Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 1 of 23 Page ID #:964
`
`
`LATHAM & WATKINS LLP
` Bradley A. Hyde (Bar No. 301145)
`bradley.hyde@lw.com
`650 Town Center Drive – 20th Floor
`Costa Mesa, California 92626
`Telephone: (714) 540-1235
`Facsimile: (714) 755-8290
`
`LATHAM & WATKINS LLP
` Charles H. Sanders (pro hac vice)
`charles.sanders@lw.com
` Anant K. Saraswat (pro hac vice)
`anant.saraswat@lw.com
`200 Clarendon Street
`Boston, Massachusetts 02116
`Telephone: (617) 948-6000
`Facsimile: (617) 948-6001
`
`LATHAM & WATKINS LLP
` Lesley Hamming (pro hac vice)
`lesley.hamming@lw.com
`330 N. Wabash Avenue, Suite 2800
`Chicago, Illinois 60611
`Telephone: (312) 876-7700
`Facsimile: (312) 993-9767
`
`Attorneys for Defendants SEOUL
`SEMICONDUCTOR CO., LTD and
`SEOUL SEMICONDUCTOR, INC.
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`SOUTHERN DIVISION
`
`
`
`
` CASE NO. 8:17-CV-00981-JVS-JCG
`
`DEFENDANTS’ NOTICE OF MOTION AND
`MOTION TO STAY PENDING INTER PARTES
`REVIEW; MEMORANDUM OF POINTS AND
`AUTHORITIES
`
`Judge: Honorable James V. Selna
`Date: March 26, 2018
`Time: 1:30 pm
`Courtroom: 10C
`
`
`
`Plaintiff,
`
` DOCUMENT SECURITY SYSTEMS,
`INC.,
`
`
`
`
`v.
`
`
`SEOUL SEMICONDUCTOR CO.,
`LTD. and SEOUL
`SEMICONDUCTOR, INC.,
`
`
`
`Defendants.
`
`
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 2 of 23 Page ID #:965
`
`
`TO DOCUMENT SECURITY SYSTEMS, INC. AND ITS ATTORNEYS OF
`RECORD:
`PLEASE TAKE NOTICE that on March 26, 2018, at 1:30 p.m., or as soon
`thereafter as counsel may be heard, in Courtroom 10C before the Honorable James
`V. Selna of the United States District Court for the Central District of California,
`located at 411 West Fourth Street, Santa Ana, California, Defendants Seoul
`Semiconductor Co., Ltd. (“SSC”) and Seoul Semiconductor, Inc. (“SSI”)
`(collectively, “Seoul” or “Defendants”) will, and hereby do, move to stay all
`proceedings in this litigation pending the outcome of the inter partes review
`(“IPR”) of all three asserted patents and any appeals therefrom.
`Seoul makes this motion on the grounds that: the case is in the early stages
`of fact discovery and the Markman process has not yet begun; the IPR proceedings
`will simplify the issues in question and potentially resolve this case; and a stay will
`not cause DSS any undue prejudice or a clear tactical disadvantage. Entering a
`stay now would avoid wasting the Court’s and the parties’ resources. This motion
`is supported by the attached Memorandum of Points and Authorities; the
`Declaration of Anant K. Saraswat and exhibits thereto; the files, records, and
`pleadings in this action; and any arguments presented at the time of the hearing on
`this motion.
`Seoul respectfully requests oral argument.
`L.R. 7-3 Statement
`This motion is made following the conference of counsel under Local Rule
`7-3, which took place on February 5 and 21, 2018.
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`ii
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 3 of 23 Page ID #:966
`
`
`
`
`Dated: February 26, 2018
`
`
`LATHAM & WATKINS LLP
`
`
`
`By: /s/ Charles H. Sanders
`Bradley A. Hyde (Bar No. 301145)
`Charles H. Sanders (pro hac vice)
`Anant K. Saraswat (pro hac vice)
`Lesley M. Hamming (pro hac vice)
`
`Attorneys for Defendants
`SEOUL SEMICONDUCTOR CO., LTD.
`and SEOUL SEMICONDUCTOR, INC.
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`iii
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 4 of 23 Page ID #:967
`
`
`
`TABLE OF CONTENTS
`
`Page
`MEMORANDUM OF POINTS AND AUTHORITIES.......................................... 1
`I.
`INTRODUCTION .......................................................................................... 1
`II.
`BACKGROUND AND PROCEDURAL HISTORY .................................... 2
`A.
`Background On Plaintiff DSS .............................................................. 2
`B.
`Procedural History And Case Status .................................................... 4
`III. LEGAL STANDARDS .................................................................................. 5
`IV. ARGUMENT ................................................................................................. 6
`A.
`The Early Stage Of Discovery Strongly Favors A Stay ...................... 6
`B.
`A Stay Is Very Likely To Simplify The Issues .................................... 8
`C.
`A Stay Will Not Unduly Prejudice DSS ............................................ 12
`1.
`Status of the IPRs..................................................................... 12
`2.
`The relationship between the parties ....................................... 13
`3.
`Timing of the IPR petitions and motion to stay ...................... 15
`CONCLUSION ............................................................................................ 16
`
`V.
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`
`
`iv
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 5 of 23 Page ID #:968
`
`
`
`TABLE OF AUTHORITIES
`
`CASES
`
` Page(s)
`
`Allergan Inc. v. Cayman Chem. Co.,
`No. SACV 07-01316JVS (RNBx), 2009 WL 8591844
`(C.D. Cal. Apr. 9, 2009) ....................................................................................... 6
`Aten Int’l Co., Ltd v. Emine Tech. Co.,
`No. SACV 09-0843 AG (MLGx), 2010 WL 1462110
`(C.D. Cal. Apr. 12, 2010) ..................................................................................... 7
`Avago Techs. Fiber IP (Sing.) Pte. Ltd. v. IPtronics Inc.,
`No. 10-CV-02863-EJD, 2011 WL 3267768
`(N.D. Cal. July 28, 2011) ................................................................................... 15
`Aylus Networks, Inc. v. Apple Inc.,
`856 F.3d 1353 (Fed. Cir. 2017) ............................................................................ 9
`Black Hills Media, LLC v. Pioneer Elecs. (USA) Inc.,
`No. CV 14-00471 SJO (PJWx), 2014 WL 4638170
`(C.D. Cal. May 8, 2014) ..................................................................................... 14
`Core Optical Techs., LLC v. Fujitsu Network Commc’ns, Inc.,
`No. SACV 16-00437-AG-JPRx, 2016 WL 7507760
`(C.D. Cal. Sept. 12, 2016) .................................................................... 6, 9, 12, 14
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016) ......................................................................................... 9
`In re Cygnus Telecomms. Tech., LLC Patent Litig.,
`385 F. Supp. 2d 1022 (N.D. Cal. 2005) ............................................................... 5
`DSS Tech. Mgmt., Inc. v. Apple, Inc.,
`No. 14-cv-05330-HSG, 2015 WL 1967878
`(N.D. Cal. May 1, 2015) ................................................................ 3, 8, 11, 13, 15
`Evolutionary Intelligence LLC v. Yelp Inc.,
`No. C-13-03587 DMR, 2013 WL 6672451
`(N.D. Cal. Dec. 18, 2013) ............................................................................... 7, 15
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`v
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 6 of 23 Page ID #:969
`
`
`Game & Tech. Co. v. Riot Games, Inc.,
`Nos. CV 16-06486-BRO (SK) & CV 16-06499-BRO (SK),
`2016 WL 9114147 (C.D. Cal. Nov. 4, 2016) ............................................... 13, 14
`Inogen, Inc. v. Inova Labs, Inc.,
`No. SACV 11-1692-JST (ANx), 2012 WL 4748803
`(C.D. Cal. Mar. 20, 2012) ................................................................................... 12
`Limestone v. Micron Tech.,
`Nos. SA CV 15-0278-DOC (RNBx) et al., 2016 WL 3598109
`(C.D. Cal. Jan. 12, 2016) ................................................................... 5, 10, 11, 14
`Nichia Corp. v. Vizio, Inc.,
`No. SA CV 16-00545 SJO (MRWx), 2017 WL 3485767
`(C.D. Cal. Feb. 2, 2017) ...................................................................... 5, 7, 12, 13
`PersonalWeb Techs., LLC v. Facebook, Inc.,
`Nos. 5:13-CV-01356-EJD et al., 2014 WL 116340
`(N.D. Cal. Jan. 13, 2014) .................................................................................... 11
`Pi-Net Int’l, Inc. v. Hertz Corp.,
`Nos. CV 12-10012 PSG (JEMx) et al., 2013 WL 7158011
`(C.D. Cal. June 5, 2013) ........................................................................... 8, 10, 12
`Prime Focus Creative Servs. Can. Inc. v. Legend3D, Inc.,
`No. CV-15-2340-MWF (PLA), WL 12746207
`(C.D. Cal. Sept. 23, 2015) ................................................................................ 5, 9
`Realtime Data LLC v. Teradata Operations, Inc.,
`No. SACV 16-02743 AG (FFMx), 2017 WL 3453295
`(C.D. Cal. Feb. 27, 2017) ............................................................................... 5, 12
`SCA Hygiene Prod. Aktiebolag v. Tarzana Enters., LLC,
`No. CV 17-04395-AB (JPRx), 2017 WL 5952166
`(C.D. Cal. Sept. 27, 2017) .................................................................................. 11
`Semiconductor Energy Lab. Co. v. Chimei Innolux Corp.,
`No. SACV 12-21-JST (JPRx), 2012 WL 7170593
`(C.D. Cal. Dec. 19, 2012) ..................................................................................... 8
`Skip Hop, Inc. v. Munchkin, Inc.,
`No. CV 15-06339 SJO (AGRx), 2016 WL 7042093
`(C.D. Cal. Mar. 15, 2016) ................................................................... 5, 6, 7, 9, 12
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`vi
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 7 of 23 Page ID #:970
`
`
`Star Envirotech, Inc. v. Redline Detection, LLC,
`No. SAC 12-01861 JGB (MLGx), 2013 WL 1716068
`(C.D. Cal. Apr. 3, 2013) ................................................................................. 5, 12
`TeleSign Corp. v. Twilio,
`No. CV 15-3240 PSG (SSx), 2016 WL 6821111
`(C.D. Cal. Mar. 9, 2016) .................................................................... 9, 10, 12, 15
`Universal Elecs., Inc. v. Universal Remote Control, Inc.,
`943 F. Supp. 2d 1028 (C.D. Cal. 2013) ................................................................ 6
`VirtualAgility Inc. v. Salesforce.com, Inc.,
`759 F.3d 1307 (Fed. Cir. 2014) .......................................................................... 14
`Wonderland Nursery Goods Co. v. Baby Trend, Inc.,
`No. EDCV 14-01153-VAP (SPx), 2015 WL 1809309
`(C.D. Cal. Apr. 20, 2015) ................................................................................... 13
`STATUTES
`35 U.S.C. § 313 .......................................................................................................... 9
`35 U.S.C. § 314(b) ..................................................................................................... 4
`35 U.S.C. § 316(a)(11) .............................................................................................. 4
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`vii
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 8 of 23 Page ID #:971
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`I.
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`INTRODUCTION
`Seoul moves to stay this action pending final resolution of the inter partes
`review (“IPR”) at the United States Patent and Trademark Office (“PTO”) of all
`asserted claims of the three asserted patents, and any appeals therefrom. The
`relevant factors and totality of the circumstances support granting a stay.
`First, litigation is still in its early stages. While the parties have exchanged
`contentions and initial discovery requests, the case remains at an early stage of fact
`discovery. There has been minimal document production, no depositions have
`been scheduled or occurred, and trial is about a year and a half away. The parties
`have also not yet begun the Markman process, and the Markman hearing is five
`months away.
`Second, IPR is likely to simplify the issues in this case because all or some
`of the asserted claims may be found invalid. A stay will allow the parties and the
`Court to avoid devoting resources to the Markman process to address terms in
`claims that may be held invalid. Furthermore, to the extent any asserted claims
`survive the IPR process, the IPR record may provide guidance as to the meaning of
`particular claim terms.
`Third, a stay will not unduly prejudice Plaintiff Document Security Systems,
`Inc. (“DSS”) because DSS does not manufacture or sell LED products and thus
`does not compete in the marketplace with Seoul. If the Patent Trial and Appeal
`Board (“PTAB”) institutes proceedings based on the IPR petitions Seoul has filed,
`DSS will not be prejudiced by a stay until resolution of those proceedings by July
`2019. If the PTAB were to decide not to institute IPR proceedings, DSS will only
`need to wait until the PTAB’s institution decisions, all of which will issue by July
`2018, to resume this litigation. Courts routinely find that a stay, even prior to
`institution of IPR proceedings, does not unduly prejudice a plaintiff such as DSS,
`which does not compete in the marketplace but rather only seeks royalties for
`
`AT T ORNEYS AT L AW
`
`
`
`
`US-DOCS\99072293.7
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`SEOUL’S MOTION TO STAY PENDING INTER
`PARTES REVIEW
`
`
`1
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 9 of 23 Page ID #:972
`
`
`alleged infringement. Furthermore, Seoul filed its IPR petitions early in this case,
`before the Markman process began, and granting a stay at this stage will not give
`Seoul any unfair tactical advantage.
`For these reasons, Seoul respectfully requests that the Court stay this action
`pending the outcome of IPR and any appeals therefrom.
`II. BACKGROUND AND PROCEDURAL HISTORY
`A. Background On Plaintiff DSS
`In November 2016, seven months before filing its initial complaint against
`Seoul in this action (Dkt. No. 1), DSS acquired a patent portfolio relating to light-
`emitting diode (“LED”) technology, which includes the patents-in-suit. Id. ¶ 2.
`Although DSS claims in its Second Amended Complaint that it has recently began
`“pursuing both licensing and commercialization” of this patent portfolio, Dkt. No.
`40 ¶ 2, there is no indication that DSS has ever designed, manufactured, or sold
`LED products. In its infringement contentions, DSS did not identify any product
`of its own or of any licensee that DSS contended practiced any asserted claim and
`did not produce any financial information regarding any such product, as required
`to preserve the ability to seek lost profits. See N.D. Cal. P.L.R. 3-1 and 3-2; Ex. A,
`Plaintiff Document Security Systems, Inc.’s Disclosure of Asserted Claims and
`Infringement Contentions.1
`DSS is in the business of “acquir[ing] intellectual property (“IP”) assets . . .
`for the purpose of monetizing these assets.” Ex. B, DSS 2017 Third Quarter 10-Q
`Report at 6. DSS purchased the LED-related patent portfolio, including the
`patents-in-suit, using funds from Brickell Key Investments LP (“Brickell”), a
`litigation investor, agreeing that a “monetization program [would] be implemented
`and managed by” DSS. Id. at 12; see also Ex. C, Proceeds Investment Agreement
`§§ Preamble and 3.3. Brickell specifically allocated a portion of the financing for
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`
`1 All exhibits are attached to the Declaration of Anant K. Saraswat filed herewith
`(“Saraswat Decl.”).
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`2
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 10 of 23 Page ID #:973
`
`
`DSS’s defense of IPR proceedings. Ex. B, DSS 2017 Third Quarter 10-Q Report
`at 13.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`In pursuit of its IP monetization efforts, DSS or its subsidiary DSS
`Technology Management, Inc. (“DSS Technology”) has sued many companies for
`patent infringement. DSS Technology filed patent infringement litigation against
`Apple, Inc. asserting patents related to “systems and methods of using lower power
`wireless peripheral devices” (the “Apple Litigation”); against Intel Corporation,
`Dell, Inc., Gamestop Corp., Conn’s Inc., Conn Appliances, Inc., NEC Corporation
`of America, Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, and AT&T, Inc.
`asserting patents related to transistor structures in semiconductors (the “Intel
`Litigation”); and against Qualcomm Incorporated, SK Hynix, Samsung
`Electronics, and others, asserting patents related to semiconductor device structure
`and fabrication (the “Qualcomm Litigation”). See id. at 13-14.
`Defendants in these litigations filed IPR petitions, and in every one of those
`cases that reached a final determination,2 the PTAB held all challenged claims
`unpatentable, to the extent DSS did not voluntarily disclaim them. See, e.g.,
`IPR2015-00369 (Paper 40) (Ex. F), IPR2015-00373 (Paper 39) (Ex. G), IPR2016-
`00288 (Paper 25) (Ex. H), IPR2016-01314 (Paper 12) (the same as Ex. H),
`IPR2016-00287 (Paper 25) (Ex. I), IPR2016-01311 (Paper 9) (the same as Ex. I),
`IPR2016-00290 (Paper 24) (Ex. J), IPR2016-01312 (Paper 9) (the same as Ex. J),
`IPR2016-00289 (Paper 25) (Ex. K), IPR2016-01313 (Paper 9) (the same as Ex. K),
`IPR2016-00782 (Paper 18) (Ex. L).3 The courts in the Apple Litigation, Intel
`Litigation, and Qualcomm Litigation all granted stays in the litigations pending
`IPR before institution of the IPR proceedings. See DSS Tech. Mgmt., Inc. v.
`Apple, Inc., No. 14-cv-05330-HSG, 2015 WL 1967878 (N.D. Cal. May 1, 2015);
`
`2 In one case, the PTAB instituted review but the parties settled before the final
`determination. See IPR2016-00192 (Papers 8 and 12) (Ex. D and E, respectively).
`3 IPR2016-01314 was joined with IPR2016-00288; IPR2016-01311 was joined
`with IPR2016-00287; IPR2016-01312 was joined with IPR2016-00290; and
`IPR2016-01313 was joined with IPR2016-00289.
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`3
`
`
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 11 of 23 Page ID #:974
`
`
`Ex. M, Order Granting Stay of Intel Litigation; Ex. N, Order Granting Stay of
`Qualcomm Litigation. DSS did not oppose the stay in either the Intel or
`Qualcomm Litigation. See Ex. M, Ex. N.
`Procedural History And Case Status
`B.
`On June 8, 2017, DSS filed its original complaint against Seoul in this
`action, alleging infringement of U.S. Patent Nos. 6,949,771 (“the ’771 patent”),
`7,256,486 (“the ’486 patent”), and 7,524,087 (“the ’087 patent”). See Dkt. No. 1.
`DSS subsequently filed two amended complaints asserting the same three patents.
`See Dkt. Nos. 18 & 40. On November 17, 2017, DSS served its infringement
`contentions asserting claims 1, 2, 3, 4, 6 and 7 of the ’771 patent, claims 1, 6, 7, 8,
`15 and 17 of the ’087 patent, and claims 1, 2 and 3 of the ’486 patent (collectively
`“the asserted claims”). See Ex. A, Plaintiff Document Security Systems, Inc.’s
`Disclosure of Asserted Claims and Infringement Contentions.
`Promptly after receiving DSS’s infringement contentions, Seoul prepared
`and filed IPR petitions against all asserted claims. Seoul filed an IPR petition
`against the ’771 patent on December 3, 2017 (IPR2018-00265) (Ex. O); an IPR
`petition against the ’486 patent on December 21, 2017 (IPR2018-00333) (Ex. P);
`and an IPR petition against the ’087 patent on January 25, 2018 (IPR2018-00522)
`(Ex. Q). The PTAB’s institution decisions are due by June 13 for the ’771 patent,
`June 28 for the ’486 patent, and July 29 for the ’087 patent. See 35 U.S.C.
`§314(b). If instituted, final decisions in the IPRs would be expected within the
`statutorily prescribed one-year period. See 35 U.S.C. § 316(a)(11).
`Seoul served its invalidity contentions on February 5, 2018. Saraswat Decl.
`¶ 4.
`The parties are now in the early stages of fact discovery. DSS has only
`produced the patents and their file histories. Saraswat Decl. ¶ 4. Seoul has
`produced the prior art cited in its invalidity contentions. Id. DSS served its first
`set of interrogatories and requests for production on January 24, and Seoul served
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`4
`
`
`
`

`

`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 12 of 23 Page ID #:975
`
`
`its first set of discovery requests on DSS on February 2. Id. ¶ 5. The parties have
`not yet negotiated a protective order. Id. Neither party has noticed or taken any
`depositions. Id. ¶ 6. Further, the parties have not yet begun the Markman process
`by exchanging proposed claim terms for construction. See Dkt. No. 37 at 2.
`The Markman hearing is scheduled for July 30, 2018. See id. at 3. Fact
`discovery closes on November 23, 2018. See id. at 2. Trial is tentatively
`scheduled to begin on July 18, 2019. See id. at 1.
`III. LEGAL STANDARDS
`“District courts have broad discretion to stay judicial proceedings pending
`inter partes review.” Nichia Corp. v. Vizio, Inc., No. SA CV 16-00545 SJO
`(MRWx), 2017 WL 3485767, at *4 (C.D. Cal. Feb. 2, 2017); Skip Hop, Inc. v.
`Munchkin, Inc., No. CV 15-06339 SJO (AGRx), 2016 WL 7042093, at *2 (C.D.
`Cal. Mar. 15, 2016); Star Envirotech, Inc. v. Redline Detection, LLC, No. SAC 12-
`01861 JGB (MLGx), 2013 WL 1716068, at *1 (C.D. Cal. Apr. 3, 2013). A stay
`may be “particularly justified” where the outcome of the IPR proceedings would
`be likely to assist the court in determining patent validity. Limestone v. Micron
`Tech., Nos. SA CV 15-0278-DOC (RNBx) et al., 2016 WL 3598109, at *2 (C.D.
`Cal. Jan. 12, 2016) (“Indeed, an auxiliary function of the IPR is to free the court
`from any need to consider prior art without the benefit of the PTO’s initial
`consideration.”) (citation omitted); see also In re Cygnus Telecomms. Tech., LLC
`Patent Litig., 385 F. Supp. 2d 1022, 1023 (N.D. Cal. 2005). District courts in the
`Ninth Circuit have explained that “[t]here is a liberal policy in favor of granting
`motions to stay proceedings pending the outcome of an IPR, especially in cases
`that are still in the initial stages of litigation and where there has been little or no
`discovery.” Prime Focus Creative Servs. Can. Inc. v. Legend3D, Inc., No. CV-15-
`2340-MWF (PLA), 2015 WL 12746207, at *2 (C.D. Cal. Sept. 23, 2015); see also
`Realtime Data LLC v. Teradata Operations, Inc., No. SACV 16-02743 AG
`(FFMx), 2017 WL 3453295, at *3 (C.D. Cal. Feb. 27, 2017).
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`5
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 13 of 23 Page ID #:976
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`There are three factors that a district court considers in deciding whether to
`stay an action pending IPR: (1) whether discovery is complete and whether a trial
`date has been set; (2) whether a stay will simplify the issues in question and trial of
`the case; and (3) whether a stay would unduly prejudice or present a clear tactical
`disadvantage to the nonmoving party. See Skip Hop, 2016 WL 7042093, at *2.
`While these factors are “significant,” they are not strictly limiting; “[r]ather the
`totality of the circumstances governs.” Universal Elecs., Inc. v. Universal Remote
`Control, Inc., 943 F. Supp. 2d 1028, 1030-31 (C.D. Cal. 2013) (quoting Allergan
`Inc. v. Cayman Chem. Co., No. SACV 07-01316JVS (RNBx), 2009 WL 8591844,
`at *2 (C.D. Cal. Apr. 9, 2009)). “[A] primary issue in an undue prejudice analysis
`is whether the parties are competitors such that a stay would cause irreparable
`harm to the patentee in the market.” Core Optical Techs., LLC v. Fujitsu Network
`Commc’ns, Inc., No. SACV 16-00437-AG-JPRx, 2016 WL 7507760, at *2 (C.D.
`Cal. Sept. 12, 2016).
`IV. ARGUMENT
`Each of the three factors strongly supports a stay pending IPR at this time:
`(1) discovery is at a very early stage and the Markman process has not begun; (2)
`IPR is likely to simplify the issues in litigation; and (3) a stay would not unduly
`prejudice DSS, which does not compete with Seoul in the marketplace, or present
`clear tactical disadvantage to DSS. Courts have routinely granted motions to stay
`pending IPR in the circumstances presented here, including in cases involving
`DSS.
`A. The Early Stage Of Discovery Strongly Favors A Stay
`This case is at an early stage of fact discovery. DSS has produced only
`copies of the patents and their file histories, and Seoul produced copies of prior art
`reference along with its invalidity contentions as well as some of DSS’s publically-
`available financial documents. Saraswat Decl. ¶ 4. DSS served its first set of
`discovery requests on January 24, and Seoul served its first set of discovery
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`
`
`
`
`6
`
`
`
`

`

`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 14 of 23 Page ID #:977
`
`
`requests on February 2. Id. ¶ 5. The parties have not yet negotiated a protective
`order. Id. Neither party has noticed or taken any depositions. Id. ¶ 6. The cutoff
`for fact discovery is about nine months from now, and the trial date is tentatively
`set to begin almost a year and a half from now. See Dkt. No. 37 at 1-2.
`Consequently, the first factor strongly favors a stay because this case is at an
`early stage of fact discovery. In Nichia, a court in this district found that this factor
`favored a stay even though the discovery cutoff was eight months away (versus
`nine months here) and the trial date was fifteen months away (versus seventeen
`months here). See 2017 WL 3485767, at *5. Indeed, a court in this district found
`that this factor favored a stay even though the fact discovery cutoff and trial were
`roughly half the amount of time away compared to the circumstances here. See
`Skip Hop, 2016 WL 7042093, at *2 (finding the stage of litigation favored a stay
`where the fact discovery cutoff was four months away and the trial date was nine
`months away). This district has also recognized that the stage of litigation favors a
`stay where, as here, no depositions or expert discovery has yet occurred. See Aten
`Int’l Co. v. Emine Tech. Co., No. SACV 09-0843 AG (MLGx), 2010 WL
`1462110, at *6 (C.D. Cal. Apr. 12, 2010).
`In addition, the parties have not yet begun the Markman process by
`exchanging proposed terms for claim construction, and the Court has not expended
`the time and resources to conduct a Markman hearing or issue a Markman order.
`See Dkt. No. 37. The parties are scheduled to exchange proposed terms on March
`21, preliminary constructions on April 18, and file their Joint Claim Construction
`and Prehearing Statement on May 2. Claim construction briefing is scheduled to
`take place in June and July with the Markman hearing scheduled for July 30.
`Many courts, including courts in this district, have found the fact that the parties
`have not yet filed Markman briefs or had a Markman hearing strongly favors a
`stay. See Nichia, 2017 WL 3485767, at *5 (finding the stage of litigation favored
`a stay where the parties had not filed Markman briefs); Skip Hop, 2016 WL
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES REVIEW
`
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`7
`
`
`
`

`

`Case 8:17-cv-00981-JVS-JCG Document 57 Filed 02/26/18 Page 15 of 23 Page ID #:978
`
`
`7042093, at *2 (same); Evolutionary Intelligence LLC v. Yelp Inc., No. C-13-
`03587 DMR, 2013 WL 6672451, at *4 (N.D. Cal. Dec. 18, 2013) (granting a stay,
`stating, “[T]he court ha[d] not substantially intervened in the action such as by
`conducting a Markman hearing or issuing a claim construction order.”); Aten, 2010
`WL 1462110, at *6 (finding that the fact that no claim construction had taken place
`favored a stay).
`Where, as here, “there is more work ahead of the parties and the Court than
`behind the parties and the Court,” a stay is appropriate. Pi-Net Int’l, Inc. v. Hertz
`Corp., Nos. CV 12-10012 PSG (JEMx) et al., 2013 WL 7158011, at *2 (C.D. Cal.
`June 5, 2013) (quoting Semiconductor Energy Lab. Co. v. Chimei Innolux Corp.,
`No. SACV 12-21-JST (JPRx), 2012 WL 7170593, at *2 (C.D. Cal. Dec. 19,
`2012)); see also Ex. R, Boston Sci. Corp. v. Edwards Lifesciences Corp., No.
`SACV 16-00730-CJC (GJSx) (C.D. Cal Sept. 8, 2017) (order granting stay)
`(“Boston Sci. Order Granting Stay”) (“Given the significant amount of time and
`resources the parties and the Court are expected to spend from now until trial, a
`stay at this stage is appropriate.”).
`Accordingly, because fact discovery is at an early stage and the Markman
`process has not even begun, this factor strongly favors a stay.
`B. A Stay Is Very Likely To Simplify The Issues
`Seoul’s IPR petitions challenge the validity of all patent claims asserted by
`DSS against Seoul. If the PTAB finds asserted claims invalid, then DSS will no
`longer be able to assert those claims. This will eliminate issues of claim
`construction, infringement, invalidity, and damages for those claims. As the court
`recognized in granting a stay before institution of IPR proceedings in DSS’s Apple
`Litigation, “[s]taying the case pending the outcome of IPR could simplify the case
`by rendering some or all of Plaintiff’s infringement claims moot, estopping
`Defendant from asserting any arguments it raised or reasonably could have raised
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`AT T ORNEYS AT L AW
`
`
`
`
`
`
`
`
`
`
`
`
`CASE NO. 8:17-cv-00981-JVS-JCG
`DEFENDANTS’ MOTION TO STAY PENDING
`INTER PARTES