Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 1 of 9 Page ID #:1644
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`
`
`John P. Schnurer, Bar No. 185725
`JSchnurer@perkinscoie.com
`Yun (Louise) Lu, Bar No. 253114
`LLu@perkinscoie.com
`Kyle R. Canavera Bar No. 314664
`KCanavera@perkinscoie.com
`PERKINS COIE LLP
`11452 El Camino Real, Suite 300
`San Diego, CA 92130-2080
`Telephone: 858.720.5700
`Facsimile: 858.720.5799
`
`Attorneys for Defendants
`TCT Mobile (US) Inc., Huizhou TCL Mobile
`Communication Co., Ltd., and Shenzhen TCL
`Creative Cloud Technology Co., Ltd.
`
`
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`UNITED STATES DISTRICT COURT
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`CENTRAL DISTRICT OF CALIFORNIA
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`ANCORA TECHNOLOGIES, INC.,
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`Plaintiff,
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`v.
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`TCT MOBILE (US) INC., HUIZHOU
`TCL MOBILE COMMUNICATION
`CO. LTD., and SHENZHEN TCL
`CREATIVE CLOUD TECHNOLOGY
`CO., LTD.,
`
`
`
`Defendants.
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`
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`Case No. 8:19-CV-02192-GW-ASx
`(LEAD CASE)
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`Case No. 2:20-cv-01252-GW-ASx
`(CONSOLIDATED CASE)
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`Judge: Hon. George H. Wu
`Judge: Hon. Alka Sagar
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`TCL’S REPLY MEMORANDUM
`OF POINTS AND AUTHORITIES
`IN SUPPORT OF MOTION TO
`STAY PENDING INTER PARTES
`REVIEW
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`TCL’S REPLY TO OPPO TO
`MOTION TO STAY
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`Case No. 8:19-CV-02192-GW-ASx
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 2 of 9 Page ID #:1645
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`I.
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`INTRODUCTION
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`The Court should grant TCL’s Motion to Stay Pending inter partes review.
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`Two separate petitions are pending institution before the Patent Office, and for all
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`claims of the only patent asserted in this lawsuit. Both petitions will receive
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`institution decisions within five months. After accusing a third-party smartphone
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`maker of infringing the asserted patent based on Android functionality, Ancora
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`waited three years to bring nearly identical allegations against TCL in this lawsuit.
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`Ancora waited so long that the patent had expired by the time it brought this
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`lawsuit. There is no way that Ancora can reasonably claim that waiting a few more
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`months in the name of conserving Court and party resources will effect any
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`prejudice on a non-practicing entity like Ancora.
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`Moreover, the change in policy by the Patent Office within the last year
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`applying its NHK and Fintiv precedents warrants a pre-institution stay in a way that
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`this Court did not have occasion to consider in its past decisions. As TCL
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`explained in its opening brief, the Patent Office’s institution decisions are now
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`highly dependent on the stage of the district court case, and denying a stay in this
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`case is likely effective to cause denial of TCL’s inter partes review petition without
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`the merits ever being considered. (TCL Opening Br. (Dkt. No 59-1) at 12–17.)
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`Ancora’s primary responses are that this case is actually very far along
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`(Opposition Br. (Dkt. No. 63) at 5–7), and that TCL should have filed its petition
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`for inter partes review sooner. (Id. at 12–13.) Regarding the former, Ancora did
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`not even bother to serve any discovery requests until two days before the instant
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`motion was filed. This case is not far along. Regarding the latter, TCL filed its
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`inter partes review petition within the one-year period that Congress saw fit to
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`allow a defendant in a patent infringement lawsuit, and Ancora admits that TCL
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`filed its petition based on prior art that it discovered about four months prior to the
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`filing. (Opposition Br. at 6.) Ancora does not even attempt to reconcile its delay of
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`TCL’S REPLY TO OPPO TO
`MOTION TO STAY
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`-1-
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`Case No. 8:19-CV-02192-GW-ASx
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 3 of 9 Page ID #:1646
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`three years in bringing this lawsuit with its complaint about TCL taking a
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`reasonable four months to file its petition for inter partes review.
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`For the reasons stated in TCL’s Opening Brief and here, the unique facts of
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`this case warrant the granting of a stay at this stage. TCL respectfully requests the
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`Court grant the Motion on that basis.
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`II. ARGUMENT
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`A. The Early Stage of the Case Favors a Stay.
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`Ancora disagrees that this case is in its infancy, but the facts belie Ancora’s
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`assertion. Where no depositions have been scheduled and expert and fact discovery
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`will presumably not close for many months, a case is still in its earliest stages.
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`Polaris PowerLED Techs., LLC v. Hisense Elecs. Mfg. Co. of Am. Corp. et al., No.
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`20-00123, 2020 WL 6064638, at *2 (C.D. Cal. Aug. 26, 2020). The Court here has
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`yet to set a trial date and deadlines for fact and expert discovery. As TCL pointed
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`out in its opening brief (see TCL Opening Br. at 7), courts have routinely stayed
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`cases at this stage of the litigation. See Wonderland Nursery Goods Co. v. Baby
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`Trend, Inc., No. 14-01153, 2015 WL 1809309, at *3 (C.D. Cal. Apr. 20, 2015)
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`(finding the stage of litigation weighed in favor of a stay where fact discovery was
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`underway, expert discovery had not begun, and a trial date had not yet been set);
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`PersonalWeb Techs., LLC v. Facebook, Inc., 2014 WL 116340, at *3 (N.D. Cal.
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`Jan. 13, 2014) (granting stay although “a claim construction order has been issued
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`and the close of fact discovery is fast approaching” because “a substantial portion
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`of the work—expert discovery, summary judgment, pre-trial preparation, and trial
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`itself—lies ahead”).
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`The cases Ancora cites in the Opposition are inapposite. (See Opposition Br.
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`at 7 (Dkt. No. 63).) For instance, in the DMF, Inc. v. AMP Plus, Inc. case, trial was
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`approximately four months away, fact discovery had closed, and expert discovery
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`was scheduled to close in two weeks from when the Court issued its order denying
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`defendant’s motion for a stay. No. 2:18-cv-07090, 2019 WL 9077477, at *7 (C.D.
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`TCL’S REPLY ISO
`MOTION TO STAY
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 4 of 9 Page ID #:1647
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`Cal. Dec. 13, 2019). In Interwoven, Inc. v. Vertical Computer Sys., Inc., it was the
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`plaintiff who moved to stay the case pending reexamination, which it sought a year
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`and three months into litigation and to obtain a tactical advantage after receiving an
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`unfavorable claim construction order. No. C 10-04645, 2012 WL 761692, at *2
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`(N.D. Cal. Mar. 8, 2012).
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`In contrast, the instant case is in its early stages. The parties have performed
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`mandatory exchanges of infringement contentions and invalidity contentions, but
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`neither party has supplemented those disclosures. Neither party had exchanged
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`written discovery prior to the filing of the Motion other than: (1) TCL seeking the
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`previous invalidity contentions Ancora received in its many other lawsuits, and (2)
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`Ancora serving its first discovery requests two days before the filing of the instant
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`Motion, to which TCL’s response is not due until two weeks from now (November
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`12, 2020). Ancora clearly took its time in conducting discovery and cannot
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`credibly deny the discovery is far from complete.
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`This factor weighs strongly in favor of a stay.
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`B. A Stay Pending Inter Partes Review Would Simplify the Issues in
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`This Case.
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`Ancora argues that it is merely speculative that inter partes review trial will
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`be instituted. But any stay is at least in part speculative. A stay pending settlement
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`speculates on the possibility that the parties will finalize settlement papers. A stay
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`pending appeal speculates on affirmance of the court’s decision. A stay pending
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`inter partes review is speculative of the results of the inter partes review
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`proceeding, regardless of whether the stay occurs pre-institution or post-institution.
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`TCL’s request for a stay is of course at least in part speculative, because it is a
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`request for stay and not dismissal.
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`Ancora further argues that the Court must deny TCLs’ motion because the
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`’941 Patent “has already withstood significant scrutiny before both the USPTO and
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`courts including twice before the Federal Circuit.” (Opposition Br. at 8.) Ancora
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`TCL’S REPLY ISO
`MOTION TO STAY
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 5 of 9 Page ID #:1648
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`has conveniently omitted the fact that the ’941 Patent has never been the subject of
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`inter partes review. Only in the ex parte reexamination did the tribunal in question
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`consider prior art-based invalidity of the ’941 Patent. The tribunal in an ex parte
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`reexamination is a single patent examiner with no participation by the adverse
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`party. Notably, TCL’s petition for inter partes review does not rely on any of the
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`prior art considered during that ex parte reexamination. In fact, the prior art
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`references cited in TCL’s inter partes review petition have never been before the
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`USPTO in any prior proceeding. The inter partes review proceeding has a high
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`likelihood of success as the prior art references disclose every element of every
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`asserted claim.
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`Even if, arguendo, the simplification of issues is speculative, the potential to
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`save judicial resources favors a stay. Polaris PowerLED Techs., LLC, 2020 WL
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`6064638, at *2 (granting motion to stay despite denials of institution in prior inter
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`partes review proceedings). Because TCL has petitioned for review of all the
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`claims asserted in this action, the outcome of the inter partes review may
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`significantly narrow the scope and complexity of the litigation and the parties’ and
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`Court’s resources are likely to be conserved. And even if some asserted claims
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`survive, this case would be narrowed substantially—and inconsistent positions
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`taken by Ancora as to claim scope in attempting to survive inter partes review
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`could be addressed by this Court or a jury. See PersonalWeb Techs., LLC v.
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`Facebook, Inc., No. 5:13-CV-01356-EJD, 2014 WL 116340, at *4 (N.D. Cal. Jan.
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`13, 2014) (“Even if the PTAB affirms the validity of every asserted claim … these
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`cases would still benefit as such a strong showing would assist in streamlining the
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`presentation of evidence and benefit the trier of fact by providing the expert opinion
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`of the PTO. Indeed, allowing these invalidity arguments to be determined once,
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`employing the specialized expertise of the PTO, produces the exact results—
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`avoiding duplicative costs and efforts and averting the possibility of inconsistent
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`judgments—intended by the AIA and previous procedures.”)
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`TCL’S REPLY ISO
`MOTION TO STAY
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 6 of 9 Page ID #:1649
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`Ancora’s argument that inter partes review would not resolve TCL’s pleaded
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`affirmative defenses and counterclaims is non-sensical as they all are dependent on
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`the validity of the asserted claims and will become moot if the claims are
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`invalidated during the inter partes review. Further, Ancora’s reliance on
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`Rensselaer Polytechnic Inst. v. Apple, Inc., No. 1:13-cv-0633, 2014 WL 201965
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`(N.D.N.Y. Jan. 14, 2014), is misplaced, because invalidity is likely to be the most
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`significant affirmative defense presented at trial. Thus, resolution of all or part of
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`that affirmative defense would result in a significant simplification of issues for
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`trial. In any case, Ancora’s argument that a delay in resolving TCL’s affirmative
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`defenses works a “sever prejudice” on Ancora makes no sense. They are TCL’s
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`affirmative defenses. If there is any greater difficulty in proving those affirmative
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`defenses due to the passage of time during a stay, that only benefits Ancora, not
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`TCL.
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`Accordingly, this factor weighs in favor of a stay.
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`C. Ancora Would Suffer No Undue Prejudice from a Stay.
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`As TCL argued in its opening brief (TCL’s Opening Br. at 11), Ancora is a
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`non-practicing entity and does not risk prejudice from additional lost sales or
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`revenue should this action be stayed. See Polaris PowerLED Techs., 2020 WL
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`6064638, at *3; Prime Focus Creative Servs. Canada Inc. v. Legend3D, Inc., No.
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`CV-15-2340, 2015 WL 12746207, at *7 (C.D. Cal. Sept. 23, 2015) (“Courts have
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`consistently found that a patent licensor cannot be prejudiced by a stay because
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`monetary damages provide adequate redress for infringement.”) (quoting
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`Evolutionary Intelligence, LLC v. Facebook, Inc., No. 13–4202, 2014 WL 261837,
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`at *3 (N.D. Cal. Jan. 23, 2014)). In fact, because the ’941 Patent expired before
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`Ancora brought this lawsuit, it was legally impossible for TCL to infringe the ’941
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`Patent by the date on which this lawsuit was commenced. Ancora is only, and can
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`only, seek damages for activities performed by TCL entirely before this lawsuit
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`began.
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`TCL’S REPLY ISO
`MOTION TO STAY
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 7 of 9 Page ID #:1650
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`Ancora protests that a stay of the case pending inter partes review is “highly
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`prejudicial.” (Opposition Br. at 10.) Yet, Ancora cannot and does not specify how
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`or why it would suffer prejudice, or why damages are insufficient to compensate a
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`non-practicing entity like itself. Ancora argues that it has an interest in the timely
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`enforcement of its patent rights and that a stay would delay the conclusion of the
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`case. (Id.) But, as Courts have repeatedly found, “[t]he mere possibility of delay,
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`inherent in all proceedings, is insufficient to constitute undue prejudice.” Polaris
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`PowerLED Technologies, LLC, 2020 WL 6064638, at *3 (citing PersonalWeb
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`Techs., LLC v. Apple Inc., 69 F. Supp. 3d 1022, 1029 (N.D. Cal. 2014).
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`Further, because Ancora waited three years after filing a nearly identical
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`lawsuit against HTC based on the same Android functionality, it is clear that
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`Ancora will not be prejudiced by a stay of approximately five months pending an
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`institution decision on TCL’s inter partes review petition.
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`Ancora further argues it would be prejudiced by a stay because “Defendants
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`waited until the very last day of their statutory cut-off to file their IPR petition,”
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`referencing the Telesign Corp. factors for weighing prejudice to the non-moving
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`party. (Opposition Br. at 11.) Contrary to Ancora’s argument, TCL acted
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`diligently in filing its inter partes review petition. TCL filed the IPR petition less
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`than six months after Ancora served its Disclosure of Asserted Claims and
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`Infringement Contentions on April 1, 2020. There is nothing wrong with filing the
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`IPR before the statutory bar date, a time period set by Congress. Ancora’s lack of
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`diligence argument is misplaced.
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`The “time of the request for the stay” factor favors TCL as it sought a stay of
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`the case within approximately one month after filing its inter partes review petition.
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`See Polaris PowerLED Techs., 2020 WL 6064638, at *3 (finding defendants acted
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`diligently in filing its IPR petition within three to four months of plaintiff
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`identifying asserted claims and in moving to stay the case shortly after filing its IPR
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`petition); see also Evolutionary Intelligence LLC v. Yelp Inc., No. 13-03587, 2013
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`TCL’S REPLY ISO
`MOTION TO STAY
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`-6-
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`Case No. 8:19-CV-02192-GW-ASx
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 8 of 9 Page ID #:1651
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`WL 6672451, at *9 (N.D. Cal. Dec. 18, 2013) (granting stay where moving party
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`filed IPR petition five months after service of infringement contentions); Cypress
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`Semiconductor Corp. v. GSI Tech., Inc., No. 13-CV-02013, 2014 WL 5021100, at
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`*4 (N.D. Cal. Oct. 7, 2014) (“[P]rovided an accused infringer is diligent, delay due
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`to preparing an inter partes review petition, ascertaining the plaintiff's theories of
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`infringement, or otherwise researching the patents that have been asserted in an
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`action does not unduly prejudice the patent owner.”) (quoting Asetek Holdings, Inc
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`v. Cooler Master Co., No. 13-CV-00457-JST, 2014 WL 1350813, at *5 (N.D. Cal.
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`Apr. 3, 2014)). Given TCL’s diligence in pursuing inter partes review, Ancora
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`cannot credibly allege that TCL engaged in tactical gamesmanship in seeking this
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`stay.
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`The “relationship of the parties” factor strongly favors a stay. As noted
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`above, Ancora is a non-practicing entity and delayed filing this case until the patent
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`had long expired. Ancora cannot reasonably argue it will be prejudiced by a few-
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`months stay given that it waited years before filing this lawsuit. The “status of
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`review proceedings” factor is at most neutral or tilts in favor of a stay because
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`denying a stay in this case would in effect deny TCL’s right for seeking an inter
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`partes review on the asserted claims given the NHK/Fintiv precedent.
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`Thus, this factor strongly weighs in favor of a stay.
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`III. CONCLUSION
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`For the reasons stated above and in its Opening Brief, TCL requests that the
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`Court stay this case pending inter partes review of the ’941 Patent.
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`TCL’S REPLY ISO
`MOTION TO STAY
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`Case 8:19-cv-02192-GW-AS Document 64 Filed 10/29/20 Page 9 of 9 Page ID #:1652
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`DATED: October 29, 2020
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`Respectfully submitted,
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`/s/ Kyle R. Canavera
`John P. Schnurer, Bar No. 185725
`JSchnurer@perkinscoie.com
`Yun (Louise) Lu, Bar No. 253114
`LLu@perkinscoie.com
`Kyle R. Canavera, CA Bar No. 314664
`KCanavera@perkinscoie.com
`PERKINS COIE LLP
`11452 El Camino Real, Suite 300
`San Diego, CA 92130-2080
`Tel.: 858.720.5700
`Fax.: 858.720.5799
`
`Attorneys for Defendants
`TCT Mobile (US) Inc., Huizhou TCL
`Mobile Communication Co., Ltd., and
`Shenzhen TCL Creative Cloud Technology
`Co., Ltd.
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`TCL’S REPLY ISO
`MOTION TO STAY
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`Case No. 8:19-CV-02192-GW-ASx
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