Case 1:12-cv-00398-GMS Document 30 Filed 04/19/13 Page 1 of 19 PageID #: 382
`Case 1:12—cv—OO398—GMS Document 30 Filed 04/19/13 Page 1 of 19 Page|D #: 382
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`HUMANEYES TECHNOLOGIES LTD.
`
`Plainryjf
`
`V.
`
`CA. No. 12-398-GMS
`
`SONY CORPORATION, SONY
`
`CORPORATION OF AMERICA, SONY
`
`ELECTRONICS INC., SONY MOBILE
`COMMUNICATIONS AB, AND SONY
`MOBILE COMNIUNICATIONS (USA) INC.,
`
`Dejendonts.
`
`
`OPENING BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO STAY LITIGATION
`PENDING THE OUTCOME OF INTER PARTES REVIEW OF THE PATENTS-IN—SUIT
`
`OF COUNSEL:
`
`I011“ F1°°k
`Walter I-Ianley
`Michelle Camiaux
`Sheila Mortazavi
`Iuliana Tanase
`KENYON & KENYON LLP
`One Broadway
`New York, New York 10004~1050
`(212) 425-7200
`
`Dated: April 19, 2013
`
`RLF1 8509595v.1
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`Chad M. Shandier (#3796)
`Elizabeth R. He (#5345)
`RICHARDS, LAYTON & FINGER, P.A.
`O R d
`S
`He
`0 {my quare
`920 N. Kmg Street
`WI1TflIHgIOD,
`(302) 651-7700
`Shand1er@r1f.c0m
`He@flf_COm
`
`Atrorneysfor Defendants Sony Corporation,
`Sony Corporation ofAmerica, Sony Electronics
`Inc., Sony Mobile Communications AB, Sony
`Mobile Communications (USA) Inc.
`
`

`
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`TABLE OF CONTENTS
`
`TABLE OF AUTHORITIES ........................................................................................................ .. ii
`
`I.
`
`II.
`
`NATURE AND STAGE OF PROCEEDINGS ................................................................ .. 1
`
`SUMMARY OF ARGUMENT ........................................................................................ .. 3
`
`III.
`
`STATEMENT OF FACTS ............................................................................................... .. 4
`
`IV.
`
`ARGUMENT .................................................................................................................... .. 5
`
`A.
`
`B.
`
`Stays Pending Inter Partes Review Are Favored ........................................................... .. 5
`
`The Relevant Factors Weigh in Favor of Staying This Action ....................................... .. 7
`
`1. Staying This Action Will Eliminate or Simplify the Issues for Trial ......................... .. 8
`
`2. The Early Stage of This Case Weighs in Favor of 51 Stay ......................................... .. 10
`
`3. A Stay Will Not Result in Undue Prejudice to Hu1na11Eyes ..................................... .. 11
`
`V.
`
`CONCLUSION ............................................................................................................... .. 14
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`1
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`Cases
`
`TABLE OF AUTHORITIES
`
`Abbott Diabetes Care, Inc. v. Dexcom, Inc.,
`
`No. 06—514—GMS, 2007 WL 2892707 (D. Del. Sept. 30, 2007) ............................................... .. 6
`
`Alloc, Inc. v. Unilin Decor N.l/.,
`
`N0. 03—253~GMS, 2003 WL 21640372 (D. Del. July 11, 2003) ......................................... .. 6, 9
`
`Bausch & Lomb Inc. v. Alcon Labs., Inc.,
`
`914 F. Supp. 951 (W.D.N.Y. 1996) .................................................................................... .. 6, 11
`
`Canady v. Erbe Electromedizin GmbH,
`271 F. Supp. 2d 64 (D.D.C. 2002) ............................................................................................ .. 6
`
`Capriola Corp. v. LaRose Indus, LLC,
`Case No. 8:12-cv-2346-T-23TBM, (M.D.F1a. Mar. 11, 2013) ...................................... .. 5, 6, 12
`
`Ever Win Inr’l Corp. v. Radioslzack Corp,
`——— F. Supp. 2d —~—~, 2012 WL 4801890 (D. Del. Oct. 9, 2012) ....................................... ..passim
`
`Gould v. Control Laser Corp,
`705 F.2d 1340 (Fed. Cir. 1983) ............................................................................................ .. 5, 8
`
`Hewlett-Packard Co. v. Acuson Corp-.,
`N0. C-93-0808 (MHP), 1993 WL 149994 (N.D. Cal. May 5, 1993). ...................................... .. 6
`
`Neste Oil Oyj v. Dynamic Fuels, LLC,
`No. 12—662~GMS, 2013 WL 424754 (D. Del. Jan. 31, 2013) ......................................... ..passim
`
`Pegasus Dev. Corp. v. DirectTV, Inc.,
`No. 00-1020-GMS, 2003 WL 21105073 (D. Del. May 14, 2003) ..................................... .. 6, 11
`
`Phillips 12. AWH Corp,
`415 F.3d 1303 (Fed. Cir. 2005) .............................................................................................. .. 10
`
`Robert Bosch Healilicare Sys., Inc. v. Carcliocorn, LLC,
`N0. 5:12-3864—Em, 2012 WL 6020012 (N.D. Ca1.Dee. 3,2012) ...................................... .. 6, 9
`
`Semiconductor Energy Lab. Co., V. Chirnei Innolux Corp,
`N0. SACV 12—21—JST, 2012 WL 7170593 (C.D. Cal. Dec. 19, 2012) ............................ ..passim
`
`St. Clair Inreli. Prop. Consulranrs, Inc. 12. Canon, Inc,
`412 F. App’): 270 (Fed. Cir. 2011) .......................................................................................... .. 10
`
`Synchronoss Techs, Inc. v. Asurion Mobile Applications, Inc,
`Case No. 3:11~cv-05811—FLW-TJB, 2013 WL 1192266 (D.N..T. Mar. 22, 2013) .................... .. 9
`
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`ii
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`

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`Texrron Innovations Inc. v. Toro Co,
`
`No. 05-486—GMS, 2007 WL 7772169 (D. De}. Apr. 25, 2007) ................................... .. 6, 11, 13
`
`T0mco2 Equzp. Co. v. Southeastern Agra‘-Systems, Inc.,
`542 F. Supp. 2d 1303 (N.D. Ga. 2008) ..................................................................................... .. 7
`
`Tse 12. Apple, Inc,
`No. C 06-06573 (SBA), 2007 WL 2904279 (N.D. Cal. Oct. 4, 2007) ..................................... .. 6
`
`Translogic Tech, Inc. v. Hitachi, Ltd,
`250 F. App'x 988 (Fed. Cir. 2007) .......................................................................................... .. 13
`
`Wall Corp. v. Bonddesk Grp., LLC,
`N0. 07—844~GMS, 2009 WL 528564 (D. Del. Feb. 24, 2009) .............................................. .. 6, 7
`
`Statutes
`
`35 U.S.C. § 6 ............................................................................................................................... .. 10
`
`35 U.S.C. § 252 ............................................................................................................................. .. 9
`
`35 U.S.C.§313 ............................................................................................................................. ..5
`
`35 U.S.C. § 314 .................................................................................................................... ..pas.sz'm
`
`35 U.S.C.§315 ............................................................................................................................. ..9
`
`35 U.S.C. § 316 ................................................................................................................. ..7,10,12
`
`37 C.F.R. § 42.100 .................................................................................................................. .. 2, 12
`
`37 C.F.R. §42.107 ........................................................................................................................ .. 2
`
`Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 314(a), 125 Stat. 284 (2011) ............ .. 5
`
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`iii
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`

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`Defendants Sony Corporation (“SC”), Sony Corporation of America (“SCA”), Sony
`
`Eiectronics Inc. (“SEL”), Sony Mobile Communications AB (“SOMC”), and Sony Mobile
`
`Communications (USA) Inc. (“SOMC USA”) (collectively, “Sony” or “Defendants”) respectfully
`
`submit this brief in support of their Motion to Stay Litigation Pending the Outcome of Inter
`
`Partes Review of the Patents—in—Suit.
`
`I.
`
`NATURE AND STAGE OF PROCEEDINGS
`
`On March 29, 2012, Plaintiff Hun1anEyes Technologies Ltd. (“Plaintiff” or
`
`“HurnanEyes”) filed this action against Sony, alleging that certain Sony cameras and mobile
`
`devices having “3D Sweep” or “Sweep Multiangle” features infringe U.S. Patent No. 6,665,003
`
`(“the ‘O03 patent”) and U.S. Patent No. 7,477,284 (“the ’284 patent”). D1. 1. HumanEyes also
`
`I filed a parallel complaint with the International Trade Commission (“ITC”) on March 28, 2012.
`
`Sony filed an unopposed motion to stay this litigation pending resolution of the ITC
`
`Investigation and the Court stayed the action on May 16, 2012. D.I. 9, 10.
`
`On September 21, 2012, HumanEyes voluntarily moved to dismiss its ITC complaint and
`
`to terminate the Investigation after learning “[t]hrough depositions recently held in Tokyo, Japan,
`
`as well as through publicly available information, .
`
`.
`
`. that Sony intends to remove the accused
`
`features from its product lines at least by the [September 3, 2013] target date in this
`
`Investigation.” Exhibit A to Declaration of Iuliana Tanase (“Tanase Deal”) at 1. The ITC
`
`Investigation was terminated on October 23, 2012.
`
`The Court lifted the stay in this action on January 8, 2013. D.I. 16. Sony moved to
`
`dismiss the Complaint for failure to adequately plead contributory infringement, and HumanEyes
`
`filed a First Amended Supplemental Complaint in lieu of a response. D.I. 22, 27. Sony filed its
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`Answer on March 11, 2013. D.I. 28. The Court has not yet scheduled a Rule 16 scheduling
`
`conference and no trial date has been set.
`
`On March 29, 2013, SC filed two petitions for inter partes review (“IPR”) — one for each
`
`of the patents-in-suit — with the Patent Trial and Appeal Board (“PTAB”) of the United States
`
`Patent and Trademark Office (“USPTO”). Tanase Decl., Ex. B, Petition for Inter Partes Review
`
`of U.S. Pat. No. 6,665,003, IPR2013-00218 (P.T.A.B. Mar. 29, 2013); Ex. C, Petition for Inter
`
`Partes Review ofU.S. Pat. No. 7,477,284, IPRZOI3-00219 (P.T.A.B. Mar. 29, 2013). The
`
`remaining Sony Defendants were all identified as real parties in interest in the SC petitions. The
`
`petitions bring to the attention of the USPTO several references that previously were not
`
`considered during prosecution and challenge as invalid the claims of the patents-in-suit that were
`
`asserted by Hu1nanEyes in the now—tern1inated ITC Investigation. Tanase Decl., Ex. B at 1, EX.
`
`C at 1. The PTAB must decide whether to institute IPRS on the grounds requested by SC no later
`
`than October 3, 2013,1 and is required to complete its review within twelve to eighteen months of
`
`institution. 37 C.F.R. § 42.100(c).
`
`In order to avoid unnecessary expenditure of time and resources by both the Court and
`
`the parties, Sony now respectfully requests that the Court stay this case—which has not
`
`progressed beyond the early pleading Stage——pending the outcome of the IPRS.
`
`1 The PTAB is required to decide whether to institute inter partes review within six months of
`the date of a PTO notice indicating that an IPR request has been granted a filing date, here April
`3, 2013. See 35 U.S.C. § 314(b) (requiring institution within three months of either receipt of a
`patent owner’s preliminary response or the last date that such a preliminary response may be
`filed); 37 C.F.R. § 42.10’/(b) (requiring that a patent owner’s preliminary response be filed
`within three months of the PTO notice of an IPR filing date); Tanase Decl. EX. D (April 3, 2013
`PTAB Notices of Filing Date according SC’s petitions a filing date of March 29, 2013).
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`II.
`
`SUMMARY OF ARGUMENT
`
`The Court should stay this action pending inter partes review because doing so will
`
`eliminate or streamline the issues to be litigated in this action (which is still in the early pleading
`
`stage), and will not unduly prejudice or tactically disadvantage HumanEyes.
`
`First, the outcome of the IPR process will either eliminate altogether or substantially
`
`narrow the issues to be tried in this case, and the IPR process will be completed within twelve
`
`months (or eighteen months, for good cause) after institution. If all claims are found invalid, the
`
`litigation will end. If claims are amended during IPR to avoid a holding of invalidity, the
`
`doctrine of intervening rights will preclude any assertion of infringement with respect to
`
`products sold prior to conclusion of the IPR, and potentially dispose of the litigation in View of
`
`the fact that the accused features are not included in new models of Sony’s products. To the
`
`extent any claims survive IPR without being amended, Sony will be estopped from challenging
`
`validity on any ground that Sony raised, or reasonably could have raised, during the IPRS.
`
`Proceeding with this case in parallel with the IPRS thus creates a substantial risk that the parties
`
`and the Court will unnecessarily expend resources litigating issues that will either be eliminated
`
`or substantially altered by the IPR process.
`
`Second, HumanEyes will not be unduly prejudiced by a stay pending the outcome of the
`
`IPRS. HurnanEyes is seeking money damages in this case, not injunctive relief. If the PTAB
`
`institutes the IPRs, they will proceed expeditiously to a final determination within a year (or
`
`eighteen months, at most). Therefore, even if a claim of one of the patents-in-suit were to
`
`survive the IPR without being amended and I-IumanEyes were to prevail in the resumed
`
`litigation, HumanEyes can still seek damages for past infringement and can seek prejudgment
`
`interest to compensate for any delay. Delay of litigation alone does not constitute undue
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`prejudice to the non-moving party where monetary damages would sufficiently compensate that
`
`party. In the event that the PTAB declines to institute the IPRs, a stay will be of short duration
`
`(less than six months), and HumanEyes certainly would suffer no undue prejudice under that
`
`scenario.
`
`III.
`
`STATEMENT OF FACTS
`
`In its Amended Complaint, HumanEyes accuses certain Sony cameras and mobile
`
`devices of infringing the ’003 patent and the ’284 patent. D.I. 27, ‘W 26-59. HumanEyes also
`
`alleges that it is the exclusive licensee of the asserted patents “with all substantial rights and
`
`interest in practicing, sublicensing, and enforcement.” Id. W 23-25. HurnanEyes seeks damages
`
`but does not seek any injunctive relief.
`
`Id. at p. 18 (“Prayer for Relief’). Although HumanEyes
`
`did not identify the specific claims that Sony allegedly infringed in its original or amended
`
`complaint, HumanEyes did identify the allegedly infringed claims in the parallel ITC proceeding.
`
`In particular, HnmanEyes identified claims 1-3 and 22 of the ’003 patent and claims 1-3, 10, 20,
`
`27-29, 36 and 37 of the ’284 patent in its ITC Complaint (Tanase Decl., EX. E W 5, 36, 40), and
`
`also identified those same claims on August 29, 2012 in response to Sony’s contention
`
`interrogatories in the ITC case. On September 21, 2012, HumanEyes voluntarily moved to
`
`dismiss its ITC complaint and the ITC terminated the Investigation on October 23, 2012. Tanase
`
`Decl., Ex. A.
`
`On March 29, 2013, shortly after the Court lifted the stay in this action and Within the
`
`time period permitted by statute, SC filed petitions for IPR of the claims of the patentS—in—suit
`
`that had been asserted by HumanEyes in the ITC Investigation. Tanase Decl., EX. B at 2; Ex. C
`
`at 1; Tanase Dec1., Ex. E 111] 5, 36, 40. SC’s petition for IPR of the ’003 patent argues that the
`
`asserted claims are anticipated by or obvious over four prior art references. Tanase Decl., Ex. B
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`at 16-43. SC’s petition for IPR of the ’284 patent argues that the asserted claims are anticipated
`
`by or obvious over three of the same prior art references, as well as four others. Tanase Decl.,
`
`Ex. C at 16-52. Only one of these references was cited during prosecution of one of the patents-
`
`in-suit.2
`
`IV.
`
`ARGUMENT
`
`A.
`
`Stays Pending Inter Partes Review Are Favored
`
`A district court has the inherent and discretionary power to stay litigation pending inter
`
`parres reexamination. Gould v. Control Laser Corp, 705 F.2d 1340, 1342 (Fed. Cir. 1983). On
`
`September 16, 2012, the Leahy-Smith America lnvents Act (“AIA”) replaced inter parres
`
`reexamination with IPR. Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 314(a), 125
`
`Stat. 284 (2011). Because IPR has some similarities3 to inter parres reexamination, courts have
`
`applied precedent regarding stays pending reexamination when evaluating motions for a stay
`
`pending IPR. See Semiconductor Energy Lab. Co. v. Chimei Irmolux Corp, No. SACV 12-21-
`
`JST, 2012 WL 7170593, at *1, n.1 (C.D. Cal. Dec. 19, 2012) (staying patent infringement case
`
`pending final exhaustion of IPR proceedings, including any appeals); Capriola Corp. v. LaRose
`
`Indus, LLC, Case No. 8:12-cv-2346-T-23TBM, Dkt. No. 49, Slip Op. at 2 (M.D. Fla. Mar. 11,
`
`2013) (attached as Tanase Decl., Ex. F) (granting a motion to stay pending IPR based in part on
`
`acknowledged benefits of stays pending reexamination).
`
`Inter parres reexamination had been favored for testing the validity of issued patents
`
`because “Congress instituted the reexamination process to shift the burden of reexamination or
`
`2 One of the four additional prior art references addressed in SC’s petition for IPR of the ’284
`patent was cited (but not discussed) during prosecution of that patent.
`
`3 IPR is similar to inter partes reexamination in that the petitioner for IPR actively participates in
`the proceeding and is estopped by the outcome (in contrast with ex parte reexamination).
`5
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`patent validity from the courts to the PTO” and “courts are cognizant of Congress’s intention of
`
`utilizing the PTO’s specialized expertise to reduce costly and timely litigation.” Canady v. Erbe
`
`Electromedizin GrnbH, 271 F. Supp. 2d 64, 78 (D.D.C. 2002) (internal citations omitted).
`
`IPR similarly serves to have the USPTO be more “engaged in a transparent process to
`
`create a timely, cost—effective alternative to litigation.” Tanase Decl., Ex. G at 48,680 (Changes
`
`to Implement Inter Partes Review Proceedings, Post-Grant Review Proceedings, and
`
`Transitional Program for Covered Business Method Patents, 77 Fed. Reg. 48,680 (Aug. 14,
`
`2012)). Accordingly, courts routinely have granted stays pending reexamination or IPR. See,
`
`e.g. , Neste Oil Oyj 12. Dynamic Fuels, LLC, N0. 12-662-GMS, 2013 WL 424754, at *6 (D. Del.
`
`Jan. 31, 2013); Semiconductor, 2012 WL 7170593, at *4; Capriola, Slip Op. at 5-6 (Tanase
`
`Decl., Ex. F); Robert Bosch Healthcare Sys., Inc. v. Cardiocom, LLC, No. 5:12—3864—EJD, 2012
`
`WL 6020012, at *5 (ND. Cal. Dec. 3, 2012); Ever Win Inr’l Corp. v. Radioshack Corp, —~ F.
`
`Supp. 2d --, 2012 WL 4801890, at *8 (D. Del. Oct. 9, 2012); Walt Corp. v. Bonddesk Grp., LLC,
`
`No. 07-844-GMS, 2009 WL 528564, at *2 (D. Del. Feb. 24, 2009); Abbott Diabetes Care, Inc. v.
`
`Dexcom, Inc., No. 06—5l4—GMS, 2007 WL 2892707, at *5 (D. Del. Sept. 30, 2007); Textron
`
`Innovations Inc. v. Toro Co., No. 05—486—GMS, 2007 WL 7772169, at *3 (D. Del. Apr. 25,
`
`2007); Altoc, Inc. v. Unilin Decor N. V., No. 03~253—GMS, 2003 WL 21640372, at *3 (D. Del.
`
`July 11, 2003); Pegasus Dev. Corp. v. DirectTl/I Inc., No. 00-1020-GMS, 2003 WL 21105073,
`
`at *3 (D. Del. May 14, 2003); Bouscb & Lamb Inc. v. Aicon Labs, Inc, 914 F. Supp. 951, 953
`
`(W.D.N.Y. 1996). Moreover, courts frequently have granted stays prior to the grant of a
`
`reexamination request. See, e.g., Texrron, 2007 WL 7772169; Tse v. Apple, Inc, No. 06-06573
`
`(SBA), 2007 WL 2904279, at *1, *5 (N.D. Cal. Oct. 4, 2007); Hewlett-Packard Co. v. Acuson
`
`Corp, No. C—93-0808 (MHP) 1993 WL 149994, at *1, *4 (N.D. Cal. May 5, 1993).
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`Indeed, the case for granting a stay pending an IPR is even more compelling than the
`
`case for granting a stay pending an inter partes reexamination. Semiconductor, 2012 WL
`
`7170593, at *2.
`
`in granting stays pending inter parres reexamination, courts have noted that, in
`
`contrast with ex parte reexamination, the requester (usually the defendant) is estopped by a
`
`finding of patentability, and, therefore, even if claims are not cancelled and the litigation
`
`resumes, the bases for challenging validity are narrowed. T0mco2 Equip. Co. v. Southeastern
`
`Agrz'—Systems, Inc, 542 F. Supp. 2d 1303, 1306 (N.D. Ga. 2008); see also Wall Corp, 2009 WL
`
`528564, at *1. A determination favorable to patentability in an IPR has the same estoppel effect.
`
`Moreover, IPRS are ti1ne—1imited by statute to a period of one year from institution. 35 U.S.C. §
`
`3l6(a)(11). Although the statute allows the PTAB to extend the period by no more than 6
`
`months “for good cause,” 35 U.S.C. § 316(a)(l 1.), the PTAB has stated that “[e]xtensions of the
`
`one-year period are anticipated to be rare.” Fed. Reg. Vol. 77, No. 157 at 48695 (August 14,
`
`2012). In contrast, the average pendency of an inter partes reexamination has been
`
`approximately three years. Tanase Decl., Ex. H. Therefore, an IPR provides the same certainty
`
`as an inter partes reexamination that issues will be narrowed even if challenged patent claims
`
`survive, but is completed in a much shorter time frame.
`
`B.
`
`The Relevant Factors Weigh in Favor of Staying This Action
`
`In determining whether to stay an action, courts generally consider: “(1) whether
`
`granting the stay will simplify the issues for trial; (2) the status of the litigation, particularly
`
`whether discovery is complete and a trial date has been set; and (3) whether a stay would cause
`
`the non—rnovant to suffer undue prejudice from any delay, or allow the movant to gain a clear
`
`tactical advantage.” Ever Win, 2012 WL 4801890, at *2 (citations omitted). All of these factors
`
`support staying this action.
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`1.
`
`Staying This Action Will Eliminate or Simplify the Issues for Trial
`
`“One purpose of the reexamination procedure is to eliminate trial of that issue (when the
`
`claim is cancelled) or to facilitate trial of that issue by providing the district court with the expert
`
`View of the PTO (When a claim survives the reexamination proceeding)” Gould, 705 F.2d at
`
`1342. “Whatever outcome occurs, there is the potential for the simplification of issues for trial,
`
`either by reducing the number of claims at issue, confirming the validity of the surviving claims,
`
`or narrowing the scope of a modified claim.” Ever Win, 2012 WL 4801890, at *2. This Court
`
`has also identified, inter alia, the following additional benefits resulting from reexamination
`
`proceedings: (1) “if patent is declared invalid, the suit will likely be dismissed,” (2) “the outcome
`
`of the reexamination may encourage a settlement without further involvement of the court,” (3)
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`“issues, defenses, and evidence will be more easily limited in pretrial conferences,” and (4) “the
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`cost will likely be reduced both for the parties and the court.” Neste Off, 2013 WL 424754, at
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`*4.
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`In order to institute IPR, the PTAB must determine “that there is a reasonable likelihood
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`that the petitioner would prevail with respect to at least 1 of the claims challenged in the
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`petition.” 35 U.S.C. § 3 l4(a). Therefore, if the PTAB does institute the IPRs here, the likely
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`result will be the cancellation of claims, which either will end the litigation (if all asserted claims
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`are cancelled) or greatly simplify the issues (by reducing the number of claims litigated). In the
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`IPR petitions, SC has presented grounds of invalidity, supported by declarations from fact and
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`expert Witnesses, based on prior art not previously considered by the USPTO (with the exception
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`of one reference that Was cited, but not discussed, in the prosecution the ’284 patent). See
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`RLFI 8509595v.l
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`Case 1:12-cv-00398-GMS Document 30 Filed 04/19/13 Page 13 of 19 PageID #: 394
`Case 1:12—cv—OO398—GMS Document 30 Filed 04/19/13 Page 13 of 19 Page|D #: 394
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`Tanase Decl., Ex. B at 11-46, Ex. C at 12-55. Accordingly, the IPRS are likely to be instituted4
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`and, if instituted, are highly likely to result in claims being cancelled.‘5
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`Once instituted, even if any claims were to survive, the issues to be tried in this action
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`would be substantially narrowed. By statute, Sony would be estopped in this case from asserting
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`invalidity on any ground it “raised or reasonably could have raised” during the IPRS. 35 U.S.C.
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`§ 315(c)(2). This estoppel effect has led courts to conclude that IPR proceedings result in a
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`simplification of issues that “weighs in favor of a stay.” Robert Bosch, 2012 WL 6020012, at *2;
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`Semiconductor, 2012 WL 7170593, at *2. In addition, “[e]ven if no claims are cancelled, it is
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`more likely than not that one or more of those claims will be narrowed.” Ever Win, 2012 WL
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`4801890, at *3. The amendment of any of the asserted claims would also greatly simplify the
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`issues to be litigated in this action by reducing or eliminating altogether any damages, which is
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`the only remedy sought here, under the doctrine of intervening rights. See 35 U.S.C. § 252; see
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`also Tanase Decl., Ex. H (finding claims amended or cancelled in 89% of inter partes
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`reexamination certificates issued between 1999 and June 30, 2012).
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`Moreover, even if the litigation resumes after the IPRS are concluded, the Court will have
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`the benefit of the expertise of the PTAB and the additional record of the IPR proceedings
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`4 As of April 10, 2013, the PTAB has instituted 89.13% (41 out of 46) of lPRs that it has
`considered. Tanase Decl., Ex. I.
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`5 If IPR is instituted for fewer than all of the claims and grounds requested by SC, the PTAB
`guidance in providing that detennination will still streamline issues in this action. See, e. g.,
`Synchronoss Techs, Inc. v. Asurion Mobile Applications, Inc, Case No. 3:11-cv-05811-FLW-
`TJB, 2013 VVL 1192266, at *2 (D.N.J. Mar. 22, 2013) (“even though reexamination only
`addresses a percentage of the claims of the asserted patents, the Court finds that the analysis
`provided by the PTO in construing those claims will provide valuable guidance”); Alloc, 2003
`WL 21640372, at *2 (granting stay when no asserted claims were at issue because a related
`patent was under reexamination and there was “sufficient correlation among all of the other
`patents for the court to conclude that a stay is appropriate”).
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`RLFI 8509595v.l
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`9
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`

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`Case 1:12-cv-00398-GMS Document 30 Filed 04/19/13 Page 14 of 19 PageID #: 395
`Case 1:12—cv—OO398—GMS Document 30 Filed 04/19/13 Page 14 of 19 Page|D #: 395
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`(including patentability arguments made by the patent owner) as a resource in conducting claim
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`construction. See Phfllips v. AWH Corp, 415 F.3d 1303, 1317 (Fed. Cir. 2005); St. Clair Intel].
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`Prop. Consultants, Inc. v. Canon Inc, 412 F. App’); 270, 275-76 (Fed. Cir. 2011)
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`(“Reexamination statements ‘are relevant prosecution history when interpreting claims.”
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`(quoting EI. du Pont de Nemours & Co. v. Phillips Petroleum C0,, 849 F.2d 1430, 1439 (Fed.
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`Cir. 1988))); 35 U.S.C. §§ 6, 316(0). Accordingly, it would be more efficient to await the
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`outcome of the IPRS prior to devoting any resources to discovery, claim construction, expert
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`reports, summary judgment or trial in this action. To do otherwise would almost certainly
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`require the Court to conduct claim construction again after the IPRs have concluded.
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`2.
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`The Early Stage of This Case Weighs in Favor of 2: Stay
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`“This Court is more likely to grant stays early in a case because they are then more likely
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`to advance judicial efficiency and maximize the likelihood that neither the Court nor the parties
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`expend their assets addressing invalid claims.” Ever Win, 2012 WL 4801890, at *4 (internal
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`citations and quotations omitted). Here, this case has not progressed beyond the early pleading
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`stage. The Court has not yet entered a scheduling order, and neither a Markman hearing nor a
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`trial date has been set. The parties have not engaged in any discovery in this action. Although
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`some fact discovery was conducted in connection with the ITC Investigation, HumanEyes
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`indicated it would move to terminate before the end of the fact discovery in that Investigation
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`and the parties never engaged in any expert discovery (or damages discovery because damages
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`are not at issue in the ITC). Additionally, no Markmcm order, or any other substantive ruling,
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`was made in connection with the ITC Investigation.
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`Courts routinely stay even cases that, unlike the present action, have reached an advanced
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`stage. See Semiconductor, 2012 WL 7170593, at *2 (“Accordingly, While this case is not in its
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`RLFI 8509595v,l
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`10
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`

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`Case 1:12-cv-00398-GMS Document 30 Filed 04/19/13 Page 15 of 19 PageID #: 396
`Case 1:12—cv—OO398—GMS Document 30 Filed 04/19/13 Page 15 of 19 Page|D #: 396
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`infancy, the Court concludes that this factor weighs in favor of a stay, because considering the
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`general time line of patent litigation, there is more work ahead of the parties and the Court than
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`behind the parties and the Court”); Texrron, 2007 WL 7772169, at *2 (“the court agrees with
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`[defendant] that a significant amount of work remains to be done, despite the fact that discovery
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`is completed”); Pegasus, 2003 WL 21105073, at *1 (staying case less than four months before
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`close of discovery and less than one year before trial); Bausch & Lamb, 914 F. Supp. at 952
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`(staying case after completion of fact discovery and seven months before trial).
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`Here, the parties still have a significant amount of Work to do in this action, including
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`completing fact discovery on liability issues, conducting damages discovery, preparing and
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`exchanging infringement and invalidity contentions and expert reports, conducting expert
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`depositions, briefing summary judgment motions, and addressing Markman issues. It would be a
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`waste of the Court’s and the parties’ resources to proceed with Markman and summary judgment
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`when such determinations may become moot or at the very least likely will need to be
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`reconsidered in View of amendments of claims and/or statements made during IPR.
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`3.
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`A Stay Will Not Result in Undue Prejudice to HumanEyes
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`The determination of whether there is undue prejudice is based on several
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`“considerations, including the timing of the reexamination request, the timing of the stay request,
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`the status of the reexamination proceedings, the relationship between the parties, and the related
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`question of Whether the plaintiff may be compensated through future money damages.” Neste
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`Oil, 2013 WL 424754, at *2 (internal citations omitted). These considerations all favor staying
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`this action.
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`With respect to the first two considerations, there is no undue prejudice to Humanfiyes
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`due to the timing of SC’s IPR requests and Sony’s motion to stay. IPR proceedings did not exist
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`before September 16, 2012, and SC filed its petitions for IPR on March 29, 2013, only two and a
`11
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`RLFI 3509595v.l
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`

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`Case 1:12-cv-00398-GMS Document 30 Filed 04/19/13 Page 16 of 19 PageID #: 397
`Case 1:12—cv—OO398—GMS Document 30 Filed 04/19/13 Page 16 of 19 Page|D #: 397
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`half months after the Court lifted the stay in this action. HumanEyes moved to terminate the ITC
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`Investigation, which had been scheduled to go to trial on January 28, 2013, before any
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`substantive determinations were made. Upon termination of the Investigation, SC diligently
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`reviewed the prior art and prepared two petitions for IPR. These petitions were promptly filed
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`on March 29, 2013, only five months after termination of the ITC Investigation. See Tanase
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`Decl., Exs. B, C. Furthermore, today, April 19, 2013, only three weeks after filing these IPR
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`petitions, Sony has moved for a stay. Sony’s