Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 1 of 15
`
`
`
`ZOND, INC.,
`
`
`
`
`v.
`
`
`THE GILLETTE COMPANY and
`THE PROCTER & GAMBLE COMPANY,
`
`
`Defendants.
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MASSACHUSETTS
`
`Plaintiff,
`
`
`Civil Action No. 1:13-CV-11567
`
`LEAVE TO FILE GRANTED ON
`MAY 27, 2014 (Dkt. No. 90)
`
`FILED UNREDACTED VERSION
`UNDER SEAL PURSUANT TO COURT
`ORDER DATED MAY 27, 2014
`(Dkt. No. 91)
`
`))))))))))
`
`REPLY IN SUPPORT OF MOTION TO STAY PENDING INTER PARTES REVIEW
`BY THE GILLETTE COMPANY AND THE PROCTER & GAMBLE COMPANY
`
`
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 2 of 15
`
`TABLE OF CONTENTS
`
`INTRODUCTION..............................................................................................................1 
`ARGUMENT ......................................................................................................................2 
`Staying The Case Now Is Appropriate To Simplify This Case And
`A. 
`Promote Judicial Economy ...................................................................................2 
`A Stay Will Not Prejudice Or Tactically Disadvantage Zond ...........................5 
`A Stay Will Conserve Court And Party Resources Because This
`Litigation Is Still In Its Early Stages ....................................................................7 
`CONCLUSION ..................................................................................................................8 
`
`
`B. 
`C. 
`
`
`
`I. 
`II. 
`
`III. 
`
`
`- i -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 3 of 15
`
`TABLE OF CONTENTS
`
`INTRODUCTION..............................................................................................................1 
`ARGUMENT ......................................................................................................................2 
`Staying The Case Now Is Appropriate To Simplify This Case And
`A. 
`Promote Judicial Economy ...................................................................................2 
`A Stay Will Not Prejudice Or Tactically Disadvantage Zond ...........................5 
`A Stay Will Conserve Court And Party Resources Because This
`Litigation Is Still In Its Early Stages ....................................................................7 
`CONCLUSION ..................................................................................................................8 
`
`
`B. 
`C. 
`
`
`
`I. 
`II. 
`
`III. 
`
`
`- i -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 4 of 15
`
`TABLE OF CONTENTS
`
`INTRODUCTION..............................................................................................................1 
`ARGUMENT ......................................................................................................................2 
`Staying The Case Now Is Appropriate To Simplify This Case And
`A. 
`Promote Judicial Economy ...................................................................................2 
`A Stay Will Not Prejudice Or Tactically Disadvantage Zond ...........................5 
`A Stay Will Conserve Court And Party Resources Because This
`Litigation Is Still In Its Early Stages ....................................................................7 
`CONCLUSION ..................................................................................................................8 
`
`
`B. 
`C. 
`
`
`
`I. 
`II. 
`
`III. 
`
`
`- i -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 5 of 15
`
`TABLE OF AUTHORITIES
`
`
`
`
`
`
`CASES
`
`ADA Solutions, Inc. v. Engineered Plastics, Inc.,
`826 F. Supp. 2d 348 (D. Mass. 2011) ........................................................................................6
`
`Brixham Solutions Ltd. v. Juniper Networks, Inc.,
`2014 U.S. Dist. LEXIS 58770 (N.D. Cal. Apr. 28, 2014) .........................................................3
`
`CBS Interactive Inc. v. Helferich Patent Licensing LLC,
`2014 WL 1253006 (PTAB Mar. 3, 2014) ..................................................................................4
`
`Davol, Inc. v. Atrium Med. Corp.,
`2013 WL 3013343 (D. Del. June 17, 2013) ...............................................................................5
`
`Evolutionary Intelligence, LLC v. Facebook, Inc.,
`2014 U.S. Dist. LEXIS 9149 (N.D. Cal. Jan. 23, 2014) ............................................................5
`
`Neste Oil OYJ v. Dynamic Fuels, LLC,
`2013 WL 3353984 (D. Del. July 2, 2013) .................................................................................6
`
`Pragmatus AV, LLC v. Facebook, Inc.,
`2011 U.S. Dist. LEXIS 117147 (N.D. Cal. Oct. 11, 2011) ....................................................5, 6
`
`Riverbed Tech., Inc. v. Silver Peak Sys.,
`2014 U.S. Dist. LEXIS 59382 (N.D. Cal. Mar. 14, 2014) .....................................................4, 6
`
`SEC v. Alexander,
`2010 U.S. Dist. LEXIS 138547 (N.D. Cal. Dec. 22, 2010) .......................................................7
`
`Semiconductor Energy Lab. Co. v. Chimei Innolux Corp.,
`2012 WL 7170593 (C.D. Cal. Dec. 19, 2012) .......................................................................6, 8
`
`Software Rights Archive, LLC v. Facebook, Inc.,
`2013 WL 5225522 (N.D. Cal. Sept. 17, 2013) ......................................................................5, 7
`
`TAS Energy, Inc. v. San Diego Gas & Elec. Co.,
`2014 WL 794215 (S.D. Cal. Feb. 26, 2014) ..............................................................................3
`
`Zillow, Inc. v. Trulia, Inc.,
`2013 WL 5530573 (W.D. Wash. Oct. 7, 2013) .........................................................................2
`
`Zond, LLC v. Intel Corp.,
`No. 13-cv-11570 ................................................................................................................2, 4, 5
`
`Zond, LLC v. SK Hynix, Inc.,
`No. 13-cv-11591 ....................................................................................................................4, 5
`
`- ii -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 6 of 15
`
`
`
`Zond, LLC v. Fujitsu Semiconductor Ltd.,
`No. 13-cv-11634 ........................................................................................................................4
`
`STATUTES
`
`35 U.S.C. § 315 ................................................................................................................................6
`
`OTHER AUTHORITIES
`
`United States Patent and Trademark Office, AIA Trial Roundtables,
`http://www.uspto.gov/ip/boards/bpai/ptab_roundtable__slides_may_update
`__20140503.pdf .....................................................................................................................3, 4
`
`United States Patent and Trademark Office, Patent Trial and Appeal Board AIA Progress
`Statistics, http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_05_15_2014.pdf ..............3
`
`- iii -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 7 of 15
`
`
`
`I.
`
`INTRODUCTION
`
`In its opening brief, The Gillette Company and The Procter & Gamble Company
`
`(collectively, “Gillette”) demonstrated why Judge Stearns was correct in deciding that a stay of
`
`the Zond cases pending resolution of the inter partes reviews (“IPRs”) is appropriate. A stay
`
`will conserve the resources of the parties and the Court in a massive 10-patent case involving
`
`over 100 asserted claims. A stay will allow the experienced administrative patent judges of the
`
`United States Patent and Trademark Office (“PTO”) to decide whether some or all of those
`
`claims are even patentable in the first place. A stay will assist the Court ultimately in construing
`
`the claims because the PTO’s statements and Zond’s representations in the IPRs will be part of
`
`the intrinsic record that must be considered as part of the claim construction process. A stay will
`
`greatly simplify the case—even if every single challenged claim survives the process—a highly
`
`unlikely prospect—the parties and the Court will have a drastically narrowed invalidity case to
`
`consider. Zond cannot and does not contest any of these indisputable facts.
`
`Nor does Zond even mention that developments in this case since Gillette’s motion was
`
`filed even more strongly support a stay. On May 6, 2014, the parties entered into a stipulation
`
`that dismissed with prejudice Zond’s claims against all of Gillette’s commercial razor blades.
`
`(Dkt. No. 77.) All that is left in Zond’s case are a small number of razor blades made years ago
`
`as part of a research effort that was abandoned after testing. Thus, all that remains of Zond’s
`
`case is its effort to seek a royalty for the manufacturing of test blades that performed poorly
`
`enough the project was abandoned and the test blades were never commercialized or ever sold.
`
`Under these circumstances, the “prejudice” to Zond from a stay is, simply, nonexistent.
`
`Having ignored the facts set forth above, Zond’s opposition primarily makes the same
`
`arguments that Judge Stearns has already rejected in ruling on precisely the same motion in the
`
`- 1 -
`
`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 8 of 15
`
`
`
`Intel case. See Zond, LLC v. Intel Corp., No. 13-cv-11570 (Dkt. No. 120).
`
`
`
`Zond’s previously-rejected arguments, and its additional arguments made for the first
`
`time in this case, do not change the considerations favoring a stay.
`
`II.
`
`ARGUMENT
`
`A.
`
`Staying The Case Now Is Appropriate To Simplify This Case And Promote
`Judicial Economy
`
`Zond concedes—as it must—that the IPRs will simplify this case, even if no claims are
`
`ultimately amended or cancelled. See Opp. at 15. The estoppel of the IPRs will significantly
`
`narrow the § 102 (anticipation) and § 103 (obviousness) arguments that Gillette could make, and
`
`the additional prosecution history of the IPRs will help the Court construe the lengthy list of
`
`claim terms from the 125 asserted claims. See, e.g., Zillow, Inc. v. Trulia, Inc., 2013 WL
`
`5530573, at *4 (W.D. Wash. Oct. 7, 2013). Nevertheless, Zond makes three faulty arguments
`
`about why a stay will not simplify the issues or promote judicial economy.
`
`- 2 -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 9 of 15
`
`
`
`First, Zond argues that the Court should not stay the case before the petitions are
`
`instituted, claiming that it is “speculative” that the PTO will institute the petitions and cancel or
`
`amend claims. Opp. at 9-10. However, Gillette’s arguments are guided by statistics which
`
`demonstrate that 80% of IPR petitions are instituted and that 83% of instituted claims have been
`
`cancelled by Final Written Decisions. Gillette’s Mem. Supp. Mot. Stay at 6 & n.7; United States
`
`Patent and Trademark Office, Patent Trial and Appeal Board AIA Progress Statistics (Second
`
`Noyes Decl., Ex. A).1 Indeed, it is Zond that speculates—with no statistical support—that the
`
`PTO will take the unprecedented action of not granting a single petition. Even in the extremely
`
`unlikely event that no claims are ultimately amended or cancelled, the IPRs will provide the prior
`
`art estoppel and additional prosecution history mentioned above. See Brixham Solutions Ltd. v.
`
`Juniper Networks, Inc., 2014 U.S. Dist. LEXIS 58770, at *4 (N.D. Cal. Apr. 28, 2014); TAS
`
`Energy, Inc. v. San Diego Gas & Elec. Co., 2014 WL 794215, at *4 (S.D. Cal. Feb. 26, 2014).
`
`Second, Zond argues that the PTO is less likely to institute Gillette’s and Intel’s IPRs
`
`because many of the petitions rest on obviousness grounds. See Opp. at 14-15. However, the
`
`PTO statistics demonstrate the opposite—87% of Final Written Decisions have invalidated
`
`claims on obviousness grounds and nearly two-thirds of all claims are invalidated on
`
`obviousness grounds. United States Patent and Trademark Office, AIA Trial Roundtables at 49
`
`(Second Noyes Decl., Ex. B).2 If anything, this makes it more likely that the PTO will institute
`
`Gillette’s and Intel’s petitions due to their reliance on obviousness arguments.3
`
`
`1
`Available at http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_05_15_2014.pdf.
`2
`Available at http://www.uspto.gov/ip/boards/bpai/ptab_roundtable__slides_may_update
`__20140503.pdf.
`3
`Zond also questions the merits of Gillette’s and Intel’s IPR petitions because they rely on
`prior art references that were examined by the PTO during the application process. See Opp. at
`13-14. Even though the PTO reviewed these prior art references during the ex parte application
`process, the adversarial inter partes IPR process exists because the PTO is free to, and often
`
`- 3 -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 10 of 15
`
`
`
`Third, Zond argues that the estoppel of the IPRs is insufficient because the “practice in
`
`this District” is to require defendants to waive all invalidity arguments and not just the
`
`arguments that were or could have been raised during the IPRs. See Opp. at 16. This is not
`
`correct. Zond relies on a single case where the court required a party to waive all invalidity
`
`arguments in exchange for a stay—the case before Judge Young. To suggest that Judge Young’s
`
`unpublished opinion is the “practice in this District” is incorrect. It certainly is not the practice
`
`of Judge Stearns, who stayed two cases without such a requirement. Zond, LLC v. Intel Corp.,
`
`No. 13-cv-11570 (Dkt. No. 120); Zond, LLC v. SK Hynix, Inc., No. 13-cv-11591 (Dkt. No. 66).
`
`Judge Young’s ruling was not based on anything in the America Invents Act (“AIA”),4 but is
`
`merely a requirement he imposed in one of his cases.
`
`Finally, despite Zond’s arguments to the contrary, Judge Stearns determined that it was
`
`appropriate to stay a case before the PTO decided whether to institute the IPR petitions.5 See
`
`Zond, LLC v. Intel Corp., No. 13-cv-11570 (Dkt. No. 120); Zond, LLC v. SK Hynix, Inc., No. 13-
`
`cv-11591 (Dkt. No. 66). Other courts have taken the same position. See Riverbed Tech., Inc. v.
`
`Silver Peak Sys., 2014 U.S. Dist. LEXIS 59382, at *7-8 (N.D. Cal. Mar. 14, 2014) (“The fact that
`
`the PTAB has not yet determined whether it will grant the requests for IPR does not alter the
`
`does, arrive at different conclusions regarding claims and prior art references when it conducts
`an IPR trial on a patent’s validity. United States Patent and Trademark Office, AIA Trial
`Roundtables at 9, 47 (Second Noyes Decl., Ex. B). There is no presumption of validity, and
`therefore the PTO reviews the references as if it had never seen them before. See, e.g., CBS
`Interactive Inc. v. Helferich Patent Licensing LLC, 2014 WL 1253006, at *29 (PTAB Mar. 3,
`2014).
`4
`The IPR procedure was established by the America Invents Act patent reform legislation
`in September 2011.
`5
`Zond points out that Judge Young denied Taiwan Semiconductor Manufacturing
`Company Limited’s and TSMC North America Corporation’s (collectively, “TSMC”) motion to
`stay in one of the related cases but failed to mention two critical distinctions: (1) TSMC had not
`filed any petitions when it filed its motion and (2) Judge Young denied the motion without
`prejudice, giving TSMC the opportunity to renew its motion once it filed its petitions. Zond,
`LLC v. Fujitsu Semiconductor Ltd., No. 13-cv-11634 (Dkt. No. 102); id. (Dkt. No. 84).
`
`- 4 -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 11 of 15
`
`
`
`Court’s findings.”); Pragmatus AV, LLC v. Facebook, Inc., 2011 U.S. Dist. LEXIS 117147, at
`
`*10 (N.D. Cal. Oct. 11, 2011) (collecting cases demonstrating that “it is not uncommon for this
`
`court to grant stays pending reexamination prior to the PTO deciding to reexamine the patent”).
`
`The Court should leverage the benefits of a stay now, before the parties waste more
`
`resources in the construction of more than 100 claims of 10 separate patents in a case where the
`
`accused products were discarded and never even sold. Should the PTO decide not to institute the
`
`petitions, the Court can simply lift the stay—at most, the case would be stayed for a few months.
`
`See Evolutionary Intelligence, LLC v. Facebook, Inc., 2014 U.S. Dist. LEXIS 9149, at *9-10
`
`(N.D. Cal. Jan. 23, 2014) (granting a stay prior to institution of the petitions because it would lift
`
`the stay if the petitions were not instituted).6
`
`B.
`
`A Stay Will Not Prejudice Or Tactically Disadvantage Zond
`
`Zond has failed to show how it would be unduly prejudiced or tactically disadvantaged
`
`by a stay, even if the stay is granted before the PTO decides to institute the petitions.
`
`First, Zond concedes that it does not compete with Gillette. See Opp. at 12. Given this
`
`concession, which Judge Stearns emphasized in granting the Intel and SK Hynix stays, Zond will
`
`not be prejudiced by the requested stay. See Zond, LLC v. Intel Corp., No. 13-cv-11570 (Dkt.
`
`No. 120); Zond, LLC v. SK Hynix, Inc., No. 13-cv-11591 (Dkt. No. 66); see also Davol, Inc. v.
`
`Atrium Med. Corp., 2013 WL 3013343, at *3-5 (D. Del. June 17, 2013) (“An important factor in
`
`determining if a stay will prejudice the plaintiff is whether the parties are direct competitors.”);
`
`6
`If courts were to accept Zond’s flawed logic, courts would not even stay cases once IPR
`petitions were instituted because, even then, there is still a possibility that the petitioned claims
`will remain unchanged. Zond would have courts only stay cases if the PTO reached a Final
`Written Decision amending or cancelling at least one asserted claim—such illogic runs counter
`to the policy and case law encouraging the stay of cases while the PTO reexamines patent
`validity. See Software Rights Archive, LLC v. Facebook, Inc., 2013 WL 5225522, at *6 (N.D.
`Cal. Sept. 17, 2013) (“A stay effectuates the intent of the AIA by allowing the agency with
`expertise to have the first crack at cancelling any claims that should not have issued . . . before
`costly litigation continues.”).
`
`- 5 -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 12 of 15
`
`
`
`ADA Solutions, Inc. v. Engineered Plastics, Inc., 826 F. Supp. 2d 348, 350-51 (D. Mass. 2011);
`
`Neste Oil OYJ v. Dynamic Fuels, LLC, 2013 WL 3353984, at *3 (D. Del. July 2, 2013).
`
`Further, given Zond’s stipulation dismissing all of Gillette’s commercial razor blades
`
`from the case, Zond’s claims are now limited to a small number of razor blades manufactured as
`
`part of a research project between 2005 and 2008. Thus, there is no possibility of injunctive
`
`relief available to Zond on any commercial razor blades, and a stay will not limit Zond’s
`
`potential to recover damages to the extent it prevails—which, to be clear, it will not—when the
`
`merits of the case are litigated.
`
`Nevertheless, Zond insists that a stay will cause it prejudice by delaying its day in court.
`
`But mere delay, alone, is not a basis to deny a stay of this case.7 Neste Oil OYJ, 2013 WL
`
`3353984, at *2; Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., 2012 WL 7170593, at
`
`*3 (C.D. Cal. Dec. 19, 2012).
`
`Second, Zond inconsistently argues that Gillette’s motion is both “premature” and
`
`“tardy.” Opp. at 1. Zond argues that Gillette should have waited until the PTO institutes the IPR
`
`petitions before moving to stay. Id. However, as Zond concedes, the PTO may take up to six
`
`months before instituting a petition. This is why, contrary to what Zond argues, courts, including
`
`Judge Stearns, routinely grant stays prior to the PTO instituting IPRs. See Riverbed Tech., 2014
`
`U.S. Dist. LEXIS 59382, at *7-8; Pragmatus AV, 2011 U.S. Dist. LEXIS 117147, at *10.
`
`With respect to Gillette’s petitions, Zond is also incorrect that they are untimely. See
`
`Opp. at 5. By statute, Gillette has until July 1, 2014—a year after the complaint was filed—to
`
`file its petitions. 35 U.S.C. § 315(b). Indeed, Zond’s infringement contentions were not even
`
`7
`Zond also waited more than two years before filing this lawsuit, so it is contrary to its
`own actions for it to now urge the speedy resolution of its claims. Indeed, U.S. Patent No.
`7,966,909—the basis for Zond’s continued assertions of infringement—issued on June 28, 2011,
`more than two years before Zond filed its complaint. Compl. ¶¶ 23-24.
`
`- 6 -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 13 of 15
`
`
`
`served until January 13, 2014, less than two months before Gillette began filing its petitions.
`
`Gillette then filed its motion promptly upon completing its filings on May 2, 2014.
`
`
`
`
`
`
`
`
`
`
`
`
`
`C.
`
`A Stay Will Conserve Court And Party Resources Because This Litigation Is
`Still In Its Early Stages
`
`Despite Zond’s assertions to the contrary, this litigation is still in its early stages and a
`
`stay will prevent the Court and the parties from devoting significant resources to the claim
`
`construction process, further motion practice, and expert discovery, which has not yet begun.
`
`Only a single deposition has been taken and, shortly following that deposition, the parties
`
`negotiated the stipulation that led to dismissal of Gillette’s commercial razor blades from this
`
`case. (Dkt. No. 77.) Although Zond has produced documents in this case,8 Gillette has not taken
`
`or noticed any depositions of Zond’s witnesses and no other depositions are currently scheduled.
`
`Accordingly, granting a stay given this limited discovery is appropriate and will not prejudice
`
`Zond. See, e.g., Software Rights Archive, LLC v. Facebook, Inc., 2013 WL 5225522, at *3 (N.D.
`
`Cal. Sept. 17, 2013) (granting a stay despite the production of over 150,000 pages of documents,
`
`propounded interrogatories, and service of preliminary infringement contentions and invalidity
`
`
`8
`Zond had produced only 61,364 pages (native files are identified by a single Bates
`number) from the start of the case on July 1, 2013 through April 1, 2014. In a document
`production apparently designed for its opposition to Gillette’s motion to stay, Zond produced
`78,509 pages the day before it filed its opposition.
`
`- 7 -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 14 of 15
`
`
`
`contentions because “discovery is not near completion, only one witness has been deposed, claim
`
`construction briefing has not commenced, deadlines for dispositive motions are still months out,
`
`and the court has not set a trial date”); Semiconductor Energy Lab. Co., 2012 WL 7170593, at *2
`
`(granting a stay based on the fact that “there is more work ahead of . . . than behind the parties
`
`and the Court”).
`
`III. CONCLUSION
`
`For the foregoing reasons, Gillette respectfully requests that the Court stay this case
`
`pending final resolution of the IPRs filed for the patents-in-suit.
`
`
`
`Dated: May 23, 2014
`
`
`Respectfully submitted,
`
`
`
`
`/s/ Christopher R. Noyes
`Mark G. Matuschak, BBO # 543873
`Larissa Bifano Park, BBO # 663105
`Wilmer Cutler Pickering Hale and Dorr LLP
`60 State Street
`Boston, MA 02109
`
`Christopher R. Noyes, BBO # 654324
`Wilmer Cutler Pickering Hale and Dorr LLP
`7 World Trade Center
`250 Greenwich Street
`New York, NY 10007
`
`Attorneys for Defendants The Gillette
`Company and The Procter & Gamble
`Company
`
`- 8 -
`
`

`
`Case 1:13-cv-11567-DJC Document 92 Filed 05/27/14 Page 15 of 15
`
`
`
`CERTIFICATE OF SERVICE
`
`I, Christopher R. Noyes, hereby certify that on May 27, 2014 a true and correct copy of
`
`the foregoing Reply in Support of Motion to Stay Pending Inter Partes Review by The Gillette
`
`Company and The Procter & Gamble Company was served by ECF upon all counsel of record
`
`for the plaintiff.
`
`/s/
`
`Christopher R. Noyes
`
`
`
`- 9 -