Case 5:20-cv-05676-EJD Document 40 Filed 11/30/20 Page 1 of 20
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`YAR R. CHAIKOVSKY (SB# 175421)
`yarchaikovsky@paulhastings.com
`PHILIP OU (SB# 259896)
`philipou@paulhastings.com
`JOSEPH J. RUMPLER, II (SB# 296941)
`josephrumpler@paulhastings.com
`ANDY LEGOLVAN (SB# 292520)
`andylegolvan@paulhastings.com
`BERKELEY FIFE (SB# 325293)
`berkeleyfife@paulhastings.com
`BORIS LUBARSKY (SB# 324896)
`borislubarsky@paulhastings.com
`PAUL HASTINGS LLP
`1117 S. California Avenue
`Palo Alto, California 94304-1106
`Telephone: 1(650) 320-1800
`Facsimile: 1(650) 320-1900
`Attorneys for Plaintiff
`APPLIED MATERIALS, INC.
`
`
`IRELL & MANELLA LLP
`Morgan Chu (70446)
`MChu@irell.com
`Benjamin W. Hattenbach (186455)
`BHattenbach@irell.com
`C. Maclain Wells (221609)
`MWells@irell.com
`1800 Avenue of the Stars, Suite 900
`Los Angeles, California 90067-4276
`Telephone: (310) 277-1010
`Facsimile:
`(310) 203-7199
`
`
`Attorneys for Defendant
`DEMARAY LLC
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`APPLIED MATERIALS, INC.,
`Plaintiff,
`
`vs.
`DEMARAY LLC,
`Defendant.
`
`CASE NO. 5:20-cv-05676-EJD
`JOINT CASE MANAGEMENT
`STATEMENT
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`JOINT CASE MANAGEMENT
`STATEMENT
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`Plaintiff Applied Materials, Inc. (“Applied”) and Defendant Demaray LLC (“Demaray”)
`(collectively, “the Parties”), submit this Joint Case Management Statement.
`1. Jurisdiction and Service
`The Parties have a dispute about whether the Court has subject matter jurisdiction over
`this declaratory judgment action pursuant to 28 U.S.C. §§ 1331. Demaray identified the dispute
`over subject matter jurisdiction in its response (Dkt. No. 23) to Applied’s motion for preliminary
`injunction (Dkt. No. 14). Applied responded in its reply to the motion. Dkt. No. 26. Applied’s
`motion was taken under submission without oral argument on November 10, 2020. Dkt. No. 35.
`In response to Applied’s First Amended Complaint, on November 23, 2020, Demaray
`formally moved to dismiss for lack of subject matter jurisdiction, among other issues. Applied’s
`response is due December 7, 2020 and the motion is presently set for hearing on March 4, 2021.
`All current parties have been served.
`2. Facts
`On July 14, 2020, Demaray filed actions for patent infringement against Intel and
`Samsung in the Western District of Texas (“Texas cases”), alleging infringement of U.S. Patent
`Nos. 7,544,276 and 7,381,657 (the “Demaray Patents”) relating to Intel’s and Samsung’s use of
`certain physical vapor deposition (“PVD”) reactors, as allegedly configured by Intel and
`Samsung, to make Intel and Samsung semiconductor products. Dkt. Nos. 13-1, 13-2. Applied
`sells certain PVD reactors, including certain PVD reactors identified by Demaray in its
`complaints and infringement contentions in the Texas cases, to Intel and Samsung.
`On August 13, 2020, Applied filed the instant action seeking a declaratory judgment that
`Applied and Applied’s PVD reactor products do not directly or indirectly infringe the Demaray
`Patents. Dkt. No. 1. On September 1, 2020, Applied filed its First Amended Complaint to add
`claims for non-infringement based on alleged license and ownership claims to the Demaray
`Patents. Dkt. No. 13 (adding counts three through five).
`On September 4, 2020, Applied filed a motion for preliminary injunction seeking to enjoin
`Demaray from proceeding with the Texas cases during the pendency of this action. On
`November 10, 2020, the Court took the motion under submission without oral argument.
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`On November 19, 2020, the Parties held their Rule 26(f) conference.
`On November 23, 2020, Demaray filed its motion to dismiss under Federal Rules of Civil
`Procedure 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim
`upon which relief could be granted on the basis that Applied’s license/ownership-based claims
`(counts three through five of Applied’s First Amended Complaint) are based upon assignment
`provisions that a court in this district has previously ruled is unlawful and void.
`Principal factual issues in dispute: whether Applied or Applied’s products directly or
`indirectly infringe the Demaray Patents; and, whether Applied or Applied’s products cannot
`infringe the Demaray Patents because Applied has a license or ownership interest in the Demaray
`Patents.
`These issues are not intended to be final or exhaustive.
`3. Legal Issues
`The issues below are not intended to be final or exhaustive. The disputed points of law
`raised by the respective Parties include:
`A. Applied’s Position:
`The proper construction of any disputed claim term in the Demaray Patents; whether
`Applied or Applied’s products do not directly or indirectly infringe the Demaray Patents; whether
`Applied or Applied’s products cannot be found to infringe the Demaray Patents by reason of a
`license; whether Applied or Applied’s products cannot be found to infringe the Demaray Patents
`by reason of assignments from one or more of the named inventors of the Demaray Patents; and,
`whether this is an exceptional case and Applied should be awarded costs and attorneys’ fees.
`B. Demaray’s Position:
`Whether the Court has subject matter jurisdiction for Applied’s declaratory judgment
`claims (only if the Court determines that it has jurisdiction, the Court may need to address the
`factual and legal issues raised by Applied); whether Applied is estopped from asserting that the
`assignment provisions underlying its license/ownership claims are valid; and, whether the
`assignment provisions underlying Applied’s license/ownership claims are unlawful and void.
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`4. Motions
`On September 14, 2020, Applied filed a motion for preliminary injunction to enjoin
`Demaray from proceeding with the Texas cases against Intel and Samsung during the pendency
`of this action. Dkt. No. 14. That Motion is fully briefed and has been taken under submission by
`the Court. Dkt. No. 35.
`On November 23, 2020, Demaray filed its motion to dismiss under Federal Rules of Civil
`Procedure 12(b)(1) for lack of declaratory judgment subject matter jurisdiction due to the alleged
`lack of a case or controversy between Applied and Demaray and 12(b)(6) for failure to state a
`claim upon which relief could be granted with respect to counts three through five of Applied’s
`First Amended Complaint (Applied’s license/ownership-based non-infringement causes of action)
`on the basis that the assignment provisions relied upon are unlawful and void. The motion is set
`for hearing on March 4, 2021, the earliest available hearing date on the Court’s calendar at the
`time Demaray’s motion was filed.
`5. Amendment of Pleadings
`A. Applied’s Position:
`During the Rule 26(f) conference, Demaray refused to inform Applied whether it will file
`compulsory counterclaims of infringement against Applied. Demaray similarly refuses to take a
`position in this Joint Statement, despite its potential impact on a procedural schedule and other
`case management issues (see Sections 15-17 below). If Demaray files compulsory counterclaims
`of infringement, Applied intends to respond with counterclaims of invalidity. Otherwise, this
`case should proceed based on the declaratory judgment action causes of action of non-
`infringement presently in the case.
`Demaray’s indecision is unreasonable considering Demaray has filed infringement claims
`directed at Applied’s products used by Applied’s customers in the Texas cases. Demaray
`contends that it “did not accuse Applied’s reactors standing alone of infringement”, but
`Demaray’s complaints against Applied’s customers exclusively identify Applied reactors and rely
`on Applied’s products materials, website, and literature and Demaray has not, despite Applied’s
`request, granted Applied a covenant not to sue. Demaray’s infringement contentions reinforce
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`Applied’s position. For example, in the public version claim chart for claim 1 of the ’276 patent1,
`elements 1[a]-1[d] rely exclusively on documentation regarding Applied’s reactors. The last
`element 1[e] directed at the narrow band-rejection filter is devoid of any evidentiary support, but
`alleges that “[a] narrowband filter is used … as configured to, for example, protect the pulsed DC
`power supply from feedback from the RF bias power supply.” Applied addressed this alleged
`configuration in its Reply brief in support of its injunction motion, including with supporting
`declarations from Applied, Intel and Samsung. Dkt. No. 26 at 4:3-28; see also Applied’s
`Injunction Motion Hearing demonstratives, slides 26-30 (lodged on Nov. 10, 2020). Nowhere in
`Demaray’s allegations for claim 1 of the ’276 patent is there evidence from engineering reports,
`as suggested by Demaray below, or evidence that Samsung or Intel includes their own narrow
`band-reject filter. In other words, the accused “Intel/Samsung reactors” identified in the
`complaint and contentions are the reactors supplied by Applied to its customers. With the totality
`of this information in hand, there is no legitimate reason, other than for purposes of attempting to
`delay this action while the parallel Texas cases proceed, that Demaray cannot take a position as to
`whether it will assert infringement against Applied. But to the extent Demaray believes it needs
`“targeted discovery”, nothing in the Federal Rules precludes Demaray from seeking that
`discovery now (as opposed to waiting for a decision on its motion to dismiss).
`Applied is also investigating facts regarding a potential unenforceability/inequitable
`conduct claim against Demaray relating to the named inventors’ and prosecuting attorney’s
`omitting disclosure of a co-inventor to the USPTO during prosecution of the Asserted Patents. If
`these facts are substantiated during Applied’s investigation and discovery efforts, Applied may
`add a claim for unenforceability of the Demaray Patents based on inequitable conduct.
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`1 Demaray objected to Applied’s inclusion of the public claim chart as an exhibit to this joint
`submission. Applied intends to include the claim chart as evidence in support of Applied’s
`opposition to Demaray’s motion to dismiss, due this upcoming Monday, December 7, 2020, at
`which time it will be available to the Court as part of the record in this action. Applied can also
`separately lodge the claim chart for the Court’s consideration upon request.
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`Applied proposes June 30, 2021, as the deadline for amending pleadings.
`B. Demaray’s Position:
`Applied’s proposals regarding amendment of the pleadings are not well taken for several
`reasons. First, Applied proposes that it be permitted to delay bringing claims and defenses that it
`confirmed during the meet and confer process are ripe. This includes claims and defenses
`regarding invalidity and improper inventorship. There is no proper basis on which Applied
`should be excused from bringing such claims in a timely manner. In accordance with settled law
`they should be brought, if at all, now.
`Second, Applied mischaracterizes Demaray’s positions regarding infringement
`counterclaims. In the Texas complaints against Intel and Samsung, Demaray accused methods of
`thin-film deposition in a PVD reactor with a specific configuration used by Intel and Samsung,
`and that specific reactor configuration. The Demaray Patents have claim elements requiring, for
`example, the use of a reactor configuration with “a narrow band-rejection filter that rejects at a
`frequency of the RF bias power supply coupled between the pulsed DC power supply and the
`target area.” See, e.g., ’276 Patent, claim 1. Demaray relied upon, among other sources,
`confidential reverse engineering of Intel and Samsung products suggesting Intel’s and Samsung’s
`use of the infringing reactor configurations, including the use of a narrow band-rejection filter and
`pulsed DC power supply. Applied ignores this reverse engineering support for Demaray’s
`allegations against Intel and Samsung products. Demaray’s allegations in the Texas complaints
`Demaray did not accused Applied’s reactors standing alone of infringement and has made no
`express or implied infringement assertions against Applied in the Texas complaints or anywhere
`else. Furthermore, Applied claims that it does not supply certain elements of the specific
`configurations accused in Texas.
`Applied also mischaracterizes the scope and content of the claim charts in the Texas cases.
`The cases against both Samsung and Intel involve both Demaray Patents and the infringement
`contentions for both cases are based on confidential reverse engineering reports detailing Intel’s
`and Samsung’s infringing use of the claimed reactor configurations. Applied’s selective
`excerpting of specific claim limitations from a single claim of one of the patents at issue against
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`only one of the Texas defendants is misleading, incomplete and inaccurate.
`As discussed above, Demaray is moving to dismiss Applied’s First Amended Complaint
`for lack of subject matter jurisdiction in lieu of a responsive briefing. The Federal Rules of Civil
`Procedure are clear that a motion to dismiss under Rule 12(b)(1) is appropriate in these
`circumstances. Applied’s demand that Demaray make infringement determinations regarding
`Applied’s products on some other timeline divorced from the Federal Rules is not well-taken.
`The most appropriate course (and the one provided for by the Federal Rules) is to resolve
`Demaray’s pending motion and then, only if necessary after resolution of the motion, allow
`targeted discovery of information from Applied regarding matters such as the configurations of
`PVD reactors that Applied makes, sells and uses. Demaray could then, if it turns out to be
`necessary, promptly address whether counterclaims for infringement are appropriate in this case.
`6. Evidence Preservation
`The parties certify that they have reviewed the Guidelines Relating to the Discovery of
`Electronically Stored Information (“ESI Guidelines”), and have met and conferred pursuant to
`Fed. R. Civ. P. 26(f) regarding reasonable and proportionate steps taken to preserve evidence
`relevant to the issues in this action. The parties will work together to propose an ESI Order for
`the Court’s approval in advance of ESI discovery.
`7. Disclosures
`A. Applied’s Position:
`The deadline to serve initial disclosures is December 3, 2020, 14 days after the parties
`November 19, 2020 Rule 26(f) conference. See Fed. R. Civ. P. 26(a)(1)(C). Applied intends to
`serve timely initial disclosures pursuant to Rule 26 and expects Demaray to do the same. A
`pending motion to dismiss does not excuse Demaray from complying with the Federal Rules.
`B. Demaray’s Position:
`As discussed above, Demaray has moved to dismiss Applied’s First Amended Complaint
`for lack of subject matter jurisdiction, and on other bases, in lieu of a responsive briefing. As
`Demaray has discussed with Applied, the most efficient course would be for the Court to require
`Rule 26(f) disclosures and discovery after ruling on the motion to dismiss, which may eliminate
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`some or all of the issues in dispute. To the extent the Court desires a formal motion to stay
`disclosures pending resolution of the outstanding motion to dismiss, Demaray will provide one.
`8. Discovery
`With the caveat that the parties disagree as to whether discovery will be necessary in this
`action, if discovery becomes necessary, the parties agree concerning certain discovery limitations
`as outlined below. Unless otherwise agreed below, the parties agree that the Federal Rules of
`Civil Procedure govern. Any party may later move to modify these limitations for good cause.
`Written Discovery: Each party is limited to serving no more than 45 requests for
`admission. The parties stipulate as to a presumptive authenticity of documents produced by the
`Parties and appearing to belong to that party, which can be rebutted by demonstrating a lawful
`basis for questioning the authenticity of the produced document.
`Fact Witness Depositions: Each party may take up to 70 hours total of fact deposition
`testimony of parties, party-affiliated individuals, and third-parties, inclusive of depositions under
`Rule 30(b)(1) and Rule 30(b)(6).
`Expert Depositions: The parties agree that depositions of expert witnesses do not count
`towards the above limits on fact witness depositions. Each side may depose each opposing
`testifying expert witnesses for up to 7 hours per report served by a particular expert witness. For
`avoidance of doubt, an expert’s opinions on discrete issues—for example, infringement, validity,
`damages, and/or survey—will be considered separate reports, regardless of whether they are
`contained in a single document. To the extent one side offers an expert declaration in support of
`claim construction or any other issue raised in the case, the other side may depose the expert for
`up to 7 hours in connection with the expert’s opinions in the declaration.
`Depositions by Written Questions: The parties agree that there are no limits on the number
`of depositions upon written questions taken pursuant to Fed. R. Civ. P. 31 for the sole purpose of
`establishing the admissibility of documents of third parties.
`Protective Order and ESI Order:
`With the caveat that the parties disagree as to whether discovery will be necessary in this
`action, if discovery becomes necessary, the parties agree that a Protective Order and an ESI Order
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`should be entered in this case. The parties will work together to propose such orders for the
`Court’s approval.
`Timing of Discovery
`A. Applied’s Position:
`Pursuant to Fed. R. Civ. P. 26(d), discovery has commenced following the parties’ Rule
`26(f) conference. Applied will be serving subpoenas on third-parties with potentially relevant
`information to Applied’s claims of non-infringement based on the Sales and Relationship
`Agreement between Symmorphix and Applied Komatsu, as well as potential inventorship or
`inequitable conduct claims. Applied will also seek discovery from Demaray regarding the
`alleged conception and reduction to practice of the Demaray Patents, including whether the
`inventions were conceived during the inventors’ prior employment at Applied or used Applied’s
`trade secrets or confidential information, which is relevant to Applied’s claims of non-
`infringement based on the inventors’ assignment agreements, as well as potential inventorship or
`inequitable conduct claims. Demaray contends that discovery and disclosures should be stayed,
`but cannot demonstrate good cause, nor has it filed a motion to stay the case.
`Nor will moving forward with discovery be a waste of Party or judicial resources. To the
`extent this Court does not enjoin Demaray from proceeding with the Texas cases and/or those
`cases are not transferred to the Northern District of California, similar discovery will likely be
`sought by Intel and Samsung, who have raised the same declaratory judgment claims as
`affirmative defenses. Moreover, assuming arguendo that the Court found no subject matter
`jurisdiction at the time Applied commenced this declaratory judgment action, to the extent there
`was not a justiciable case or controversy between Applied and Demaray at the time, there is
`unquestionably one now considering (1) Demaray has refused to provide Applied a covenant not
`to sue or confirm it will not allege infringement against Applied and (2) Demaray’s continued
`lawsuits against Applied’s customers, including its public infringement contentions. To the extent
`Demaray needs “targeted discovery” to make its infringement, Demaray should seek that
`discovery now; any further delay by Demaray reinforces Applied’s concern that Demaray’s intent
`is to delay this case from proceeding while the parallel Texas cases proceed.
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`B. Demaray’s Position:
`As discussed above, Demaray has moved to dismiss Applied’s First Amended Complaint
`for lack of subject matter jurisdiction, and on other bases, in lieu of a responsive
`briefing. Demaray informed Applied that Demaray believes that it is most efficient for the Court
`to require Rule 26(f) disclosures and discovery after ruling on the motion to dismiss, which may
`eliminate some or all of the issues in dispute and that this issue should be raised with the Court at
`the Case Management Conference.
`There is no discovery currently pending and, to the extent the Court desires a formal
`motion to stay discovery pending resolution of the outstanding motion to dismiss, Demaray will
`provide one. Federal district courts routinely apply a two-prong test to determine whether a stay
`should issue: (1) the pending motion must be potentially dispositive of the entire case, or must at
`least be dispositive on the issue to which the discovery is aimed, and (2) the court must determine
`whether the potentially dispositive motion can be decided without the discovery. S.F. Tech. v.
`Kraco Enters. LLC, No. 5:11-cv-00355 EJD, 2011 U.S. Dist. LEXIS 59933, at *7, 2011 WL
`2193397 (N.D. Cal. June 6, 2011). Here, both prongs are met by Demaray’s pending motion to
`dismiss.
`Applied’s position that the Texas cases somehow warrant discovery here is misplaced.
`Fact discovery in the Texas cases does not commence until March 29, 2021. If, at that time, Intel
`and Samsung wish to seek discovery from Demaray, they are free to do so. Applied presents no
`reason why its potentially unnecessary discovery in this action (e.g., if Demaray’s motion to
`dismiss is granted) needs to commence before the Court’s decision on the motion to dismiss.
`Applied’s arguments about the Texas cases proceeding are misplaced—the Texas cases are the
`earlier-filed actions and despite Applied’s attempts to derail the case schedules in Texas, trial in
`those cases is set for December 27, 2021. They are proceeding and will continue to proceed.
`9. Class Action
`This is not a class action.
`10. Related Cases
`The Texas cases against Intel and Samsung involve the same Demaray patents as
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`described above. Demaray LLC v. Intel Corporation, No. 6:20-cv-634 (W.D. Tex. July 14, 2020);
`Demaray LLC v. Samsung Electronics Co., Ltd, et al., No. 6:20-cv-636 (W.D. Tex. July 14,
`2020). Intel and Samsung filed motions to transfer the Customer Suits to the Northern District of
`California on November 6, 2020. Venue discovery is ongoing.
`On October 27, 2020, Applied filed four IPR petitions relating to the Demaray Patents:
`Case Nos. IPR2021-00103 and IPR2021-00105 are directed toward the ’276 Patent. Case Nos.
`IPR2021-00104 and IPR2021-00106 are directed toward the ’657 Patent.
`11. Relief
`Currently, Applied seeks declaratory judgment against Demaray that: (1) Applied and
`Applied’s products do not directly or indirectly infringe the Demaray Patents; (2) Applied and
`Applied’s products cannot infringe the Demaray Patents because of Applied’s alleged
`license/ownership interests; and Applied also asks that the Court declare this an exceptional case
`and order that Applied be awarded costs and attorneys’ fees.
`12. Settlement and ADR
`The parties are open to mediation, settlement conference, or the Court’s Early Neutral
`Evaluation process and submitted their respective ADR certifications on November 20, 2020.
`13. Consent to Magistrate Judge for All Purposes
`The Parties do not consent to proceeding before the Magistrate for all purposes.
`14. Other References
`The parties do not believe that this case is suitable for reference to binding arbitration, a
`special master, or the Judicial Panel on Multidistrict Litigation.
`15. Narrowing of Issues
`A. Applied’s Position:
`Assuming Demaray does not assert compulsory counterclaims for infringement of the
`Asserted Patents against Applied and Applied’s products (currently an unresolved question),
`Applied believes this case may be appropriate for the Expedited Trial Procedure (discussed under
`section 16 below). As discussed above, while Applied does not believe Demaray needs “targeted
`discovery” to decide whether it will assert compulsory counterclaims of infringement when
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`considering, for example, that Demaray’s infringement contentions as to claim 1 of the ’276
`patent rely exclusively on documentation regarding Applied’s reactors, Demaray may serve
`discovery now to obtain the information it purportedly needs to make that determination. There
`is no reason to delay discovery or that decision until after resolution of the motion to dismiss,
`which is not set for hearing until over three months now (March 4, 2021).
`B. Demaray’s Position:
`As discussed above, the Court should resolve Demaray’s motion to dismiss as it will
`likely resolve some or all off the issues in dispute. Contrary to Applied’s repeated assertions, as
`detailed in Demaray’s motion to dismiss, Demaray’s infringement contentions against Intel and
`Samsung rely upon confidential reverse engineering reports of Intel and Samsung products
`indicating Intel’s and Samsung’s use of the claimed configurations of PVD reactors. If necessary
`after resolution of the motion, the Court should allow targeted discovery of information from
`Applied regarding matters such as the configurations of PVD reactors that Applied manufactures
`and uses. Demaray can then promptly address whether counterclaims for infringement are
`appropriate in this case and the parties can propose a case schedule based upon the Patent Local
`Rules. Applied presents no reason to proceed with such discovery before the Court addresses the
`motion to dismiss, and doing so would be a waste of resources.
`16. Expedited Trial Procedure
`A. Applied’s Position:
`Assuming Demaray does not assert counterclaims for infringement of the Demaray
`Patents against Applied (currently an unresolved question), Applied believes this case may be
`appropriate for the Expedited Trial Procedure. While ordinarily patent infringement cases could
`potentially prove to be too complex for expedited trial procedures, if Demaray does not assert
`infringement claims in this action, and Applied does not in turn assert counterclaims of invalidity
`of the Demaray Patents in this action, the case will be significantly simplified. For example,
`Demaray would not need to serve infringement contentions under P.L.R. 3-1 or damages
`contentions under P.L.R. 3-8, and Applied would not need to serve invalidity contentions under
`P.L.R. 3-8 or responsive damages contentions under P.L.R. 3-9. While claim construction may
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`be necessary to resolve the question of whether Applied or Applied’s products do not infringe the
`Demaray Patents, the Demaray Patents are related and there are only four independent claims
`across both patents. Therefore, this case presents a much simpler dispute limited to Applied’s
`non-infringement causes of action.
`B. Demaray’s Position:
`The Court should resolve Demaray’s motion to dismiss as it is likely to resolve some or
`all off the issues in dispute. Then, only if the motion is denied: if, after targeted discovery of
`product information from Applied regarding the configurations of PVD reactors that Applied
`manufactures and uses, Demaray decides not to assert counterclaims for infringement, the parties
`should have a follow-up Case Management Conference with the Court to determine what, if any,
`factual and legal issues remain to be addressed.
`17. Scheduling
`A. Applied’s Position:
`Applied believes the Court should either (1) set an imminent deadline (i.e., one or two
`weeks after the Case Management Conference) for Demaray to decide whether it will assert
`compulsory counterclaims of infringement against Applied, and based on that decision, order the
`Parties to prepare a proposed schedule; or (2) enter a procedural schedule as proposed below in
`Attachment A to address the declaratory judgment action causes of action in its First Amended
`Complaint. This action was filed within three weeks of the Texas cases, has been pending for
`over three months, and Applied granted Demaray a sixty day extension to respond to the
`Complaint. There is no legitimate reason that by now, Demaray has not made a decision as to
`whether it will, in response to Applied’s declaratory judgment complaint, file compulsory
`counterclaims of infringement—other than for the improper purposes of delaying this action
`while the Texas cases against Applied’s customers proceed. Given Demaray’s refusal to make
`that decision, the Court should enter a schedule assuming this case is limited to Applied’s
`declaratory judgment causes of action of non-infringement. As discussed in Section 16 above,
`many of the Patent Local Rule disclosures are not needed, and the Parties can begin claim
`construction immediately.
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`To the extent Demaray later alleges compulsory claims of infringement and Applied
`responds with invalidity counterclaims, Applied believes that the relevant disclosures can be
`incorporated into the proposed schedule without impacting the claim construction deadlines and
`proposed Markman hearing date, while modest adjustments can be made to the remaining case
`deadlines (e.g., time allotted for completing expert discovery). Regardless of Demaray’s
`indecision, discovery in this case should proceed and Demaray’s proposal to stay all deadlines
`until its motion to dismiss is decided should be rejected.
`Finally, Demaray’s arguments below that proceeding with discovery and/or claim
`construction will be a waste of resources lacks merit. As discussed above, to the extent there was
`not a case or controversy at the time