Case 5:20-cv-09341-EJD Document 127 Filed 02/07/22 Page 1 of 3
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`February 7, 2022
`Honorable Magistrate Judge Nathaniel M. Cousins
`United States District Court Northern District of California
`San Jose Courthouse, Courtroom 7, 4th Floor
`280 South 1st Street, San Jose, CA 95113
`Re:
`Applied Materials, Inc. v. Demaray LLC, 20-cv-09341-EJD (N.D. Cal.)
`Dear Judge Cousins,
`Demaray LLC (“Demaray”) submits this separate letter to resolve a dispute regarding Demaray’s
`request to amend its Answer to add affirmative counterclaims for infringement. Demaray and
`Applied Materials, Inc. (“Applied”) met and conferred but Applied opposes Demaray’s request
`and refuses to submit a joint letter, arguing that a full motion must be brought before Judge Davila.
`The parties’ competing case schedules addressing potential affirmative infringement claims (Dkt.
`116) and Demaray’s request for Targeted Product Disclosures to allow such determinations (Dkt.
`118) are already before Your Honor. The amendment is also based upon recently produced
`discovery—a discovery issue for Your Honor.
`A.
`Background
`Applied filed this case, seeking a declaratory judgement that none of its stand-alone reactors
`infringe the Demaray patents. It is uncontested that the Demaray patents are directed at particular
`reactor configurations requiring, inter alia, the use of “a narrow band-rejection filter” for
`example, to protect the DC power source from damaging feedback from the RF bias. See, e.g.,
`’276 Patent, claim 1. It is also uncontested that the configuration details of Applied’s reactors are
`not publicly available. As Demaray has consistently explained, Demaray needs targeted
`information about Applied’s reactors to make affirmative infringement determinations, including
`circuit-level details on any protective filters (or alternative protective mechanisms used, if any).
`See, e.g., Dkts. 27 at 6-8, 69 at 3-4, 82 at 4-8, 118 at 1-3.
`At every turn, Applied has refused to disclose these necessary details. Demaray proposed that
`Applied provide Targeted Product Disclosures sufficient to detail (1) its reactors with DC power
`to the target and RF bias to the substrate (including reactor configurations, power sources,
`magnetron usage, and heating elements), (2) any RF filters or alternative protective mechanisms
`used (including the type of RF filter/alternative protective mechanism, operating frequency, and
`attenuated bandwidth), (3) its use of such reactors (including targets and substrates used and
`thin-films deposited), (4) its communications with customers regarding the same (e.g., to address
`indirect infringement), and (5) its importation and exportation to reactors and chamber parts
`sufficient to address its activities abroad (e.g., under 35 U.S.C. § 271(f)). Dkt. 106 at 11-13
`(Third Updated CMC Statement). Applied refused, requiring a motion to compel. Dkt. 118.
`Demaray also served discovery on Applied requesting this information, but again, Applied
`refused to provide full responses, supporting documents or components for inspection and
`testing. As one example, Applied maintained in the co-pending Texas cases that although certain
`of its reactors have a RF filter, it is a low-pass filter as opposed to a narrowband rejection-filter.
`Despite its assertion, Applied then refused here and in Texas to provide filter schematics,
`claiming it did not have filter details. Demaray thus subpoenaed the filter supplier, Comet
`Technologies (“Comet”). On December 17, 2021, Comet admitted to Demaray that it “built this
`component at Applied’s request and according to Applied’s specifications,” contrary to
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`Case 5:20-cv-09341-EJD Document 127 Filed 02/07/22 Page 2 of 3
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`Applied’s protestations of ignorance about the subject. Then, on January 19, 2022, Comet
`provided a circuit-level schematic revealing the use of a narrowband-rejection filter—also
`directly contrary to Applied’s prior representations. And on February 4, 2022, Demaray
`confirmed through visual inspection and testing that this description in the schematics was
`indeed accurate. Demaray now seeks to add affirmative infringement claims to this case and is
`prepared to file an amended Answer and Counterclaims at the Court’s direction. Of note,
`Demaray still seeks targeted disclosures regarding these and other Applied reactors (see Dkt.
`118) to prepare infringement contentions addressing Applied’s infringement.
`B.
`Argument
`Based on new discovery contradicting Applied’s representations, Demaray seeks leave to add
`affirmative counterclaims for infringement. Courts “freely give leave when justice so requires,”
`Fed. R. Civ. P. 15(a)(2), and this applies to adding counterclaims. Kawczynski v. Kawczynski,
`No. 18-cv-05709 NC, 2019 U.S. Dist. LEXIS 239238, at *2-3 (N.D. Cal. Mar. 25, 2019). The
`factors governing amendment are: (1) bad faith, (2) undue delay, (3) prejudice to the opposing
`party, and (4) futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). The party
`opposing amendment bears the burden of showing prejudice. DCD Programs v. Leighton, 833
`F.2d 183, 187 (9th Cir. 1987). Rule 15 and the Foman factors favor granting Demaray’s request.
`Demaray neither seeks amendment in bad faith nor has unduly delayed. Demaray has
`consistently sought Targeted Product Disclosures, including circuit-level details regarding
`Applied’s protective filters to evaluate affirmative infringement issues. See, e.g., Pac. Sci.
`Energetic Materials Co. LLC v. Ensign-Bickford Aero. & Def. Co., 281 F.R.D. 358, 363 (D.
`Ariz. 2012) (“Erring on the side of avoiding Rule 11 sanctions at the risk of waiving its
`counterclaim, the defendant diligently sought discovery of technical documentation to support its
`claim of infringement…I FIND good cause to…allow the defendant to amend its answer and file
`a counterclaim.”). Applied not only refused to provide these disclosures, but affirmatively
`claimed it used a low-pass filter and not a narrowband rejection-filter while its counsel
`repeatedly asserted that it would be a violation of Rule 11 for Demaray to claim otherwise. Judge
`Albright granted three motions to compel in Texas to obtain the actual filter details, which were
`never provided by Applied; Comet’s disclosures now reveal that the filter details directly
`contradict Applied’s earlier representations. Now that Demaray has circuit-level filter details
`and confirmed those details via inspection, it has a good faith basis to add affirmative
`infringement claims on Applied’s stand-alone reactors and has sought Court permission at the
`earliest opportunity so that the Court can enter an appropriate schedule. Nor is amendment futile;
`Applied cannot show that it “appears beyond doubt” that “amendment would eventually be
`dismissed for failure to state a claim.” DCD Programs, 833 F.2d at 188.
`Applied also will not be prejudiced by amendment. Applied has known of these likely claims
`since the first Joint CMC Statement. The case is in its early stages; there is no case schedule yet,
`and discovery just commenced. Applied’s suggestion that Demaray should have brought
`affirmative claims based on Texas disclosures ignores that Applied misled Demaray and the
`Texas Court by misrepresenting its filters as low-pass and refusing to provide discovery on the
`subject – even in the face of multiple orders to compel that were never complied with.
`In sum, the Court should grant Demaray’s motion to add affirmative claims for infringement, and
`it is prepared to file an amended Answer with Counterclaims. Of note, Demaray still requests
`Targeted Product Disclosures (Dkt. 118) to ascertain the full scope of Applied’s infringement.
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`Case 5:20-cv-09341-EJD Document 127 Filed 02/07/22 Page 3 of 3
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`Respectfully submitted,
`
`/s/ C. Maclain Wells
`C Maclain Wells
`of Irell and Manella LLP
`
`Counsel for Defendant
`Demaray LLC
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