Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 1 of 25 PagelD #: 6958
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`ACCELERATION BAY LLC,
`
`Plaintiff,
`
`C.A. No. 16-453 (RGA)
`
`v.
`
`PUBLIC VERSION
`
`ACTIVISION BLIZZARD,INC.,
`
`Defendant.
`
`PLAINTIFF ACCELERATION BAY LLC’S ANSWERING BRIEF IN OPPOSITION
`TO DEFENDANT’S MOTIONTO DISMISS AND IN SUPPORT OF ACCELERATION
`BAY’S CROSS-MOTION FOR ATTORNEYS’ FEES AND SANCTIONS
`
`Philip A. Rovner (#3215)
`Jonathan A. Choa (#5319)
`POTTER ANDERSON & CORROON LLP
`Hercules Plaza
`P.O. Box 951
`Wilmington, DE 19899
`(302) 984-6000
`provner@potteranderson.com
`jchoa@potteranderson.com
`
`Attorneys for PlaintiffAcceleration Bay LLC
`
`OF COUNSEL:
`
`Paul J. Andre
`Lisa Kobialka
`KRAMERLEVIN NAFTALIS
`& FRANKEL LLP
`990 Marsh Road
`Menlo Park, CA 94025
`(650) 752-1700
`
`Aaron M.Frankel
`KRAMERLEVIN NAFTALIS
`& FRANKEL LLP
`1177 Avenue of the Americas
`New York, NY 10036
`(212) 715-9100
`
`Dated: March 6, 2017
`Public Version dated: March 17, 2017
`1247358
`
`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 2 of 25 PagelD #: 6959
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`TABLE OF CONTENTS
`
`I.
`
`Il.
`
`NATURE ANDSTAGEOF PROCEEDINGS 2... cecscccessessssseeetesneeeceectecsseeseeneesesevaceaseres 1
`
`SUMMARYOF THE ARGUMENTou... csesessseeeesenessesesesseeaeeesseeeesesetseseatssessesacareaeeeees 1
`
`TH.
`
`STATEMENT OF FACTSuc cesssssecessecesssesssseseeecsesessesceacseesecassessesesacsesseetevseeeeseseeaeees 3
`
`A.
`
`B,
`
`C.
`
`D.
`
`Acceleration Bay’s Infringement Allegations ...... ccc eeseseeseenerseneeenscnseeeeeeeeeneenes 3
`
`Acceleration Bay’s Substantial Investigation Before Filing the 2015 Case........... 4
`
`Acceleration Bay Refiled After Receiving Limited Discovery From Activision... 5
`
`Activision’s Harassment and Attempts to Intimidate Acceleration Bay’s CEO .... 7
`
`TV.—§ARGUMENTLe ecescsesesesesscsensesensnssessensesesessessesesesaesevsesacassersescesaaseassesaasaeeaeaeeceeenseesegeesas 8
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`Acceleration Bay’s Pre-Filing Investigation Was Reasonable 0... ceeseessereeees 8
`
`The Limited Discovery in the 2015 Case Confirms That Activision Infringes.... 10
`
`Activision’s Additional Non-Infringement Theories Are Unsupported and
`Contradicted By the Record... eseeeesseesesesererseessseeceseessseesessssenseesseneereseneensees 15
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`Acceleration Bay Has Not Received Any Discovery on Destiny... 18
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`The Court Should Sanction Activision For Filing This Baseless Motion............ 18
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`V.
`
`CONCLUSION Qu. iecescsccesenecssneessensseeesseeasesvsesseseseeeeeessseeceessrseseessesessesaseassesenseseseseasegs 20
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 3 of 25 PagelD #: 6960
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`TABLE OF AUTHORITIES
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`Page
`
`CASES
`
`Burkhart v. Kinsley Bank,
`852 F.2d 512 (Oth Cir.1988) occ eccssecsessececeesteesssssessecsseesssseeesecsaessessseeesesssessscseseasenereees 14
`
`Chambers v. NASCO, Inc.,
`501 U.S. 32 (1991) ceeeesccesessetssseecsscssessscseenssseesessesssessseesecsaesssenecseecnsesnensecassaeeeensessenserseseeed 19
`
`Cooter & Gell v. Hartmarx Corp.,
`A496 U.S. 384 (1990)... cecccsscsssscsssesesscssssssssessessesesusessnscsesesevsesssessesseesaesececsecseseasausseseesesseaseneces 18
`
`Greenberg v. Sala,
`822 F.2d 882 (Oth Cir. 1987) ...cccsecsssccscessesessscssssssssescsesseeesessesssesessssssaseseesasesessesesesesatensensenees 14
`
`HBAC Matchmaker Media, Inc. v. CBS Interactive Inc.,
`13-428-SLR, D.I. 42 (D. Del. Nov. 18, 2013) vce ccsssecscssessssssesssssssesscsecssssssssessesesensentes2, 9, 14
`
`Patelco Credit Union v. Sahni,
`262 F. 3d 897 (9th Cir. 2001) occ csccscsssssssssseesssessesessesssesvsscesssssseesesenseseessesecsssneenasensusnesssase 19
`
`Inre Prosser,
`777 F.3d 154 (3d Cir. 2015). cecccsscssessessecsssssestecsssssesseestscsseeessscesesessesseseeaseecsessatensensenees 19
`
`Inre Prudential Ins. Co. Am. Sales Practice Litig.,
`278 F.3d 175 (3d Cit, 2002)... csscssscssscsscsscsscssscssscsssssessessecessssssssssssssesssssersessenssresessesserenseneees 19
`
`QO-Pharma, Inc. v. Andrew Jergens Co.,
`360 F.3d 1295 (Fed. Cit, 2004)... cssscsscssssscssesssssssssessessscssssessssssssseesseesessssessecasereeaeeas 9, 10, 14
`
`Safe-Strap Co. v. Koala Corp.,
`270 F. Supp. 2d 407 (S.D.N.Y. 2003)... ccsesscsscsssssssseessessscssecseessssnessseveeeessessensesesaseessetensensenees2
`
`W.L. Gore & Assocs., Inc. v. C.R. Bard, Inc.,
`11-515-LPS, 2017 WL 525669 (D. Del. Feb. 8, 2017) ....cccccesccsesssssseecessesssecscsersersesseseecseenes 19
`
`Walker Digital, LLC v. Google Inc.,
`Civil Action No. 11-311-RGA, 2015 WL 5190685 (D. Del. Sept. 4, 2015)eee 9, 10
`
`STATUTES
`
`28 U.S.C, § 1927 eeccssccscsessesssseesecssssscsscesseseresssseseceseessceasecsessessesausssesvesenasesnseenecensensssesensesseenseses 19
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`OTHER AUTHORITIES
`
`Del. Rules of Professional Conduct 4.2 ......cccsccesssssessssessesssesssessaeseessessssteesessesssseaessesseestensueseeess 20
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 4 of 25 PagelD #: 6961
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`Fed. R. Civ. Proc. 5....ccccescccccssccscsesssccevcssseccseusescvessvueucevsasessnssesseseesevsssssseeaesessesaesvsrstsseeeseeagenaeaenes 20
`
`Fed. R. Civ. Proc. 11 cece seveeseveeeeseensensenevsesseneessensseasseesuseessssssssessessussesesessesieseeaseeees passim
`
`Fed. R. Civ. Proc. 30 cccccccsccsssscsssscsssesscceevessssssncnesccesecnnscsesssessesseeseeeeseeeeseseessesseseseegecsaneegesseeeees 18
`
`iii
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 5 of 25 PagelD #: 6962
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`I.
`
`NATURE AND STAGE OF PROCEEDINGS
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`Activision’s Rule 11 Motion is just another chapter in its vexatious approachto this
`
`litigation. In the predecessor case, Activision thwarted discovery multiple times, leading to the
`
`Special Master ordering it to make witnesses available for deposition. Then, after Acceleration
`
`Bayfiled the instant action and asked that the first case be dismissed to address a standing issue,
`
`Activision filed an unsuccessful and unwarranted exceptional case motion asking this Court for a
`
`fee award. Meanwhile, despite telling this Court it was a prevailing party on the predecessor
`
`action, Activision filed an anticipatory declaratory judgment action in California in a failed
`
`attempt to move venuefor this dispute. Now that its machinations have been thwarted andits
`
`motions denied, Activision filed the instant Motionasits latest attempt to harass Acceleration
`
`Bayandits principal and delay the progression ofthis case.
`
`I.
`
`SUMMARY OF THE ARGUMENT
`
`Activision’s Motion is completely baseless, and the Court should sanction Activision for
`
`filing it. Indeed, the Special Master, after evaluating extensive briefing, including an expert
`declaration, and a full day hearing, considered and rejected the very arguments Activision
`
`recycles in its Motion — a decision Activision did not challenge.
`
`Acceleration Bay and its counsel did not file this action lightly. Before filing, counsel
`
`conducted a careful pre-filing investigation that included: (i) reviewing the asserted patents and
`
`their file histories, (ii) conducting an extensive search of publicly available information on the
`
`accused products and their functionality, (iii) comparing the claims, construed in light of the
`
`intrinsic record, with the accused products; (iv) reviewing technical and academicliterature on
`
`the games and multiplayer networks, (v) testing and playing the gamesto verify their relevant
`
`functionality, (vi) engaging Dr. Nenad Medvidovié, a leading expert in the field of software and
`
`distributed systems architecture, who conducted an independent investigation and concludedthat
`
`Activision’s accused products infringe Acceleration Bay’s patents and (vii) preparing a detailed
`
`pre-filing memorandum, which can be madeavailable to the Court for im camera inspection, that
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`set forth the analysis of Activision’s infringement.
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 6 of 25 PagelD #: 6963
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`In contrast, Activision did not give such careful preparation to its Motion, failing to even
`
`submit an expert declaration in support of its non-infringement theories.
`
`In reality, Activision’s
`
`Motion is nothing more than a premature motion for summary judgment of non-infringement
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`filed before the completion of fact discovery, claim construction, and expert discovery. By
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`skipping all the normal proceduresofthe litigation process, Activision is seeking to have the
`
`Court construe the claims in Activision’s favor, grant summary judgment of non-infringement
`
`and concludethat Acceleration Bay’s infringementtheoryis entirely baseless. See Ex. 1!, HBAC
`
`Matchmaker Media, Inc. v. CBS Interactive Inc., 13-428-SLR, D.I. 42 at *4 (D. Del. Nov. 18,
`
`2013)(denying Rule 11 motion: “The court is not prepared to engage in a claim construction
`
`exercise ... at this stage of the proceedings, with no context provided by discovery or a motion
`
`practice”). The Advisory Committee explains that “Rule 11 motions .
`
`.
`
`. should not be employed
`
`... to test the sufficiency or efficacy of allegations in the pleadings; other motionsare available
`
`for those purposes.” Fed. R. Civ. P. 11 Advisory Comm. Notes (1993 Amendment); see also
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`Safe-Strap Co. v. Koala Corp., 270 F. Supp. 2d 407, 416-17 (S.D.N.Y. 2003) (noting that Rule
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`11 should not be used to raise issues that more properly can be disposed of by a motion to
`
`dismiss or for summary judgment).
`
`Activision waited nearly two years from Acceleration Bay’s filing of the predecessor case
`
`to file this Motion. In an attempt to explain awaythis delay, which aloneraises serious doubts as
`
`to Activision’s belief in the merits of its Motion, Activision argues that the limited discovery
`
`taken in the predecessor action should have led Acceleration Bay to concludethat it has no basis
`
`to continue to pursueits claims. In fact, that limited discovery has only bolstered Acceleration
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`Bay’s infringement theories. Activision’s source code and its corporate designeesflatly
`
`contradictits present non-infringement theories and confirm Acceleration Bay’s goodfaith basis
`
`to bring this action. Further discoveryis likely to yield the sameresults, perhaps explaining
`
`Activision’s desperate attempt to end this case. Accordingly, the Court should deny the Motion
`
`' Unless otherwise noted, all “Ex.” citations are to the Declaration of Paul Andre in Support of
`Acceleration Bay’s Opposition to Motion to Dismiss (“Andre Decl.”), filed herewith.
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 7 of 25 PagelD #: 6964
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`because ample evidence demonstrates the objective reasonableness of Acceleration Bay’s
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`decisionto file suit.
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`Beyondits substantive lack of merit, Activision’s Motion is highly problematic becauseit
`
`is just the latest foray in its campaign to harass and improperly pressure Acceleration Bay to
`abandon its meritoriousclaims.
`
`ED<tivision filed a meritless retaliatory patent
`
`infringement suit against xTV, a startup company ownedin part by Mr. Ward. While xTV
`quickly obtained dismissal of that bogus action,ee
`
`Ps] Activision also served harassing subpoenas onthree entities associated with Mr.
`
`Ward and on Mr. Ward personally, even though heis an officer of a party. Most recently,
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`Activision violated Delaware’s ethical rules by directly communicating with Mr. Ward regarding
`
`this Motion in a further attempt to intimidate Acceleration Bay into abandoningits case.
`
`Activision’s filing and maintenance of this Motion is frivolous and only continues
`
`Activision’s pattern of harassing Acceleration Bay and its CEO. Consequently, Acceleration
`
`Bay asks the Court to award Acceleration Bayits attorneys’ fees in opposing the Motion,to
`
`impose a further meaningful sanction against Activision in an amountto be determined by the
`
`Court to act as a deterrent to prevent this type of misconduct from happening again and to
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`require Activision to seek leave from the Court before filing any further motionsin thiscase.
`
`WW.
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`STATEMENT OF FACTS
`
`A.
`
`Acceleration Bay’s Infringement Allegations
`
`Acceleration Bayfiled suit against Activision on March 11, 2015, asserting infringement
`
`of U.S. Patent Nos. 6,701,344, 6,714,966, 6,732,147, 6,829,634, 6,910,069 and 6,920,497, (the
`
`“Asserted Patents”). C.A. No, 15-228-RGA(the “2015 Case”), D.I. 1. Acceleration Bay alleged
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`infringement based on Activision’s Call of Duty: Black Ops II and Advanced Warfare products
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`(“CoD”), which are “first-person shooter” games where players control soldiers that can
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 8 of 25 PagelD #: 6965
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`cooperate and compete against other players, and World of Warcraft (“WoW”), a “massive
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`multiplayer online” game with a fantasy theme. Jd. Acceleration Bayalso asserted infringement
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`based on Activision’s distribution of Destiny, a science-fiction themedfirst-person shooter game,
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`developedby third-party Bungie (together with CoD and WoW,the “Accused Products”).
`
`In connection with the Court’s finding regarding prudential standing, Acceleration Bay
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`filed this action and requested dismissal without prejudice of the 2015 Case, which the Court
`
`granted. 2015 Case, D.I. 153 (Order); D.I. 1 (Complaint).
`
`B.
`
`Acceleration Bay’s Substantial Investigation Before Filing the 2015 Case
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`Beforefiling the 2015 Case, Acceleration Bay’s counsel carefully reviewed the Asserted
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`Patents andtheir file histories in order to interpret the claims and understandthe relevant
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`technology. Andre Decl., 4 2. Counsel also reviewedall of the publicly available information
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`they could find regarding the Accused Products to determine if Acceleration Bay had a
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`reasonablebasis to allege infringement, including publications, technical materials and the
`
`games themselves. /d. The pre-filing investigation included using the games to verify their
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`functionality, as documented in screen captures used in Acceleration Bay’s complaintandinitial
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`infringement charts. /d.; see also Exs. 2-4 (initial infringement claim charts for CoD, WoW and
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`Destiny); 2015 Case, D.IL. 1.
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`Acceleration Bay also retained Dr. Nenad Medvidovié, a leading expertin the field of
`
`software and distributed systemsarchitecture, to assist with its pre-filing investigation. Andre
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`Decl., 3; Declaration of Nenad Medvidovi¢ (“Medvidovié Decl.”), 4 7. Dr. Medvidovié
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`reviewedthe patents, conferred with Acceleration Bay’s counsel, reviewed the publicly available
`
`information, including technicalliterature, researched the Accused Products and ultimately
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`concluded that the Accused Products infringe the Asserted Patents. Medvidovié Decl., 78. Dr.
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`4
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`

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`Acceleration Bay’s counsel prepared a detailed pre-filing memorandum based on their
`investigation and Dr. Medvidovi¢’s analysis. Andre Decl., 4 4.Po
`
`ee
`
`determining that Activision infringes the Asserted Patents, Acceleration Bayfiled the 2015 Case.
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`Id.,4 5.
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`C.
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`Acceleration Bay Refiled After Receiving Limited Discovery From Activision
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`While the 2015 Case pended from March 2015 until the filing of the instant action on
`
`June 17, 2016, discovery wasonly in its early stages. Activision provided very limited
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`documentary discovery for CoD — none of which related to the accused functionality — and no
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`documents for WoW (other than offering source code for inspection). Andre Decl., ¥ 6.
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`Activision did not provide a single email, even though Acceleration Bay provided search terms
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`in March 2016, consistent with the Scheduling Order in the case, and followed up numerous
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`times to request email production. /d., { 7; 2015 Case, D.I. 34 (Scheduling Order)at 4.
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`ED (onsequently, Acceleration Bay
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`served subpoenas on Destiny’s developer, Bungie, but has not yet received any confidential
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`documents or taken a deposition. /d.
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`Provided with no relevant documentation regarding the source code and waiting for
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`depositions that turned out to be months away, Acceleration Bay expendedconsiderable
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`resources reviewing Activision’s source code for CoD and Wowwithout any guidance about
`
`how the code was organized and the relevant portionsof the source code files. Andre Decl., ¥ 8.7
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`Despite the absence of such guidance, Dr. Medvidovié’s review of source code identified highly
`
`? Acceleration Bay moved in February and April 2016 to compel Defendants to proceed with
`depositions. Ex. 5 (2/12/16 Tr.) at 14:14-17; 2015 Case, D.I. 122.
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 10 of 25 PagelD #: 6967
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`relevant functionality and reconfirmed his opinion that the Accused Products infringe.
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`Medvidovié Decl., ff 11-13.
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`On March 2, 2016, in compliance with the Scheduling Order, Acceleration Bay served
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`Activision with its initial infringement claim charts providing a detailed explanation of the basis
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`for Acceleration Bay’s infringementallegations. Andre Decl., ¢ 10; Exs. 2-4. Notwithstanding
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`Acceleration Bay’s service of deposition notices in January 2016 shortly after the issuance of a
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`protective order, Activision refused to make witnesses available for depositions on the theory
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`that Acceleration Bay’s claim charts were inadequate. 2015 Case, D.I. 129 at 2. The Special
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`Master granted Acceleration Bay’s motion to compel Activision to proceed with depositions,
`
`finding Acceleration Bay’s charts sufficient to provide notice ofits infringementtheoriesso that
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`Activision could prepare witnesses for deposition. Jd.; see also Andre Decl., § 10. The Special
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`Master reachedthis decision after a full day hearing featuring extensive oral argument on the
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`same issues Activision raises in this Motion. Id?
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`Shortly before the dismissal of the 2015 Case, Acceleration Bay took a 30(b)(6)
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`deposition on CoD andapartial 30(b)(6) deposition on WoW,covering only certain aspects of
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`the game. Andre Decl., 11.4 These depositions and Dr. Medvidovié’s review of Activision’s
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`source code further confirmed his opinion that Activision infringes the Asserted Patents.
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`Medvidovié Decl., {ff 13-16.
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`Acceleration Bay also retained a consulting expert who conducted confidentialtests on
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`certain accused products. Andre Decl., 4 12. The results of these tests were consistent with
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`Acceleration Bay’s infringementtheories. Id.
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`After the Court’s order regarding standing in the 2015 Case, Acceleration Bayfiled the
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`3 The Special Master further ordered Acceleration Bay to update certain interrogatory responses
`regarding infringement after taking depositions, and the parties agreed to a schedule for doing so
`after the completion of initial depositions on a game. 2015 Case, D.I. 129 at 3-4; Andre Decl.,
`410. With discovery having resumed and having taken the initial CoD deposition, Acceleration
`Bay served Activision with an updated interrogatory response for CoD. Ex. 15.
`4 Acceleration Bay has not yet taken a deposition on Activision’s accused Blizzard Downloader
`functionality, used in WoW andother products. Andre Decl., ¥ 11.
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`

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`instant action. Before doing so, Acceleration Bay’s counsel carefully evaluated and relied upon
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`the additional evidence of Activision’s infringement. Andre Decl., { 13.
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`D.
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`Activision’s Harassment and Attempts to Intimidate Acceleration Bay’s CEO
`
`Since Acceleration Bayfiled the 2015-Case, Activision has attempted to coerce
`
`Acceleration Bay into dropping its claims by threatening and harassing Acceleration Bay’s CEO,
`le Wal.(ii__as
`
`Po] Declaration of Joe Ward (“Ward Decl.”), J 4-5. ActivisionGy
`(iin: a meritless retaliatory suit against xTV. Id., 95; Activision Pub., Inc.
`
`v. xTVNetworks, Ltd., 2:16-cv-737-SJO (C.D. Cal. Feb. 2, 2016). With its first substantive
`
`filing, xTV obtained dismissal of the suit because Activision asserted a patent that was not
`“patent eligible.” Ex. 6 (Order of Dismissal).Po]
`
`Activision further harassed Mr. Ward byserving three subpoenas on various companies
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`in which Mr. Ward wasa founderor advisor, including xTV, Argyle Data, Inc. and One Model
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`Inc. Ward Decl., 9 6. Activision then improperly served a subpoena on Mr. Ward personally,
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`even though he is party officer, forcing Mr. Ward to move to quash. See In re Subpoena of
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`Joseph Ward, 5:16-mc-80106-NC, Dkt. No. 1 (N.D. Cal. May 16, 2016).
`
`In a further attempt to improperly pressure Mr. Ward into causing Acceleration Bay to
`
`abandonits claims, Activision hand delivered correspondence and draft Rule 11 motion papers
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`on Mr. Ward personally on January 18, 2017.° Ward Decl., { 7. In so doing, Activision ignored
`
`
`
`> Activision’s unsolicited delivery to Mr. Ward waived confidentiality as to these motion papers.
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`

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`the fact that both Acceleration Bay and Mr. Ward are represented by counsel and that
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`Acceleration Bay’s Initial Disclosures expressly state that they “should be contacted only
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`through Plaintiff's counsel of record.” Ex. 7 at 2.°
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`IV.
`
`ARGUMENT
`
`Activision’s Motion should be denied because Acceleration Bay filed this suit based on
`
`its careful investigation into Activision’s infringement of the Asserted Patents, far exceeding the
`
`reasonable investigation requirement of Rule 11. Indeed, the limited discovery Acceleration Bay
`
`obtained in the 2015 Case confirmsthat its complaint is well founded and objectively reasonable.
`
`Activision simply ignores and does not address a number of Acceleration Bay’s infringement
`
`theories, which alone is reason to deny its Motion. Because Activision had nobasis to seek the
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`extraordinary remedy of Rule 11 sanctions, it should be sanctioned for recklessly filing the
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`Motion and harassing Acceleration Bay and its CEO, including through improper direct contact.
`
`A.
`
`Acceleration Bay’s Pre-Filing Investigation Was Reasonable
`
`Acceleration Bay’s pre-filing investigation was objectively reasonable, which alone
`
`warrants denial of Activision’s Motion. Beforefiling the 2015 Case, Acceleration Bay’s counsel
`
`(1) carefully reviewed the Asserted Patents andtheir file histories; (2) conducted an extensive
`
`search of publicly available information on the accused products and their functionality; (3)
`
`comparedthe claims, construed in light of the intrinsic record, with the accused products; (4)
`
`reviewed the relevant technical and academicliterature; (5) tested and played the gamesto verify
`
`their relevant functionality; (6) engaged a leading expert in the field who conducted an
`
`independent investigation and concluded that Activision’s accused products infringe
`
`Acceleration Bay’s patents; and (7) prepared a detailed pre-filing memorandum. Andre Decl., {
`
`2-5; Medvidovié Decl., J 7-10. Acceleration Bay offers its pre-filing memorandum to the Court
`
`
`
`® Activision also attempted to improperly pressure Acceleration Bay’s outside counsel by hand
`serving correspondence and draft Rule 11 motion papers on the firm’s Managing Partner and
`General Counsel, who are not counselof record in this action. Andre Decl., { 14.
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 13 of 25 PagelD #: 6970
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`for in camerainspection, to the extent the Court has any questions regarding the extent ofits pre-
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`filing investigation.
`
`Activision comes nowhereclose to meeting the standard for seeking sanctions under Rule
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`11. Indeed, sanctions are only available in exceptional circumstances. HBAC, at *3. Not only
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`are there no exceptional circumstances, Activision cannot prove under any circumstancesthat
`
`Acceleration Bay’s complaint was “legally or factually ‘baseless’ from an objective
`
`perspective...[and made without] a reasonable and competent inquiry.” Q-Pharma,Inc. v.
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`Andrew Jergens Co., 360 F.3d 1295, 1299 (Fed. Cir. 2004)(citation omitted). As is apparent
`
`from the claim charts attached as Exhibits 7-9 to Acceleration Bay’s Complaint that comparedat
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`least one claim of each of its Asserted Patents with the publicly available information about
`
`Activision’s Accused Products, Acceleration Bay satisfied the requirements of a reasonable pre-
`
`filing investigation. HBAC, at *3, quoting Q-Pharma, 360 F.3d at 1302 (“our case law makes
`
`clear that the key factor in determining whether a patentee performed a reasonablepre-filing
`
`inquiry is the presence of an infringement analysis” And “can simply consist of a goodfaith,
`
`informed comparison of the claims of a patent against the accused subject matter.”), D.I. 1 at
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`Exs. 7-9
`
`In Walker Digital, the Court found that a plaintiff's pre-suit investigation that was less
`
`extensive than the one Acceleration Bay performed was “objectively reasonable” and denied
`
`Rule 11 sanctions, even after the Federal Circuit affirmed non-infringement. Walker Digital,
`LLC vy. Google Inc., Civil Action No. 11-311-RGA, 2015 WL 5190685, at *1-2 . Del. Sept. 4,
`2015). The Court found sufficient that plaintiff “analyzed the specification, claims, file history
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`of the [asserted] patent, researched publicly available information about [the accused product],
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`and prepared a chart with an element-by-element comparison ofthe [asserted] claims and the
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`[accused] system” and “submittedits pre-filing infringement chart for in camera review.” Id.
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`Here, Acceleration Bay’s pre-filing investigation well exceeds the ones found to be
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`reasonable in HBAC and Walker Digital. Acceleration Bay performed each ofthe steps the
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`Courts found satisfied Rule 11 obligations in those cases, as well as took the additional step of
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 14 of 25 PagelD #: 6971
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`retaining a leading technical expert to conduct an independentinfringement assessment.
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`Moreover, as discussed below,beforefiling this action, Acceleration Bay further took into
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`accountthe limited discovery Activision provided in the 2015 Case, which further confirmed
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`Activision’s infringement. And unlike the facts before the Court in Walker Digital, there has
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`been no ultimate finding of non-infringement after full discovery in this case because discovery
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`is still in its early stages. Thus, Acceleration Bay’s reasonable pre-filing investigation exceeds
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`the requirements of Rule 11, such that Activision’s Motion is entirely unsupportedandfrivolous.
`
`B.
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`The Limited Discovery in the 2015 Case Confirms That Activision Infringes
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`Before filing the instant action, Acceleration Bay carefully evaluated the limited.
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`discovery from the 2015 Case, which confirmsthat Activision infringes the Asserted Patents.
`
`Thereis simply no support for Activision’s naked allegation that Acceleration Bay’s complaint
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`was objectively “baseless.” Q-Pharma, 360 F.3d at 1299.
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`Despite only having limited discovery, Acceleration Bay has developed strong evidence
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`of infringementthat fully supports Acceleration Bay’s filing of this suit. In fact, the limited
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`discovery Activision madeavailable to Acceleration Bay further confirms Dr. Medvidovic’s
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`initial assessment that Activision infringes the Asserted Patents. Medvidovic Decl., JJ 13-16.
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`Activision’s primary argumentis that Acceleration Bay has failed to prove that the
`Accused Products use incomplete, m-regular graphs.Po
`
`—_ Oo
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`

`

`’ Fatal to Activision’s arguments that there is a “flooding” requirementis the fact that the claims
`do notrecite “flooding.” Rather, the claims require that the “participant sends data thatit
`receives from a neighborparticipantto its other neighborparticipants,” which, as discussed
`above, CoD does. D.I. 1-1 ((344 Patent) at Claim 1.
`
`11
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`

`

`Moreover, the deposition testimony of Activision’s corporate designee entirely
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`undermines Activision’s argument that Acceleration Bay should be sanctioned for not accepting
`its bald representation
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`Al
`
`—_ NO
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 17 of 25 PagelD #: 6974
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`Activision’s Motion also completely ignores Acceleration Bay’s other theories of
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`infringement for WoW,which is an independentbasis to deny the Motion because Activision has
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`not even attempted to show that Acceleration Bay’s assertion of infringement is unreasonable.
`For example, the Motion does not address(iis
`
`ee Activision has yet to provide a deposition regarding this accused
`functionality.SDAndre Decl., | 11.!°
`
`While the pace of Acceleration Bay’s source code review has been impeded dueto
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`Activision’s refusal to produce any relevant technical documents and its extended delay in
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`offering deposition witnesses, Acceleration Bay’s initial review of source code through the
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`dismissal of the 2015 Case further established its reasonable basis to continue pursueits
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`infringement claims. Medvidovié Decl., {J 12-16. Indeed, Acceleration Bay used relevant
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`source code modules to question Activision’s witnesses and develop support forits infringement
`theories discussedxbove,
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`Activision's argument—
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`«2:1; for multiple reasons. First, this argument is based on a very narrow
`
`
`
`‘0 Acceleration Bayis pursuing othertheories of infringement with respect to WoW, such asits
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`chat channels. See, e.g., Ex. 2 (WoW chart) at 1.
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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 18 of 25 PagelD #: 6975
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`claim construction and the parties have yet to even exchange proposed claim construction
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`positions. A potential disagreementover claim constructionsis nota valid basis to seek Rule 11
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`sanctions. Q-Pharma, 360 F.3d at 1301 (denying Rule 11 motion: “Claim interpretation is not
`
`always an exact science, andit is not unusual for parties to offer competing definitions of even
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`the simplest claim language.”); HBAC,at *4 (denying Rule 11 motion as premature and
`requiring claim construction).
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`Accordingly, Acceleration Bay’s allegations that Activision’s Accused Products include
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`incomplete, m-regular networksare objectively reasonable, especially in view of the only limited
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`discovery provided to date. The Court need not determine whether Acceleration Bay’s pre-filing
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`interpretation of the asserted claims wascorrect, but rather only whether such interpretation was
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`frivolous. Q-Pharma, 360 F.3d at 1301. Activision has made no such showing.
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`Acceleration Bayfiled this action (and its predecessor) for the entirely valid purpose of
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`vindicating its statutory patent rights and seeking redress for Activision’s ongoing infringement
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`of the Asserted Patents. Activision offers no evidence to the contrary, and its argumentforits
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`unsubstantiated claims of improper purpose are limited to its baseless attacks on the merits of
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`Acceleration Bay’s infringementposition, refuted herein. Because Acceleration Bay’s
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`Complaint is non-frivolous, the Court need not even reach the issue of Acceleration Bay’s
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`purpose in filing its complaint, because “a non-frivolous complaint cannotbe saidto be filed for
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`an improper purpose.” Greenberg v. Sala, 822 F.2d 882, 885 (9th Cir. 1987); Burkhartv.
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`Kinsley Bank, 852 F.2d 512, 515 (10th Cir. 1988) (if complaint filed were not frivolous, “then
`
`any suggestion of harassment would necessarily fail”). For all of these reasons, Activision’s
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`Motion should be denied.
`
`14
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`

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`Case 1:16-cv-00453-RGA Document 82 Filed 03/17/17 Page 19 of 25 PagelD #: 6976
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`C.
`
`Activision’s Additional Non-Infringement Theories Are Unsupported and
`Contradicted By the Record
`
`The record also contradicts Activision’s additional unsupported non-infringementclaims.
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`Activision points to an informal comment from an inventor in an email sent years ago that
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`certain aspects of infringement could be verified through testing of a public game. Activision is
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`flatly wrong in suggesting that Acceleration Bay did not test the Accused Products. Acceleration
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`Baydid test the products, verifying various aspects of the products’ functionality, as noted in its
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`initial infringement charts. Andre Decl., {{ 2, 10, 12; see, e.g., Ex. 2 (WoW chart) at 23-24; Ex.
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`3 (Destiny Chart) at 1, 10, 11; Ex. 4 (CoD chart) at 1-2.
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`Activision misrepresents the proceedings before the Special Master in arguing that
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`Acceleration Bay represented that it never tested the Accused Products. Br. at 4 (quoting TDEx.
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`20A at 4) (“Plaintiff represented that there had been notesting byit for its infringement claims
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`and contentions.”). The specific issue before the Special Master was if Activision wasentitled to
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`confidential testing conducted by Acceleration Bay’s attorneys and consultants for which
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`Acceleration Bay has asserted work product immunity. Acceleration Bay told the Special Master
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`that it had conducted testing that it relied upon in the infringement claim charts and fully
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`disclosed that testing in the claim charts themselves. Ex. 12 (4/14/16 Tr.) at 144:8-145:5
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`(“documents generated by the testing are the screen captures that are included in the claim charts
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`... Everything that we’ve observed that we thought was relevant we put into the claim charts”).
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`Acceleration Bay further informed the Special Master that additional testing by its consulting
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`experts andits pre-filing investigation was work product and not cited in