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`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
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`Aplix IP Holdings Corporation,
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`Civil Action No. 1:14-cv-12745-MLW
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` Plaintiff,
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`v.
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`Sony Computer Entertainment, Inc. and
`Sony Computer Entertainment America,
`LLC,
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` Defendants.
`
`
`APLIX’S BRIEF OPPOSING
`DEFENDANTS’ MOTION TO STAY
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` Defendants’ motion for a stay is, at best, premature and should be denied. There is
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`no active proceeding in the United States Patent and Trademark Office with respect to a
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`single patent in this lawsuit. Defendants have asked the Patent Trial and Appeal Board
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`(“the Board”) to review claims in only three of the five patents-in-suit, but the Board has
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`not yet agreed to institute any review. Plaintiff Aplix IP Holdings Corporation (“Aplix”)
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`has not yet filed an opposition to any of those petitions. And defendant Sony Computer
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`Entertainment America, LLC (“SCEA”) acknowledges that it has not even filed all of its
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`petitions for review with the Board; it represents only an intention to file additional
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`petitions “soon.” Courts have not hesitated to find a stay premature in any single one of
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`these situations, let alone this combination. In these circumstances, a stay would not
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`result in judicial economy, but would instead prejudice Plaintiff—delaying the case
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 2 of 15
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`indefinitely and for no reason beyond Defendants’ speculation that it will succeed on its
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`petitions, including those it has not yet filed. For these reasons, Aplix asks this Court to
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`deny Defendants’ motion to stay proceedings.
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`BACKGROUND
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`A. A team of Massachusetts inventors, led by Dr. Beth Marcus, develop
`unique technologies for improving data entry, control, and game-play
`on hand-held devices and host devices.
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`This case concerns patented technology covering game devices such as the hand-
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`held Sony PlayStation Vita gaming console as well as the Sony PlayStation DualShock 3
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`and DualShock 4 controllers.1
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` Beginning in 2003, a group of Massachusetts inventors, led by Dr. Beth Marcus,
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`developed interactive-design technologies for improving data entry, control, and game-
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`play on hand-held devices and host devices.2 Among other advancements, Dr. Marcus
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`and her team deployed configurable input systems and elements on multiple surfaces of a
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`hand-held device, implementing unique combinations of and applications for particular
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`types of input elements.3 The team designed hand-held accessory devices that would
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`enable users to remotely operate (and play video games on) cell phones and tablet
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`devices.4 Without discussing any of the patent claim language, Defendants
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`mischaracterize the scope of these inventions, reducing them to single aspects of single
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`figures included in the patents, and falsely claim that the USPTO “did not have an
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`1 Amended Complaint, ¶ 1 (ECF Docket No. 23).
`2 Amended Complaint, ¶ 2.
`3 Amended Complaint, ¶ 2.
`4 Amended Complaint, ¶ 2.
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`2
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 3 of 15
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`opportunity” to analyze the prior art during examination of the patents.5 However, the
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`issued claims, which are the only appropriate measure of “the invention,” reflect that Dr.
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`Marcus and her team’s innovations were well ahead of their time in the infancy of the
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`smartphone world.
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`Marcus and her team applied for patents on their inventions, and, after a thorough
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`review, the United States Patent & Trademark Office awarded them several patents.6
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`These patents were assigned to Dr. Marcus’ company, Zeemote, Inc., a Boston-area start-
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`up, which sought to commercialize the technology.7 Aplix, a Japanese operating
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`company, acquired Zeemote’s assets, including the patents.8 This lawsuit asks the Court
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`to find that the Defendants infringe the patents by importing, marketing, selling, and
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`using the PlayStation Vita and accessories, including memory cards and pre-installed or
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`bundled games, as well as the DualShock 3 and DualShock 4 controllers.9
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`B. Aplix files suit in June 2014; grants Defendants multiple extensions to
`respond.
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` Aplix filed this lawsuit seven months ago, accusing Sony Computer
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`Entertainment, Inc. (“SCEI”) and Sony Computer Entertainment America, LLC
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`(“SCEA”) of infringing Aplix’s patents.10 Aplix’s initial complaint sought to vindicate
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`5 Defendants’ Brief at 6, 7, and 8.
`6 Amended Complaint, ¶ 2.
`7 Amended Complaint, ¶ 2.
`8 Amended Complaint, ¶¶ 2, 17.
`9 Amended Complaint, ¶ 2.
`10 June 27, 2014 Complaint (ECF Docket No. 1).
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`3
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 4 of 15
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`its rights with respect to three patents: U.S. Patent Nos. 7,218,313; 7,463,245; and
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`7,667,692 (referred to herein as the ’313, ’245, and ’692 patents, respectively).11
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` Defendant SCEA requested, and Aplix agreed to, a 75-day extension of
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`Defendant SCEA’s deadline to respond to the complaint.12 On October 6, 2014,
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`Defendants answered Aplix’s complaint and SCEA filed a counterclaim. 13
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` Within the requisite period, Aplix amended its complaint, adding allegations
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`relating to two additional patents: U.S. Patent Nos. 7,280,097 and 7,932,892 (referred to
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`as the ’097 and ’892 patents, respectively).14 Defendants again requested an extension of
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`their time to answer, and Aplix agreed to a 45-day extension.15 Aplix agreed to 120 days
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`of extensions in total.
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` On December 31, 2014, Defendants answered Aplix’s amended complaint and
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`SCEA filed another counterclaim.16 Aplix answered the counterclaim two weeks later.17
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`C. Defendants seek Board review of only
`of the patents-in-suit.
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`some of the claims of only some
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`Inter partes review provides a mechanism by which the Patent Office may elect to
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`
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`review a patent’s validity in light of prior patents and printed publications identified by a
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`third party. The procedure addresses no other issues of validity or infringement.
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`11 June 27, 2014 Complaint, ¶¶ 10-12.
`12 ECF Docket No. 8 at 1.
`13 ECF Docket Nos. 17, 18.
`14 Amended Complaint, ¶¶ 13,16.
`15 ECF Docket No. 25.
`16 ECF Docket Nos. 28, 29.
`17 ECF Docket No. 32.
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`4
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 5 of 15
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`If the Board grants a petition, it has 12 months (which can be extended to 18 months), to
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`issue a final decision.18 Either party may appeal a final decision to the Federal Circuit
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`Court of Appeals—it is not yet clear how long this entire process will take. As
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`Defendants’ own exhibit provides, “the true extent to which IPR simplifies patent
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`litigation remains to be seen.”19
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`Five months after Aplix filed suit, defendant SCEA filed its first two petitions for
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`inter partes review with the Board, purporting to seek review of the ’245 patent and
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`claims 1-3, 5-13, and 15-20 of the ’692 patent. Since then, SCEA has filed three
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`additional petitions for inter partes review, each relating to the ’313 patent. These
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`petitions do not seek review of every claim at issue in Aplix’s first complaint.20 And
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`defendant SCEI is not a party to any of the petitions for review.21
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`Aplix’s preliminary responses to the ’245 and ’692 petitions are not due until early
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`March and its responses to the ’313 petitions are not due until late April.22 Once Aplix
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`submits each response, the Board has up to three months to decide whether to grant the
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`requested review.23 Accordingly, the Board will have until late July to evaluate whether
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`even to grant these petitions—more than one year after Aplix filed its lawsuit in this
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`Court.
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`18 35 U.S.C. § 316(a)(11).
`19 Defendants’ Ex. N, Love & Ambwani, at 105.
`20 Defendants’ Brief at 8 (conceding that 16 of the claims in the ’245, ’692
`and ’313 patents are not included in Defendant SCEA’s “first round of IPRs”).
`21
`Id.
`22 35 U.S.C. § 313; 37 C.F.R. § 42.107(b).
`23 77 Fed. Reg. 48,655.
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`5
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 6 of 15
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`To date, neither Defendant has filed any petition for inter partes review relating to
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`the ’097 or the ’892 patent. Defendants provide no definite timeframe by which they
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`anticipate filing such a petition, instead representing that SCEA will file additional
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`petitions “soon.”24
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`
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`ARGUMENT
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`I.
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`DEFENDANTS’ MOTION FOR A STAY IS PREMATURE AND
`INAPPROPRIATE UNDER THE GOVERNING THREE-FACTOR TEST.
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` “The party requesting a stay bears the burden of showing that the circumstances
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`justify an exercise of that discretion.” Nken v. Holder, 129 S. Ct. 1749, 1761 (2009). If
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`Defendants meet that burden, the decision to stay a case in the district court’s discretion.
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`Cf. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). A court, however,
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`“is under no obligation to delay its own proceedings by yielding to ongoing PTO patent
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`reexaminations.” Avago Techs. Fiber IP v. IPtronics, Inc., No. 10-CV-02863, 2011 WL
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`3267768, at *4 (N.D. Ca. July 28, 2011) (citations omitted). In exercising this discretion,
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`courts typically assess three factors:
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`(1) whether a stay will simplify the issues in question and trial of the case;
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`(2) whether a stay would unduly prejudice or present a clear tactical
`disadvantage to the non-moving party; and
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`(3) whether discovery is complete and whether a trial date has been set.
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`24 Defendants’ Brief at 9.
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`6
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 7 of 15
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`SCVNGR, Inc. v. eCharge Licensing, LLC, 13-CV-12418, 2014 WL 4804738, at *8 (D.
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`Mass. Sept. 25, 2014). These factors weigh strongly against Defendants’ request for a
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`stay.
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`A. It is purely speculative at this stage whether a stay will result in the
`simplification of a single issue.
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`The majority of courts have held that whether a stay will result in the
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`simplification of issues is purely speculative before the Board has instituted trial. Freeny
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`v. Apple, Inc., No. 2:13-cv-00361 (WCB), 2014 WL 3611948, at *1 (E.D. Tex. July 22,
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`2014) (observing the “majority of courts that have addressed the issue have postponed
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`ruling on stay requests or have denied stay requests when the PTAB has not yet acted on
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`the petition for review”); see also CDX Diagnostics, Inc. v. U.S. Endoscopy Group, Inc.,
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`No. 13-cv-05669 (NSR), 2014 WL 2854656, at *5 (S.D.N.Y. June 20, 2014); Rensselaer
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`Polytechnic Inst. v. Apple, Inc., No. 1:13-CV-0633, 2014 WL 201965, at *9 (N.D.N.Y.
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`Jan. 15, 2014); U.S. Nutraceuticals, LLC v. Cyanotech Corp., No. 5:12-cv-366-Oc-10PL,
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`2013 WL 6050744, at *3 (M.D. Fla. Nov. 15, 2013); Ultratec, Inc. v. Sorenson Comm.,
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`Inc., No. 13-cv-346 (BBC), 2013 WL 6044407, at *4 (W.D. Wis. Nov. 14, 2013);
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`Automatic Mfg. Sys., Inc. v. Primera Tech., Inc., No. 6:12-cv-1727-Orl037, 2013 WL
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`1969247, at *3 (M.D. Fla. May 13, 2013). At least one court in this District has found
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`similarly, explaining it was “premature for the Court to analyze this potential
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`reexamination” when Defendants had not established that an inter partes review would
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`occur. Trs. of Boston Univ. v. Everlight Elecs. Co., Ltd., No. 12-11935, 2013 U.S. Dist.
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`LEXIS 96916, at *5 (D. Mass. July 11, 2013) (Saylor, J.).
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`7
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 8 of 15
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` In an attempt to meet its burden and demonstrate the presently unknowable
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`conclusion that the Board will institute trial, and the resulting trial will simplify matters,
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`Defendants cite statistics regarding both the percentage of inter partes review petitions
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`that have been granted and the outcome of inter partes review proceedings to date.
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`Defendants’ statistics, however, are both misleading and irrelevant.
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` Citing an October 2014 law-review article, Defendants represent that
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`inter partes
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`review is instituted about “84% of the time it is requested” and that “all instituted claims
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`are canceled 77.5% of the time.”25 More recent and complete data, however, tells a
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`different story. As of January 15, 2015, the United States Patent Office’s official
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`statistics on inter partes review petitions terminated to date reflect that the Board has
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`instituted trials on only 68% of challenged claims.26 Of the instituted claims, the Board
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`found only 36% of those claims un-patentable.27 Thus, only 24% of challenged claims
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`were ultimately found un-patentable.28 These numbers showcase the difficulty in
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`predicting that Board action will necessarily result in simplification of district court
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`litigation.
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` For this reason, when presented with statistical data, courts have held that such
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`information should not govern individual outcomes. See, e.g., Boundaries Solutions, Inc.
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`v. Corelogic, Inc., 5:14-cv-00761, 2014 U.S. Dist. LEXIS 175590, at *3 (N.D. Cal. Dec.
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`19, 2014) (“While appreciating the statistical rate at which petitions have been granted to
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`25 Defendants’ Brief at 1 and 14 (citing Ex. N, Love & Ambwani, at 102).
`26 Exhibit A, Inter Partes Review Petitions Terminated to Date (as of
`1/15/2015) (http://www.uspto.gov/ip/boards/bpai/stats/aia_ trial_statistics.jsp).
`27
`Id.
`28
`Id.
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`8
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 9 of 15
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`date, this court is unwilling to assume the PTO and its Administrative Law Judges are
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`nothing more than well-educated, well-trained rubber stamps.”); Dane Techs., Inc. v.
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`Gatekeeper Sys., Inc., No. 12-2730, 2013 WL 4483355, at *2 (D. Minn. Aug. 20, 2013)
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`(denying motion to stay pending review of inter partes review petition “because the
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`PTO’s review of [Defendant’s] petitions is speculative, and because the scope of the
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`PTO’s possible review is also speculative”).
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` Moreover, even if the Board institutes review, the simplification that Defendants
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`predict may not materialize for two key reasons. First, Defendants argue that the inter
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`partes review estoppel rules will “limit the number of claims and defenses that this Court,
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`and a jury, would have to consider at trial.”29 Defendant SCEA, however, is the only
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`“party” to the Board proceedings. In these circumstances, Defendants assert that only
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`SCEA “will be estopped from asserting invalidity on any grounds that it raised, or
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`reasonably could have raised, in the IPRs.”30 While Aplix reserves its right to argue that
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`the estoppel provision of 35 U.S.C. § 315(e)(2) would bind both Defendants, the plain
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`language of Defendants’ brief previews that they are prepared to argue otherwise. In
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`such circumstances, the Court should give no weight to Defendants’ claim that an
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`estoppel effect is a reason to stay this case.
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` Second, courts recognize that where defendants have not sought review of all the
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`claims asserted by the patent owner, a stay is unlikely to provide substantial
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`simplification of issues. See, e.g., SCVNGR, Inc. v. eCharge Licensing, LLC, 13-cv-
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`29 Defendants’ Brief at 11.
`30 Defendants’ Brief at 11.
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`9
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 10 of 15
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`12418, 2014 WL 4804738, at *10 (D. Mass. Sept. 25, 2014) (denying stay where “only
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`three of the eight patents-in-suit are subject to IPR”); Davol, Inc. v. Atrium Med. Corp.,
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`No. 12-CV-958, 2013 WL 3013343, at *6 (D. Del. June 17, 2013) (“the court is
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`concerned by [Defendant’s] failure to seek inter partes review of the ′420 Patent—a stay
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`of this action in its entirety will do little to advance the parties' dispute over the ′420
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`Patent, and allowing litigation to proceed solely with respect to that patent while the
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`parties await a PTO decision on the other two patents-in-suit would invite substantial
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`inefficiency.”). To date, Defendants have not sought any review of two of the patents-in-
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`suit, and Defendants concede that the filed petitions do not seek review of all the claims
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`in the three patents included in Aplix’s initial complaint.31 This factor counsels against a
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`stay.
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`B. A stay will unduly prejudice Aplix and present a clear tactical
`advantage for Defendants.
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` A patent plaintiff has “an interest in the timely enforcement of its patent right.”
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`Ambato Media, LLC v. Clarion Co., Ltd., No. 2:09-cv-242-JRG, 2012 WL 194172, at *1
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`(E.D. Tex. Jan. 23, 2012). Under this principle, courts have held that “[w]aiting for the
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`administrative process to proceed risks prolonging the resolution of the dispute, and can
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`result in inherent prejudice to the plaintiff.” Audatex N. Am., Inc. v. Mitchell Int’l, Inc.,
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`No. 13-CV-1523, 2014 WL 4546796, at *5 (S.D. Cal. Sept. 11, 2014). And beyond the
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`prejudice of any delay itself, staying the case for a prolonged amount of time increases
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`the chances that “witnesses may become unavailable, their memories may fade, and
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`31 Defendants’ Brief at 8.
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`10
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 11 of 15
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`evidence may be lost while the PTO proceedings take place.” Ambato Media, LLC, 2012
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`WL 194172, at *5.
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` Aplix filed suit seven months ago, fully anticipating that discovery would be well
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`underway by this time. Instead, Defendants requested two lengthy extensions, delaying
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`the case’s progress. Because the Board has until June to decide whether or not to grant
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`Defendant SCEA’s first two requests for review, a stay would effectively pause this
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`matter for almost a year while nothing happened in either forum. Productive activity can
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`take place in the interim—this Court can set a scheduling order and the parties can
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`execute a protocol for the discovery of Electronically Stored Information (“ESI”),
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`negotiate a protective order, and exchange initial disclosures. Each of these activities
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`would need to occur in almost any scenario, regardless as to the Board’s decisions. In
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`contrast, further delay threatens to cause this litigation to drag on for years, especially if
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`the review process does not resolve the entire matter. Even if review is partially granted,
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`the Court may be able to proceed in part, and will have continued to make progress.
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` Defendants’ stay also appears timed to gain a tactical advantage regarding
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`discovery and disclosure obligations. Defendants requested, and obtained, lengthy
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`continuances from Aplix. Defendant SCEA apparently used the pending seven months to
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`craft its petitions for inter partes review. Then, instead of waiting for the Board to rule
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`on the proceedings, Defendants seek to stay the matter at the pleadings stage. In other
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`words, Defendants delayed the proceedings to their advantage and now seek a premature
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`stay to further that advantage. If successful, they will have deferred any progress on
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`Aplix’s claims for over a year. This factor weighs against granting a stay.
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`11
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 12 of 15
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`C. Although the litigation remains in its early stages, the litigation may
`progress without prejudice to either party.
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`Although this case remains in its early stages, this factor should not favor a stay.
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`This case has progressed slowly primarily as a result of Defendants’ multiple requests for
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`lengthy extensions. While Aplix has granted Defendants 120 days in extensions,
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`Defendants should not be permitted to use this self-imposed, requested delay as a sword
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`to implement its desired stay. Moreover, the early stage of proceedings means that even
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`if the Board ultimately institutes proceedings, having gone forward with initial discovery
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`will not be unduly harmful to the efficient management of these proceedings. As noted
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`above, the parties will need to enter a protective order, an ESI protocol, and exchange
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`initial disclosures in almost any scenario. In the at least four months before the Board
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`rules on Defendant SCEA’s first two petitions, a scheduling conference in this action can
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`occur and the parties have the opportunity to make meaningful progress.
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`
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`CONCLUSION
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` Defendants bear the burden of proof in seeking a stay of these proceedings. Given
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`that the Patent Trial and Appeal Board has not instituted a single review of a single claim
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`at issue in this lawsuit, Defendants cannot meet this burden. Recognizing this dilemma,
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`Defendants cite outdated statistics, claiming that review is likely. The governing factors,
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`however, ask courts to focus on the facts and circumstances unique to each case. Where,
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`as here, there is meaningful progress that both parties can make pending the Board’s
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`determination of review, a stay is not appropriate. Even should the Board at some point
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`down the road grant review as to some claims of some of the patents in suit, there is no
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`12
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 13 of 15
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`efficiency in granting a stay here when other claims not subject to review are at issue in
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`this action, and when only one of the defendants has sought Board review. The Court
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`should deny Defendants’ motion.
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`13
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 14 of 15
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`Dated: January 29, 2015. Respectfully submitted,
`
` APLIX IP HOLDINGS CORPORATION
`
` By its attorneys,
`
`
`
`
`
`
` /s/Brandon T. Scruggs
` Lisa M. Tittemore (BBO # 567941)
` Brandon Scruggs (BBO # 672541)
` SUNSTEIN KANN MURPHY & TIMBERS LLP
` 125 Summer Street
` Boston, MA 02110-1618
` Telephone: (617) 443-9292
` Facsimile: (617) 443-0004
` E-mail:
`
`
`
`
`ltittemore@sunsteinlaw.com
`bscruggs@sunsteinlaw.com
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`
`Robert J. Gilbertson (pro hac vice)
`Sybil L. Dunlop (pro hac vice)
`X. Kevin Zhao (pro hac vice)
`GREENE ESPEL PLLP
`222 South Ninth Street, Suite 2200
`Minneapolis, MN 55402
`Telephone: (612) 373-0830
`Facsimile: (612) 373-0929
`E-mail:
`BGilbertson@GreeneEspel.com
`
`
`SDunlop@GreeneEspel.com
`
`
`KZhao@GreeneEspel.com
`
`Sherman W. Kahn (pro hac vice)
`MAURIEL KAPOUYTIAN WOODS LLP
`27 W. 24th Street, Third Floor
`New York, NY 10010
`Telephone: (212) 529-5131
`Facsimile: (212) 529-5132
`E-mail:
`skahn@mkwllp.com
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`Attorneys for Plaintiff
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` Aplix IP Holdings Corporation
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`14
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`Case 1:14-cv-12745-MLW Document 33 Filed 01/29/15 Page 15 of 15
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`CERTIFICATE OF SERVICE
`
` I
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`
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`04088/05001 2248243.1
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` hereby certify that this document, filed through the ECF system, will be sent
`electronically to the registered participants as identified on the Notice of Electronic Filing
`(NEF) and that paper copies will be sent to those non-registered participants (if any) on
`January 29, 2015.
`
`
`/s/ Brandon T. Scruggs
`Brandon T. Scruggs
`
`
`
`
`
`15