Case 5:20-cv-05676-EJD Document 56 Filed 01/11/21 Page 1 of 7
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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.
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`APPLIED MATERIALS, INC.,
`Plaintiff,
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`vs.
`DEMARAY LLC,
`Defendant.
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`CASE NO. 5:20-cv-05676-EJD
`APPLIED MATERIALS, INC.’S
`UPDATED CASE MANAGEMENT
`STATEMENT
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`APPLIED MATERIALS, INC.’S UPDATED
`CASE MANAGEMENT STATEMENT
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`Case 5:20-cv-05676-EJD Document 56 Filed 01/11/21 Page 2 of 7
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`Plaintiff Applied Materials, Inc. (“Applied”) submits this Updated Case Management
`Statement pursuant to the Court’s December 2, 2020 Order. Applied Materials, Inc. v. Demaray
`LLC, Case No. 5:20-cv-05676-EJD, Dkt. No. 41 (“Applied I”).
`Defendant Demaray LLC (“Demaray”) refused to file a joint case management statement
`because it contended that Applied’s position in Section 2 below (“How the Cases Should
`Proceed”) “address[es] a separate case, raising separate issues, and contravening the Court’s
`unambiguous order on these issues.” See Ex. A (E-mail Correspondence from counsel). Applied
`disagrees with Demaray’s characterization, as Demaray ignores that the cases involve the same
`parties, the same causes of action, and have been deemed related—the issues raised below are
`necessarily related to this action and updating the Court since the last joint case management
`statement. Disagreement aside, Applied proposed that Demaray state its position in its portion of
`a joint submission rather than burdening the Court with separate filings from each party.
`Demaray refused, contending separate filings were necessary. Id.
`The Parties previously submitted a Joint Case Management Statement in Applied I on
`November 30, 2020, in advance of the previously scheduled case management conference,
`Applied I, Dkt. No. 40, which the Court continued to January 21, 2021, Applied I, Dkt. No. 41.
`The Court stayed discovery until the next case management conference and ordered the parties to
`provide an updated Joint Case Management Statement. Id. Despite the stay order, Demaray has
`sought discovery from Applied through third-party subpoenas issued out of Demaray’s cases in
`the Western District of Texas against Applied’s customers, Intel and Samsung. Applied II, Dkt.
`No. 1, Exs. F, G (subpoenas). At the same time, Demaray seeks to have Applied’s declaratory
`judgment causes of action that it and its products do not infringe, including based on a license
`Applied has to the asserted patents, delayed as much as possible while Demaray’s lawsuits
`against Applied’s customers, involving the same products and same defenses, proceed. Contrary
`to the representations made to this Court about the nature of those cases, as explained in the new
`complaint in Applied II, those actions are directed to Samsung and Intel’s use of Applied’s
`reactors—not some phantom post-installation configuration by the customers on their own.
`Applied incorporates by reference their prior Joint Case Management Statement and
`APPLIED MATERIALS, INC.’S UPDATED
`CASE MANAGEMENT STATEMENT
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`Case 5:20-cv-05676-EJD Document 56 Filed 01/11/21 Page 3 of 7
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`provide an update below.
`1. Updates To The Procedural Posture
`Since the Court’s Order continuing the previously scheduled case management
`conference, on December 16, 2020, the Court denied Applied’s Motion for Preliminary Injunction
`in Applied I, finding that Applied failed to allege an actual controversy to support subject matter
`jurisdiction under the Declaratory Judgment Act. See Applied I, Dkt. No. 46.
`Thereafter, on December 24, 2020, Applied filed a new civil action in the Northern
`District of California based upon the same causes of action. See Applied Materials, Inc. v.
`Demaray LLC, Case No. 4:20-cv-09341-EJD, Dkt. No. 1 (“Applied II”). Applied added factual
`allegations to support the existence of an actual controversy between Applied and Demaray,
`including facts that have occurred since the filing of the operative complaint in this action. On
`December 24, Applied filed an administrative request to lodge new declaratory judgment
`complaint in Applied I requesting “(1) leave to lodge the concurrently filed declaratory judgment
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`complaint, (2) that the Court permit the new complaint to become the operative complaint in this
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`action, and (3) that the Court deny as moot Demaray’s pending motion to dismiss.” See Applied I,
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`Dkt. 53, at 2. Applied alternatively stated “with the Court’s approval and guidance, Applied can
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`voluntarily dismiss the operative complaint in this action, proceed with a new-filed action based on
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`[the] concurrently filed complaint, and take appropriate action to relate the new action with this Court
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`under Local Rule 3-12. Under these circumstances, in the interest of judicial efficiency and avoiding
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`further delay of Applied’s declaratory judgment cause of action, Applied respectfully requests that the
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`Court maintain the currently scheduled January 21, 2021 case management conference.” Id.
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`On December 28, 2020, Applied filed an administrative motion to consider whether Applied I
`and Applied II should be related. Applied I, Dkt. No. 52. On January 6, 2021, the Court denied
`Applied’s administrative motion lodge the concurrently filed declaratory judgment complaint,
`Applied I, Dkt No. 53, and issued a Related Case Order, deeming this action and Applied II to be
`related cases pursuant to Local Rule 3-12. Applied I, Dkt. No. 54.
`Demaray’s motion to dismiss the operative complaint in Applied I remains pending and
`was set for hearing on March 4, 2021. Applied I. Dkt. Nos. 39, 42, 43.
`APPLIED MATERIALS, INC.’S UPDATED
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`CASE MANAGEMENT STATEMENT
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`Case 5:20-cv-05676-EJD Document 56 Filed 01/11/21 Page 4 of 7
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`2. How the Cases Should Proceed1
`In view of the new complaint filed in Applied II, which sets forth the same causes of
`action as in Applied I, and the Related Cases Order, Applied believes there is no need for the
`operative complaint in Applied I to proceed. Subject to further guidance from the Court regarding
`Demaray’s motion to dismiss in Applied I, which remains pending, Applied intends to voluntarily
`dismiss that action and proceed with the same causes of action in related Applied II.
`Applied’s newly filed complaint alleges a substantial controversy between Applied and
`Demaray, thus conferring jurisdiction in this Court. See, e.g., Applied II, Dkt. No. 1 at ¶ 9 (table
`of affirmative acts taken by Demaray supporting jurisdiction). The newly filed complaint
`describes in detail the totality of the evidence and facts as they exist today, which include: (i) the
`commercial realities of the relationship between Applied and its customers using Applied’s
`products; (ii) Demaray’s exclusive reliance on Applied’s products in the customer complaints;
`(iii) Demaray’s infringement contentions in the customer suits; (iv) Applied’s customers’
`confirmation that they do not perform the post-installation modifications to Applied’s reactors
`that Demaray contended took place; (v) Demaray’s refusal to grant Applied a covenant not to sue;
`(vi) Demaray’s refusal to inform Applied or the Court in this action whether it will assert
`compulsory counterclaims against Applied; (vii) Demaray’s requests to obtain discovery from
`Applied to determine if Applied allegedly infringes; (viii) Demaray’s serving of subpoenas on
`Applied for discovery regarding the reactors it supplies to Intel and Samsung, including Applied’s
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`1 As of the time of Applied’s filing of this case management statement, Demaray had yet to file its
`own case management statement, and only previously sought to strike all but the first paragraph
`of this section from the proposed joint filing (i.e., Demaray did not provide notice of any
`substantive positions other than that discovery should continue to be stayed until the Court rules
`on Demaray’s motion to dismiss). It is unclear what Demaray is waiting for, except to perhaps
`hide its positions from Applied so that Applied does not have the opportunity to address them.
`To the extent Demaray’s submission provides any substantive response to this section, Applied
`was never provided the opportunity to consider Demaray’s positions in advance of this filing.
`APPLIED MATERIALS, INC.’S UPDATED
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`CASE MANAGEMENT STATEMENT
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`configurations of the hardware components Demaray previously alleged that Intel and Samsung
`configures on their own; and (ix) Demaray’s representations in the customer suits that the
`discovery from Applied is necessary to determine which reactors allegedly infringe.
`Demaray has been in possession of technical documents produced by Applied in the
`customer suits since as early as November 18, 2020, when Applied voluntarily, at the request of
`its customers, produced manuals for the power supplies provided with its reactors that are
`manufactured and installed by Applied for its customers and accused of infringement. As noted
`above, five days after the Court continued the prior case management conference and stayed
`discovery in this case, Demaray issued subpoenas to Applied in the customer suits seeking
`discovery regarding Applied’s configurations of the hardware components Demaray repeatedly
`represented to this Court were allegedly configured by Applied’s customers in arguing lack of
`subject matter jurisdiction. Notwithstanding the about-face of Demaray’s subpoenas, Applied
`produced technical documents regarding the reactors it supplies to Intel and Samsung of which
`their use (and not any purported post-installation configuration) form the basis of the alleged
`infringement by Applied’s customers nearly a month ago. Applied has also made available for
`inspection its “crown-jewel” documents for its reactors supplied to Intel and Samsung and
`accused of infringement, and has agreed to make a witness available for deposition in response to
`Demaray’s subpoenas. Thus, despite the Court’s prior order staying discovery in this action,
`Demaray has in fact proceeded with discovery from Applied for over a month now. Demaray
`knows that Intel and Samsung do not make the post-installation hardware configurations it
`contended occurred in previously challenging this Court’s subject matter jurisdiction—thus, its
`continued prosecution of its cases against Applied’s customers are either (i) necessarily
`allegations against Applied or (ii) have no basis whatsoever.
`Any continued refusal by Demaray to inform Applied or this Court as to whether it will
`assert compulsory counterclaims against Applied, or another challenge to this Court’s subject
`matter jurisdiction over Applied II (which Applied believes would be frivolous), will be for the
`improper purpose of continued delay of this case as the customer suits proceed. Indeed, and as
`reported in the parties’ prior case management statement, Applied I, Dkt. No. 40 at 9:28-10:4,
`APPLIED MATERIALS, INC.’S UPDATED
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`CASE MANAGEMENT STATEMENT
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`Case 5:20-cv-05676-EJD Document 56 Filed 01/11/21 Page 6 of 7
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`Intel and Samsung filed motions to transfer the customer suits to the Northern District of
`California over two months ago, where Applied would anticipate, for judicial efficiency, they
`would either be consolidated with this action or stayed pending resolution of this action under the
`customer-suit exception. But Demaray continues to delay the Western District of Texas’s
`consideration and adjudication of those motions, as Demaray has refused to file its responsive
`brief by claiming it continues to need “venue discovery” including through its subpoenas to
`Applied—subpoenas Demaray waited for over a month after the transfer motions were filed to
`serve on Applied.
`In view of the substantial, justiciable controversy between the parties, and that Demaray
`has already been seeking discovery from Applied, Applied believes the Court should open
`discovery and order the parties to submit a proposed schedule to adjudicate Applied’s declaratory
`judgment causes of action in related case Applied II, which Demaray has already succeeded in
`delaying now for several months. Demaray has refused, since the last joint case management
`statement, to propose a schedule—claiming it would be premature in view of its pending subject
`matter jurisdiction challenge. Considering the developments explained above, Applied does not
`believe there is any reasonable basis for Demaray to continue to contend there is not a justiciable
`case or controversy between the parties. Discovery should open and the case should proceed.
`Notably, and aside from Applied and its reactors’ non-infringement of Demaray’s patents
`on the merits, Applied believes discovery will confirm the validity and enforceability of the Sales
`and Relationship Agreement (“SRA”) between Applied and its subsidiary Applied Komatsu and
`Demaray’s predecessor, Symmorphix, which granted Applied and its customers a license to the
`patents-in-suit. See, e.g., Applied II, Dkt. No. 1 at ¶¶ 64-88 (Factual Background), 101-108
`(Third Count: Declaration of Non-Infringement Based on License). The license dispute is
`potentially case dispositive of Demaray’s suits against Applied’s customers, and should be
`adjudicated in this action between the parties and/or their affiliates to the SRA (Applied and
`Demaray).
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`APPLIED MATERIALS, INC.’S UPDATED
`CASE MANAGEMENT STATEMENT
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`Case 5:20-cv-05676-EJD Document 56 Filed 01/11/21 Page 7 of 7
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`Dated: January 11, 2021
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`YAR R. CHAIKOVSKY
`PHILIP OU
`JOSEPH J. RUMPLER, II
`ANDY LEGOLVAN
`BERKELEY FIFE
`BORIS LUBARSKY
`PAUL HASTINGS LLP
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`By: /s/ Yar R. Chaikovsky
`YAR R. CHAIKOVSKY
`Attorneys for Plaintiff
`APPLIED MATERIALS
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`APPLIED MATERIALS, INC.’S UPDATED
`CASE MANAGEMENT STATEMENT
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