 11-cv-2170 DMS
(BGS), 2012 WL 559993, at *2. The pending cases will not be unduly delayed if they are
stayed pending Plaintiff’s appeal of the Collateral Estoppel Order. As Defendants
explained in their Opening Brief, according to statistics published by the Federal Circuit,
the median disposition time for cases at the Federal Circuit is less than ten months from
the time that an appeal is docketed. (Dkt. No. 54-11, Opening Brief Ex. 9.) Therefore,
the
Huawei appeal will likely be concluded by July, 2014 and perhaps earlier. Plaintiff
ignores these facts and argues, without support or explanation, that “[i]t is likely that oral
argument will not occur for many months and a decision not issued for many months
As such, there can be no assurances that the
Huawei appeal will be concluded within a
reasonable time.” (Dkt. No. 65, Oppn., at 16.)
In addition to ignoring the Federal Circuit’s own statistics, Plaintiff ignores the
schedule for the
Huawei appeal, which was issued before Defendants filed their Opening
Brief. (Dkt. No. 54-1, Opening Brief, at 5 (summarizing schedule for the
Huawei appeal.)
However, on December 6, 2013, Plaintiff filed an unopposed motion in the Federal Circuit
seeking a two-week extension of the deadline for Plaintiff to file its opening brief in the
Huawei
appeal, so that Plaintiff can address the defect in the Federal Circuit’s jurisdiction
over the
Huawei appeal, which Defendants identified. (Dkt. Nos. 66-2 and 66-3, Reply in
Support of Motion to Amend Exhs. 4 and 5.) The Federal Circuit granted Plaintiff’s
motion on December 9, 2013. Therefore, Plaintiff’s opening brief in the
Huawei appeal is
now due on December 23, 2013, and Huawei’s responsive brief—if it opposes the
appeal—is due on February 3, 2014. Plaintiff’s reply brief, if any, is due on February 17,
2014. As Defendants explained in their Opening Brief, the Federal Circuit is presently
scheduling oral arguments on patent cases approximately 3-4 months after briefing is
scheduled. (
Therefore, notwithstanding Plaintiff’s extension to the briefing schedule, the oral
argument in the
Huawei appeal will likely be scheduled in May, 2014 and the appeal fully
resolved by July, 2014.
Moreover, Plaintiff does not practice any of the patents-in-suit, including the two
patents at issue in the
Huawei appeal, and Plaintiff does not compete with any of the
Defendants in the marketplace. (Dkt. No. 54-12, Opening Brief Ex. 10, at 7-10.) Thus,
assuming,
arguendo, that any of the asserted patents are found to be not invalid and
infringed, monetary damages will be Plaintiff’s only remedy in any event, and those
damages will cover whatever infringement is found during the stay.
Software Rights
Archive
, Case No. C-12-3970 RMW, 2013 WL 5225522, at *6. It should also be noted
that Plaintiff waited
15 years after the ‘737 and ‘170 patents issued to assert those patents
against Defendants, during which time Plaintiff watched Defendants develop and market
numerous products that incorporate flash memory. On the other hand, Defendants
promptly moved for this stay once they learned of Plaintiff’s appeal. (
Huawei, Rec. Doc.
No. 74 (10/8/13 Notice of Appeal).) Therefore, Plaintiff cannot reasonably argue that a
delay pending Plaintiff’s own appeal, which Plaintiff has already delayed once, will
materially affect Plaintiff, much less cause any prejudice to Plaintiff.
E. Defendants Should Be Allowed To Represent Their Own Interests In
The Appeal Of The Collateral Estoppel Order
Defendants previously explained, in the context of the Motion to Amend, that there
is no basis for requiring them to rely on another party, which competes with many of the
Defendants in the marketplace, to represent all of the Defendants’ interests in the appeal
of the Collateral Estoppel Order. (Dkt. No. 53-1, Mtn to Amend, at 1-2, 8-9; Dkt. No. 66,
Reply in Support of Mtn to Amend, at 8-10.) Nonetheless, Plaintiff again argues that
Defendants should be forced to assume that Huawei will fully represent all of Defendants’
interests in the appeal. (Dkt. No. 65, Oppn., at 9-11.)
Notably, Plaintiff continues to fight production of its settlement agreement with
Huawei, even though that agreement would presumably put to rest all of the questions
regarding whether Huawei benefits from a less vigorous, and less expensive, effort on
appeal, and indeed whether Huawei has any incentive at all to participate in the appeal.
Cf. Allflex USA, Inc. v. Avid Identification Sys., Inc.
, 704 F.3d 1362, 1369 (Fed. Cir. 2013)
(noting that a settlement agreement that allows for appeal of an issue but “avoid[s]
encouraging the adverse party to participate in the appeal…results in the highly
unsatisfactory situation in which the court finds itself with a one-party appeal, where there
is no adversarial presentation and the court consequently has reduced confidence in any
ruling it might enter.”). Therefore, Defendants have no reason to believe that one of their
competitors can—or will—represent their interests in the appeal.
Plaintiff also argues, again, that Defendants simply need to file an
amicus brief in
the
Huawei appeal. (Dkt. No. 65, Oppn., at 11.) However, Plaintiff does not say whether
it would oppose Defendants’ motion to file an
amicus brief or a motion to allow
Defendants to participate in the oral argument.
See Fed. R. App. P. 29(a) (requiring
motion for leave to file an
amicus brief) & (g) (“An amicus curiae may participate in oral
argument only with the court’s permission.”). More importantly, an
amicus brief filed by
one or more Defendants would not provide the Federal Circuit jurisdiction to address the
Collateral Estoppel Order in that Defendant’s case, or any of the other
In re e.Digital
cases, whereas a Rule 54(b) certification would provide appellate jurisdiction and
guarantee Defendants the right to participate fully in the appeal process, including oral
argument. Thus, even if the Federal Circuit allowed Defendants to file
amicus briefs and
allowed Defendants to participate in oral argument, neither of which is a certainty in this
situation, Defendants would not be able to participate fully in the appeal.
F. There Is No Rational Reason To Conduct Multiple
Markman Hearings
Plaintiff argues that the Court “has already set two hearing dates for claim
construction in this case, March 18 and March 19, 2014.” (Dkt. No. 65, Oppn., at 12.)
Plaintiff confuses a two-day
Markman hearing, which the Court scheduled before the
Collateral Estoppel Order removed two of the patents-in-suit from the cases, and two
separate
Markman
hearings. Moreover, the parties have agreed that the Markman hearing
can be conducted in one day, subject to the Court’s schedule. (Dkt. No. 62, Joint
Statement, at 11-12.) The parties filed the Joint Statement four days before Plaintiff filed
its Opposition, yet Plaintiff ignored these facts.
Plaintiff also argues that the Court should amend its consolidation of these cases
and allow certain of them to proceed while others are stayed, so that only some of these
cases will immediately proceed to a
Markman hearing. (Dkt. No. 65, Oppn. at 2-4
(arguing that certain of these consolidated cases proceed); 12-16 (arguing that the Court
can, and should, allow for multiple
Markman
hearings.) The basic point that the Court
has discretion to manage its own docket is correct. But Plaintiff does not explain why it
believes that the Court
should break up these cases and conduct multiple Markman
hearings. Considering that the
Huawei appeal could be resolved as early as July, 2014,
and possibly sooner, there is no reason for the Court to stagger these cases and conduct
multiple, seriatim
Markman hearings. Instead, the Court should stay these consolidated
cases pending the resolution of Plaintiff’s appeal of the Collateral Estoppel Order.
Dated: December 13, 2013
GREENBERG TRAURIG LLP
By: /s/ Kevin J. O’Shea
Kevin J. O’Shea
osheak@gtlaw.com
77 West Wacker Drive, Suite 3100
Chicago, IL 60601
Telephone: (312) 456-1025
Facsimile: (312) 899-0385
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