Case 5:20-cv-09341-EJD Document 161 Filed 07/28/22 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
`DAVID OKANO (SB#278485)
`davidokano@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
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`MATTHIAS KAMBER (SB#232147)
`matthiaskamber@paulhastings.com
`PAUL HASTINGS LLP
`101 California Street, 48th Floor
`San Francisco, California 94111
`Telephone: 1(415) 856-7000
`Facsimile: 1(415) 856-7100
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`Attorneys for Plaintiff
`APPLIED MATERIALS, INC.
`
`
`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-09341-EJD
`APPLIED MATERIALS, INC.’S
`MOTION FOR RELIEF FROM
`NONDISPOSITIVE PRETRIAL
`ORDERS OF MAGISTRATE JUDGE
`(DKTS. 155, 156) REGARDING THE
`CASE MANAGEMENT SCHEDULING
`ORDER
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`Case 5:20-cv-09341-EJD Document 161 Filed 07/28/22 Page 2 of 7
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`I.
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`INTRODUCTION
`Pursuant to Fed. R. Civ. P. Rule 72 and Local Rule 72-2, Applied Materials, Inc.
`(“Applied”) requests the Court review the Magistrate Judge’s Order on Case Scheduling, Dkt. 155
`at 3:24-4:14 (Sec. V, ECF 116, 135, 139: Case Scheduling) (the “Order”) and Case Management
`Scheduling Order, Dkt. 156 (the “Schedule”). The Order explains that “the Court setting a case
`schedule that takes into account Judge Davila’s consideration of Demaray’s motion to amend is the
`most judicially efficient solution” and reasons that “[a]ny delay in case progress is outweighed by
`the burden of having to a set a new case schedule should Judge Davila grant the motion.” Id.
`While any further delay in the Court hearing Demaray’s motion may be minimal, the
`prejudice to Applied resulting from the Schedule is significant, as it enables Demaray’s ongoing
`strategy to delay this manufacturer suit in favor of its lawsuits against Applied’s customers in the
`Western District of Texas where the same Applied products are accused of infringement
`(“Customer Suits”). But in rejecting Demaray’s arguments that this Court should “exercise
`discretion and decline jurisdiction as the customer suits against Intel and Samsung progress,” the
`Court reasoned that “[g]iven the affirmative acts and the potential impact the resolution of this case
`could have on Demaray’s suits against Applied’s customers, the Court finds it appropriate to
`exercise jurisdiction over Applied’s claims for declaratory relief.” Dkt. 63 at 14:3-5; 14:11-14.
`Despite the Court’s directive that “the case will move forward”, Dkt. 80 at 3:1-2, Demaray
`has repeatedly sought to delay that resolution from occurring (e.g., attempting to delay the
`Markman hearing and the proper construction of the case dispositive term, “narrow band rejection
`filter”). For example under the default Patent Local Rule deadlines, had Demaray answered and
`asserted compulsory counterclaims of infringement in January 2021—instead of challenging the
`Court’s subject matter jurisdiction—a Markman hearing could have occurred in the summer of
`2021, subject to the convenience of the Court’ calendar. Had Demaray asserted infringement when
`it answered in September 2021, a Markman hearing could have occurred in the spring of 2022. But
`under the Schedule, a Markman hearing would be delayed another year – April 2023. Meanwhile,
`the Customer Suits close fact discovery in three months and are set for trial in May 2023. In sum,
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`APPLIED’S MOTION FOR RELIEF FROM
`NONDISPOSITIVE PRETRIAL ORDER
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`Case 5:20-cv-09341-EJD Document 161 Filed 07/28/22 Page 3 of 7
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`the Magistrate’s Schedule frustrates the Court’s rationale for exercising jurisdiction last
`September—so that the resolution of this manufacturer suit can impact the customer suits.
`Moreover, regardless of how the Court resolves Demaray’s motion to amend, the Order and
`Schedule do not account for the unique procedural posture of this case. First, Applied has had
`notice of Demaray’s infringement claims against Applied’s products through Demaray’s
`infringement contentions in the Customer Suits since October 2020, including final infringement
`contentions in June 2022. Second, Demaray in-turn has received invalidity contentions in the Texas
`cases, including final invalidity contentions in June 2022. Third, on July 14, 2022, Magistrate
`Cousins denied Demaray’s motion for additional “targeted discovery”, and thus any contentions
`served by the parties in this case will likely be unchanged from those served in Customer Suits.
`Dkt. 155:7-13. Finally, Applied previously moved to compel Demaray to comply with the Patent
`Local Rules in late 2021 and the Court ordered Demaray to do so. Dkt. 101 at 3:7-21. Thereafter
`the parties complied with all of the Patent Local Rule claim construction deadlines, including
`completing briefing in April 2022.
`Indeed, in the most recent joint CMC statement, even Demaray acknowledges that repeating
`the entire claim construction process pursuant to the normal Patent Local Rules deadlines does not
`comport with the procedural posture of this case. Dkt. 151 at 20:27-28 (“… while Demaray agrees
`that certain claim construction deadlines can be truncated given the parties’ existing
`briefing…”); 23:10-24:10 (proposing truncated claim construction deadlines and briefing,
`including, e.g., “5 pages maximum” for “Opening Supplemental Claim Construction Brief” and a
`Markman hearing on December 19, 2022) (emphasis added).
`Applied respectfully requests the Court reset the case schedule to comport with the current
`status of the case, including a Markman hearing at the Court’s earliest convenience.
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`BACKGROUND
`On July 14, 2020, Demaray filed its Customer Suits against Intel and Samsung, accusing
`them of infringement based on their use of Applied’s PVD equipment. Less than a month later,
`Applied filed a complaint for declaratory judgment that the same PVD equipment accused of
`infringement in Texas does not infringe. Applied Materials v. Demaray LLC, Case No. 20-cv-
`APPLIED’S MOTION FOR RELIEF FROM
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`NONDISPOSITIVE PRETRIAL ORDER
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`II.
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`Case 5:20-cv-09341-EJD Document 161 Filed 07/28/22 Page 4 of 7
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`5676-EJD (N.D. Cal.) (“Applied I”). On December 16, 2020, crediting representations by Demaray
`that it was not accusing Applied’s equipment “standing alone” of infringement in Texas, the Court
`found that Applied had not sufficiently established subject matter jurisdiction. Applied I, Dkt. 46.
`On December 24, 2020, Applied filed an updated complaint for declaratory judgment,
`including new facts supporting subject matter jurisdiction, e.g. Demaray’s October 2020
`preliminary infringement contentions in the Customer Suits. Dkt. 1. On September 16, 2021, the
`Court denied Demaray’s motion to dismiss for lack of subject matter jurisdiction, reasoning that
`“the claims and initial infringement contentions presented in Demaray’s WDTX Customer Cases
`suggest a substantial direct infringement controversy” and that “Demaray ‘could just as easily have
`asserted a claim for direct infringement against [Applied] based on the same underlying
`circumstances in the customer suit.’” Dkt. 63 at 12:13-17, 13:20-22.
`The parties thereafter filed joint case management statements on November 4, 2021,
`December 22, 2021, and May 27, 2022 where in each, Demaray sought to stall this manufacturer
`suit from moving forward by proposing a case schedule that delayed or reset deadlines based on its
`alleged need for “targeted discovery” from Applied and its indecision as to whether to accuse
`Applied of infringement in this case. See Dkts. 82, 106, 151. However, on July 14, 2022, Magistrate
`Judge Cousins denied Demaray’s motion for “targeted discovery”. Dkt. 155 at 2:7-13 (“Applied
`concludes that the discovery it has already provided is sufficient for Demaray’s needs and supports
`this conclusion by referencing Judge Davila’s comment that Demaray could easily have asserted a
`claim for direct infringement against Applied based on the same underlying circumstances as
`Demaray’s suit against Applied customers–Intel and Samsung–in Texas. Id. at 3–4. Because
`Demaray has not demonstrated how the information Applied has already supplied is insufficient,
`the Court DENIES Demaray’s request for ‘targeted’ discovery.”)
`On the same day, Magistrate Judge Cousins issued the Schedule. Dkt. 156.
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`III. ARGUMENT
`A magistrate judge’s nondispositive order should be set aside when it is “clearly erroneous”
`or “contrary to law.” Fed. R. Civ. P. 72(a). This is the case here – the Schedule facilitates another
`year-long delay in the potential resolution of this case to the continued prejudice of Applied, the
`APPLIED’S MOTION FOR RELIEF FROM
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`NONDISPOSITIVE PRETRIAL ORDER
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`Case 5:20-cv-09341-EJD Document 161 Filed 07/28/22 Page 5 of 7
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`manufacturer, and its customers, Intel and Samsung, who continue to face the same claims for their
`use of the same Applied products in Texas.
`Moreover, the Schedule (1) presumes the Court will allow Demaray to amend its answer to
`add infringement claims and (2) regardless of the Court’s decision on Demaray’s motion, does not
`account for the unique posture of this case, including that the parties have completed claim
`construction briefing and agree that resetting all claim construction deadlines pursuant to a default
`Patent Local Rules schedule is not warranted. The Schedule, on its face, largely tracks the Patent
`Local Rule deadlines as though this were a newly filed patent infringement lawsuit requiring the
`sequential disclosures of infringement contentions, invalidity contentions, claim construction
`exchanges, briefing and then a Markman hearing. But the disclosures contemplated by the Patent
`Local Rules (other than a Markman hearing) have all already occurred.
`First, in the Customer Suits, the final infringement contentions deadline passed in June
`2022, where Demaray continues to accuse numerous Applied PVD products of infringement,
`including ones it has repeatedly represented to this Court that it lacks sufficient information to
`accuse. Dkt. 101 at 3:7-21; Dkt. 130-2 Hr’g Tr. at 7:12-8:2. That untenable position aside, the
`parties have long been past the Patent Local Rule 3-1 disclosures of infringement contentions
`through Demaray’s allegations in the Customer Suits.
`Second, and similarly, the final invalidity contentions deadline passed in the Customer Suits
`in June 2022. Demaray is fully aware of the invalidity issues that could be presented in this case if
`the Court were to allow Demaray’s infringement claims. Moreover, last month the PTAB issued
`final written decisions in Applied’s IPRs finding that Applied had not met its burden in establishing
`invalidity. In the Customer Suits, Demaray has argued that Intel and Samsung are estopped from
`continuing to assert its sections 102/103 invalidity arguments and demanded updated contentions
`identifying which theories are not estopped and still being pursued.
`Finally, the parties in this case have already completed all claim construction deadlines
`including briefing. Pursuant to the Patent Local Rules, Applied made its Patent L.R. 4-1 disclosures
`on October 14, 2021, fourteen days after Demaray answered but chose not to assert compulsory
`counterclaims of infringement. Demaray refused to comply. On November 4, 2021, Applied made
`APPLIED’S MOTION FOR RELIEF FROM
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`NONDISPOSITIVE PRETRIAL ORDER
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`Case 5:20-cv-09341-EJD Document 161 Filed 07/28/22 Page 6 of 7
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`its Patent L.R. 4-2 disclosures, and again, Demaray refused to comply. Applied then filed a motion
`to compel Demaray to comply with the Patent Local Rules, Dkt. 83, which the Court referred to
`Magistrate Judge Cousins, Dkt. 87. On December 15, 2021, Magistrate Judge Cousins ordered
`Demaray to comply with the Patent Local Rules, noting that “Demaray essentially has granted itself
`a further stay of the case even after Judge Davila ordered an end to the discovery stay on October
`15, 2021.” Dkt. 101 at 3:14-16. Demaray thereafter disclosed no new claim terms for
`construction and recycled the same claim construction positions and arguments it advanced
`in the Customer Suits. Moreover, as Magistrate Cousins recently denied Demaray’s motion for
`“targeted discovery” from Applied, it would strain credibility for Demaray to suggest the
`contentions in this case would be materially different than those in the Customer Suits or that they
`would open the door in this case for further claim construction. Requests for further claim
`construction are nothing more than another delay tactic.
`On March 18, 2022, Applied filed its opening claim construction brief. Dkt. 138. On March
`23, 2022, Demaray filed a motion to enlarge time to respond to Applied’s opening claim
`construction brief, seeking an indefinite stay of claim construction deadlines until after the Court
`addressed its motion to amend to add infringement claims. No enlargement of time was granted,
`forcing Demaray to file its responsive claim construction brief on April 1, 2022. Dkt. 145. Reply
`and sur-reply briefs followed on April 8 and April 15 respectively. Dkt. 147-148. On April 15,
`2022, Demaray filed its sur-reply claim construction brief. Dkt. 148. No Markman hearing had
`been set, but the Magistrate’s Schedule resets all of the claim construction deadlines under the
`default timeline in the Patent Local Rules, resulting in a Markman hearing in April 2023—nine
`months from now and a year after the parties already completed briefing.
`In sum, the Schedule does not comport with the unique posture of this case and the resulting
`delay precludes the resolution of this case from impacting the Customer Suits.
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`IV. CONCLUSION
`Applied respectfully requests that the Court, regardless of the outcome of Demaray’s
`motion, review the Order and reset the Schedule to account for the above-identified progress in this
`case and at a minimum, schedule a Markman hearing at the Court’s earliest convenience.
`APPLIED’S MOTION FOR RELIEF FROM
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`NONDISPOSITIVE PRETRIAL ORDER
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`Case 5:20-cv-09341-EJD Document 161 Filed 07/28/22 Page 7 of 7
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`DATED: July 28, 2022
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`YAR R. CHAIKOVSKY
`MATTHIAS KAMBER
`PHILIP OU
`JOSEPH J. RUMPLER, II
`DAVID OKANO
`BORIS LUBARSKY
`PAUL HASTINGS LLP
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`PAUL HASTINGS LLP
`By: /s/ Yar R. Chaikovsky
`YAR R. CHAIKOVSKY
`Attorneys for Plaintiff
`APPLIED MATERIALS
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`APPLIED’S MOTION FOR RELIEF FROM
`NONDISPOSITIVE PRETRIAL ORDER
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