Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 1 of 8 PageID #: 435
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
`
`Case No. 2:10-cv-294-DF-CE
`
`JURY TRIAL DEMANDED
`
`
`
`
`
`
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`AMERANTH, INC.
`
`
`
`
`
`v.
`
`Plaintiff,
`
`(1) PAR TECHNOLOGY CORP.,
`(2) PARTECH, INC.
`(3) KUDZU INTERACTIVE, INC.,
`(4) LONE TREE TECHNOLOGY, INC.
`(5) MUNCHAWAY LLC
`(6) MENUSOFT SYSTEMS CORP., and
`(7) CASH REGISTER SALES & SERVICE
`OF HOUSTON, INC. (dba CRS TEXAS),
`
`
`
`Defendants.
`- --- --- --- --- --- --- --- --- --- --- --- --- --- --- x
`
`
`AMERANTH’S SURREPLY IN SUPPORT OF OPPOSITION TO
` DEFENDANT KUDZU INTERACTIVE, INC.’S MOTION TO DISMISS
`
`
`
`
`
`
`FANDANGO EXHIBIT 1067
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 2 of 8 PageID #: 436
`
`
`
`Kudzu’s reply (Dkt. 67) does nothing to correct the infirmities of its motion to dismiss.
`
`Supreme Court precedent compels denial based on the present procedural posture and
`
`circumstances of the first case.1 Moreover, Kudzu has not provided any viable theory or
`
`authority for invoking collateral estoppel against claims which were not previously asserted.
`
`I.
`
`Kudzu’s Arguments On Blonder-Tongue Ignore The Pertinent Issues
`Kudzu’s argument that Fifth Circuit law controls over the Supreme Court’s Blonder-
`
`Tongue decision is a thinly-veiled attempt to distract from Kudzu’s failure to even acknowledge
`
`Blonder-Tongue in its opening brief. General Fifth Circuit law on collateral estoppel cannot
`
`obviate the primacy of the Supreme Court’s Blonder-Tongue decision as regards a patentee’s
`
`opportunity to fully and fairly litigate patent validity.
`
`Neither Abbott nor Pharmacia involved the aspects of Blonder-Tongue which are present
`
`in this case. Kudzu’s argument that Pharmacia requires blind application of collateral estoppel
`
`is belied by what the Federal Circuit actually decided in Pharmacia. Specifically, the Federal
`
`Circuit relied on the first court’s denial of JMOL/new trial motions to support its conclusion that
`
`a proper Graham analysis had been performed and that the jury did not fail to grasp the technical
`
`subject matter.2 Moreover, the record amply demonstrates that the district court in Pharmacia
`
`was not faced with issues regarding “a full and fair opportunity to litigate” which Blonder-
`
`Tongue held must be resolved when present. Id. The issue before that district court was whether
`
`collateral estoppel should apply to a prior determination involving an ordinary adjudication of
`
`1 At the beginning of its reply, Kudzu indicates that it would withdraw its motion if its motions
`to sever and transfer are granted. (Dkt. 67 at 1, fn. 1). By page 5, however, Kudzu postures
`that it “wants to do battle.” Kudzu also accuses Ameranth of trying to delay the current case.
`If Kudzu is really interested in avoiding delay in adjudicating this case, it is baffling why
`Kudzu would agree to essentially what Ameranth requests, i.e., a tabling of the collateral
`estoppel issue until the motions in the first case are decided. A new judge in a brand new case
`in Georgia would undoubtedly not decide the present motion until after Ameranth’s motions in
`the first case are decided by this Court.
`2 Pharmacia & Upjohn Co. v. Mylan Pharm., 170 F.3d 1373, 1379-80 (Fed. Cir. 1999) (citing
`Blonder-Tongue).
`
`1
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 3 of 8 PageID #: 437
`
`
`invalidity.3 As is clear from the first Pharmacia case (i.e., Mova case) in which the patents were
`
`adjudicated invalid, none of the issues raised by Ameranth were present in the Mova case.4
`
`Ameranth has pointed to serious improprieties by Defendants and their expert Dr.
`
`Acampora which resulted in jury confusion and irretrievably tainted verdicts including (1) failing
`
`to properly apply Graham, (2) testifying on validity inconsistent with the Court’s claim
`
`construction5 and (3) taking contradictory positions on the TransPad in two different litigations.6
`
`There was nothing of the kind in Pharmacia. These are extraordinary circumstances which
`
`invoke the “full and fair opportunity” proviso of Blonder-Tongue which precludes application of
`
`collateral estoppel until the issues raised by Ameranth are finally resolved.7 Pharmacia
`
`recognized that Blonder-Tongue requires a “full and fair opportunity to litigate” determination by
`
`the court which is being asked to invoke collateral estoppel (which is what Ameranth cited
`
`Pharmacia for).8 Pharmacia does not stand for the proposition that collateral estoppel is to be
`
`applied blindly when such extraordinary circumstances are present.
`
`Kudzu’s arguments regarding other factors discussed in Blonder-Tongue are meaningless.
`
`Ameranth does not base its argument on those factors. Notwithstanding Kudzu’s elevated
`
`3 Pharmacia & Upjohn Co. v. Mylan Pharm. Inc., 5 F. Supp. 2d 399, 407 (N.D. W.Va. 1998) (no
`mention of applicability of Blonder-Tongue factors as to full and fair opportunity to litigate).
`4 See Upjohn Co. v. Mova Pharm. Corp., 31 F. Supp. 2d 211, 215-16 (D. P.R. 1998).
`5 See, e.g., DataTreasury Corp. v. Wells Fargo, C.A. No. 2:06-CV-72-DF, Dkt. 2367 at p. 11
`(E.D. Tex. Sept. 27, 2010) (“The opinions of Plaintiff’s expert to the contrary at trial were
`outside of the Court’s claim construction and thus as a matter of law cannot support the jury’s
`finding”).
`6 See Cardiac Pacemakers, Inc. v. St. Jude, Inc., 2002 WL 1801525, *48-63 (S.D. Ind. July 5,
`2002) (Dkt. 62, Exh. 5) (granting new trial based on facts nearly identical to Dr. Acampora’s
`deceit in the Ameranth v. Menusoft et al. litigation), rev’d on other grounds, 381 F.3d 1371
`(Fed. Cir. 2004).
`7 Kudzu’s weak assertion that Ameranth says it was denied a full and fair opportunity to litigate
`by this Court ignores what Ameranth actually says. It is clear that Ameranth takes exception to
`Defendants’ misconduct in the first case.
`8 Kudzu cited to a bare statement from a treatise for the proposition that courts have not followed
`Blonder-Tongue (Dkt. 67 at 3), but they cite no case refusing to apply Blonder-Tongue on the
`facts present in the Ameranth v. Menusoft case, including misconduct of an expert witness.
`2
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 4 of 8 PageID #: 438
`
`
`rhetoric,9 Ameranth’s argument is that a very serious course of deception by Defendants and
`
`their expert, Dr. Acampora, precluded Ameranth a full and fair opportunity to litigate the claims
`
`asserted in the first case. This Court is currently considering Ameranth’s Motion for New Trial
`
`and Motions for JMOL in the first case and is thus aware of the reasons Ameranth believes it was
`
`denied a full and fair opportunity to litigate validity as required by Blonder-Tongue. Kudzu’s
`
`self-serving pontifications about cross examination entirely miss the point of Ameranth’s
`
`motions in the first case and its argument here–e.g., cross examination cannot force a duplicitous
`
`expert to admit his duplicity.10 Dr. Acampora took diametrically opposite positions on the exact
`
`same device in two different litigations. His tainted testimony on that device, which was central
`
`to Defendants’ invalidity position in the first case, must therefore be disregarded. Because his
`
`deception permeated Defendants’ entire case, his remaining testimony must also be disregarded.
`
`Defendants’ and Dr. Acampora’s testimony and argument at trial was infused with allegations
`
`regarding the Transpad, all of which were false and all of which were supported by a dishonest
`
`expert. The Blonder-Tongue dictates were designed to protect a patentee from blind application
`
`9 Kudzu’s accusation that Ameranth “sandbagged the first case in order to hold its big guns at
`ready for the present suit” (Dkt. 67 at 4) makes no sense, is wrong, and is wholly irrelevant to
`the flawed verdicts resulting from Defendants’ improper conduct in the first case.
`10Unlike Wahl v. Vibranetics, Ameranth does not admit that it “could have done a better job of
`cross-examining the expert.” Dr. Acampora did not answer questions which would have shown
`his contradictory opinions in the Papyrus case. However, that does not change the fact that his
`opinions were duplicitous and thus unreliable. See Cardiac Pacemakers, supra. A
`contradictory opinion on the very same device cannot be “the product of reliable principles and
`methods” and could not have resulted from “appli[cation of] the principles and methods
`reliably to the fact of the case.” Fed. R. Evid. 702. Moreover, neither Wahl nor Pharmacia
`dealt with a dishonest expert who took directly contradictory positions in different cases. Nor
`did Pharmacia mandate application of collateral estoppel where a full and fair opportunity to
`litigate was not afforded the patentee. Pharmacia merely held that where no such showing was
`made, collateral estoppel was appropriate prior to completion of appeals. That is exactly the
`statement of the law in Ameranth’s opposition (Dkt. 62 at 4-7) which Kudzu tries to ignore.
`Ameranth is entitled to resolution of its pending JMOLs and Motion for New Trial prior to any
`invocation of collateral estoppel to the claims asserted in the first case. Such resolution
`requires a determination of the effect of Defendants’ and Dr. Acampora’s misconduct on the
`invalidity verdicts in the first case.
`
`3
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 5 of 8 PageID #: 439
`
`
`of collateral estoppel in precisely the kind of situation presented in this case.
`
`II.
`
`Kudzu’s Argument That All Claims Of All Patents Are Invalid Is Baseless
`Kudzu devotes all of six lines in its reply (Dkt. 67 at 6) in an attempt to buttress its absurd
`
`proposition that claims that were never adjudicated should be declared invalid without even
`
`considering what the claims cover. In those six lines, all they offer is further baseless argument
`
`about the word “representative”11 and a case, Bourns v. U.S.,12 that disproves their proposition.
`
`Kudzu failed to tell this Court that the Bourns court clearly stated that the issues in the
`
`two cases, i.e., the claims, had to be substantively “identical” for estoppel to apply.13 That is not
`
`the case here, where, for example, the patents include independent claims which were not
`
`previously litigated. Critically, the decision in Bourns was made on summary judgment based
`
`on a detailed comparison of the litigated and non-litigated claims. Kudzu has presented no such
`
`detailed comparison to this Court. The reason is clear−Kudzu does not wish to acknowledge the
`
`substantial differences between the previously asserted and unasserted claims of the patents. In
`
`fact, Kudzu has not even referred to the actual claim language of any claim.
`
`Comparison of the actual language of the asserted and unasserted claims shows just how
`
`baseless and extreme Kudzu’s argument really is. For illustrative purposes, Ameranth attaches
`
`as Exhibit 1 a comparison chart showing claim 1 of the ’850 patent (asserted at trial in the first
`
`case) versus claim 12 of the ’850 patent (not asserted in the first case). The highlighted portions
`
`
`11Kudzu’s focus on the word “representative” in Ameranth’s identification of claims to be
`asserted at trial is misplaced as explained in Ameranth’s opposition. (Dkt. 62 at 10-11).
`12Bourns, Inc. v. U.S., 537 F.2d 486 (Ct. Cl. 1976). Kudzu cited no other authority for its novel
`proposition that collateral estoppel applies to unadjudicated claims without any adjudication of
`the differences between the claims. There is no such authority, and as shown herein, Bourns
`does not support their theory either.
`13537 F.2d at 492 (“[T]he correct view is believed to be that of the Sixth Circuit in Westwood
`Chemical, Inc. v. Molded Fiber Glass Body Co., 498 F.2d 1115 (6th Cir. 1974), which held
`collateral estoppel applicable to unadjudicated claims where it was shown that the
`adjudicated and unadjudicated claims presented identical issues.”) (emphasis added).
`4
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 6 of 8 PageID #: 440
`
`
`of each claim are not found in the other claim.14 These differences are striking and would have
`
`been easily discernable under even the most rudimentary inspection. In essence, Kudzu filed a
`
`baseless motion as regards Ameranth’s unasserted claims without even analyzing the actual
`
`claims of the patents.15 In contrast, the defendant and the court in Bourns thoroughly analyzed
`
`the previously asserted and unasserted claims, including an extended discussion of secondary
`
`considerations. Unlike the situation in Bourns, Kudzu is asking this Court to invalidate claims
`
`which have never been litigated with no analysis of the validity of those claims whatsoever.
`
`Moreover, the plaintiff in Bourns did not argue that any of the differences between the
`
`claims were of patentable significance.16 Ameranth made no such admission and in fact
`
`expressly stated that previously unasserted claims were being asserted in this case:
`
`The present lawsuit asserts infringement of additional and previously unasserted patent
`claims against newly-infringing implementations and collaborations involving products of
`Menusoft and CRS Texas which are not asserted in C.A. No. 2:07-cv-271-TJW-CE
`including, inter alia, claim 12 of United States Patent No. 6,384,850 and claim 11 of
`United States Patent No. 6,871,325.17
`Kudzu’s argument that collateral estoppel applies to unadjudicated claims flies in the face of the
`
`Constitution and all applicable statutory and case law authority. Kudzu’s argument was non-
`
`viable from the outset and is a waste of the Court’s and Ameranth’s time and resources.
`
`
`14The highlighted material in Exhibit 1 shows, e.g., numerous pertinent differences.
`15The only reasonable conclusion to be drawn from Kudzu’s argument regarding unasserted
`claims is that it was presented to harass Ameranth and/or to needlessly increase the cost of
`litigation. Kudzu’s argument is not “warranted by existing law or by a nonfrivolous argument
`for extending, modifying, or reversing existing law or for establishing new law,” nor can the
`factual contentions on which their argument is implicitly based have evidentiary support since,
`as discussed herein, the claims are different on their face and Kudzu has offered no evidence as
`to why the claims should be interpreted to cover the same subject matter as claims directed to
`different subject matter. See Fed. R. Civ. P. 11.
`16537 F.2d at 493 (“the additional elements recited in the unadjudicated claims do not distinguish
`the claimed combination as a whole from the prior art. Indeed, plaintiffs do not contest this,
`making no argument at all in that respect.”). The patentee in Bourns also conceded that it
`received a full and fair opportunity to litigate the previously adjudicated claims, which is yet
`another distinction from the present case, as discussed above. Id. at 489.
`17Dkt. 1, Complaint ¶ 34 (emphasis added).
`
`5
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 7 of 8 PageID #: 441
`
`
`
`
`This 23rd day of December, 2010.
`
`
`
`
`
`Respectfully submitted,
`
`
`
`
` /s/ Michael C. Smith
`By:
`Michael C. Smith
`Texas Bar No. 18650410
`Email: michaelsmith@siebman.com
`Siebman, Burg, Phillips & Smith, L.L.P.
`113 East Austin Street
`Marshall, TX 75671
`(903) 938-8900 – Telephone
`(972) 767-4620 – Facsímile
`
`John W. Osborne
`josborne@lockelord.com
`Peter N. Fill
`pfill@lockelord.com
`James W. Gould
`jgould@lockelord.com
`Steven M. Purdy
`spurdy@lockelord.com
`Peter H. Noh
`pnoh@lockelord.com
`Locke Lord Bissell & Liddell LLP
`3 World Financial Center
`New York, NY 10281-2101
`(212) 415-8600 – Telephone
`(212) 303-2754 – Telecopier
`
`Attorneys for Plaintiff Ameranth, Inc.
`
`
`6
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70 Filed 12/23/10 Page 8 of 8 PageID #: 442
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that all counsel of record who are deemed to have to
`consented electronic service are being served with a copy of this document via the Court’s
`CM/ECF system per Local Rule CV-5(a)(3) this 23rd day of December, 2010. Any other counsel
`of record will be served by facsimile transmission and/or first class mail.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` /s/ Michael C. Smith
`
`Michael C. Smith
`
`
`
`
`
`
`
`
`
`
`
`
`
`7
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70-1 Filed 12/23/10 Page 1 of 2 PageID #: 443
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`Case No. 2:10-cv-294-DF-CE
`
`JURY TRIAL DEMANDED
`
`
`
`
`
`
`
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`:
`
`AMERANTH, INC.
`
`Plaintiff,
`
`
`
`
`
`v.
`
`(1) PAR TECHNOLOGY CORP.,
`(2) PARTECH, INC.
`(3) KUDZU INTERACTIVE, INC.,
`(4) LONE TREE TECHNOLOGY, INC.
`(5) MUNCHAWAY LLC
`(6) MENUSOFT SYSTEMS CORP., and
`(7) CASH REGISTER SALES & SERVICE
`OF HOUSTON, INC. (dba CRS TEXAS),
`
`
`
`Defendants.
`- --- --- --- --- --- --- --- --- --- --- --- --- --- --- x
`
`
`
`
`AMERANTH’S SURREPLY IN SUPPORT OF OPPOSITION TO
` DEFENDANT KUDZU INTERACTIVE, INC.’S MOTION TO DISMISS
`
`
`
`Exhibit 1
`
`

`
`Case 2:10-cv-00294-JRG-RSP Document 70-1 Filed 12/23/10 Page 2 of 2 PageID #: 444
`
`EXHIBIT 1
`
`Example Comparison of Asserted and Unasserted Claims of the ’850 Patent in
`Case No. 2:07-cv-271-CE
`
`
`CLAIM 12 (UNASSERTED)
`An information management and synchronous
`communications system for use with wireless
`handheld computing devices and the internet
`comprising:
`
`a. a central database containing hospitality
`applications and data,2
`
`b. at least one wireless handheld computing
`device on which hospitality applications and
`data are stored,
`
`c. at least one Web server on which
`hospitality applications and data are stored,
`
`d. at least one Web page on which hospitality
`applications and data are stored,
`
`e. an application program interface, and
`
`f. a communications control module,
`
`wherein applications and data are
`synchronized between the central data base, at
`least one wireless handheld computing
`device, at least one Web server and at least
`one Web page; wherein the application
`program interface enables integration of
`outside applications with the hospitality
`applications and wherein the communications
`control module is an interface between the
`hospitality applications and any other
`communications protocol.
`
`CLAIM 1 (ASSERTED)
`An information management and synchronous
`communications system for generating and
`transmitting menus comprising:1
`
`a. a central processing unit,
`
`b. a data storage device connected to said central
`processing unit,
`
`c. an operating system including a graphical user
`interface,
`
`d. a first menu consisting of menu categories, said
`menu categories consisting of menu items, said first
`menu stored on said data storage device and
`displayable in a window of said graphical user
`interface in a hierarchical tree format,
`
`e. a modifier menu stored on said data storage device
`and displayable in a window of said graphical user
`interface,
`
`f. a sub-modifier menu stored on said data storage
`device and displayable in a window of said graphical
`user interface, and
`
`g. application software for generating a second menu
`from said first menu and transmitting said second
`menu to a wireless handheld computing device or
`Web page,
`
`wherein the application software facilitates the
`generation of the second menu by allowing selection
`of categories and items from the first menu, addition
`of menu categories to the second menu, addition of
`menu items to the second menu and assignment of
`parameters to items in the second menu using the
`graphical user interface of said operating system,
`said parameters being selected from the modifier and
`sub-modifier menus.
`
`
`
`
`1 Blue highlighted material is not found in claim 12.
`2 Yellow highlighted material is not found in claim 1.