SEL EXHIBIT NO. 2002
`
`CMI CORP. V. PATENT OF YOSHIHARU HIRAKATA and
`
`SHUNPEI YAMAZAKI
`
`IPR 2013-00068
`
`

`

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`' Case 8:-12~'cv—00021—JST—JPR' 'Documentioo' Filed-
`'#:1887
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`10/22/12 .Pageiofzs' PagelD'
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`? JEFFER MANGELS BUTLER & MITCHELL LLP
`STANLEY M. GIBSON (Bar No. 162329)
`3 S 'bson
`'mbm. com
`GO Y S. CORDREY (Bar No. 190144)
`5 gcor'dre @fmbm.com
`Park laza, Suite 1100
`f Irvine California 92614-2592
`I Tele'pfione:
`623 —7200 -
`8283 623—7202
`; Facsnmle:
`éttorne S for Defendants
`IINNOLUX CORPORATION,
`CHIMEI OPTOELECTRONICS USA, INC.,
`ACER AMERICA CORPORATION,
`VIEWSONIC CORPORATION,
`'
`VIZIO, INC.
`
`
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`l'
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`UNITED STATES DISTRICT COURT
`
`CENTRAL DISTRICT OF CALIFORNIA
`
`SEMICONDUCTOR ENERGY
`LABORATORY CO., LTD.,
`
`Plaintiff,
`
`V.
`
`CHIMEI INNOLUX CORPORATION '
`CHI MEI OPTOEL-ECTRONICS USA,
`INC. ACER AMERICA
`CORPORATION, VIEWSONIC
`CORPORATION, VIZIO INC. and
`WESTINGHOUSE DIGITAL, LLC,
`
`.
`
`Defendants.
`
`
`
`> CASE NO. SACVIZ-OOZI—JST (JPRX)
`
`-
`DEFENDANTS' NOTICE OF
`MOTION AND MOTION TO STAY.
`LITIGATION PENDING OUTCOME
`OF INTER PARTES REVIEW;
`MEMORANDUM OF POINTS AND -
`AUTHORITIES IN SUPPORT OF .
`MOTION AND DECLARATION OF
`GREGORY S. CORDREY IN
`SUPPORT THEREOF
`
`[Notice OfMotz'on, Motion and [PropoSed] Order
`Filed Concurrently Herewz'th]
`.
`
`Date:
`Time:
`Place:
`
`December 21, 2012
`' 2:30 p.m.
`v
`Hon. Josephine Staton Tucker
`Courtroom 10A
`411 W. 4th St. # 1-053
`Santa Ana, Califomia '
`
`Memorandum of Points and Authorities In Support
`Of MOtion to Stay Pending Outcome of Inter Panes .
`Review -
`'
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`" Case81.12—c'v-10002i-JST—JPR'Document‘lOO' Filed1o/22/12 Pagezof'és Pagelo'
`#:1888'
`
`TABLE OF CONTENTS
`
`1
`
`Rage
`
`1.
`
`INTRODUCTION.........................................§ ............................................. 2
`
`~ II.
`
`STATEMENT OF FACTS .......................,........................................’
`3
`A.
`' SEL’s Prior Litigation and Inequitable Conduct.......
`........................ 3
`
`'
`
`B
`
`C.
`
`D
`
`E.
`
`'
`
`F.
`
`CM and SEL areNot Competitors.................................................... 4
`
`The Status ofthe Proceedings in thisCase ....... 5
`
`Defendants Have, Or Will Have, Filed Their Petitions For Inter
`'Partes Review With The PTO Within A Few Weeks ......................... 5
`
`If The Stay Is Not Granted, The Parties Will Be Addressing The
`Same Issues In Two Different Forums At The Same Time ................ 6
`
`The New IPR Review Process Is Fast, Fair And Will Either
`Eliminate The Need For Trial Or Streamline The Remaining
`Issues ................................................................................................. 8
`
`III.
`
`STAYING THE CASE IS WARRANTED BECAUSE THE CASE IS
`IN ITS EARLY STAGES, THE REVIEW WILL SIMPLIFY THE
`ISSUES AT TRIAL AND NEITHER PARTY WILL BE PREJUDICED
`BY A STAY .........................,....................................................................... 9
`
`A. ‘ Legal Standard ................................................................................... 9
`
`B.
`
`Discovery Has Just Begun and Is Not Close to Being Completed 10
`
`C. ' A Stay Will Simplify the Issues in Question and Streamline the
`Trial ....... 12
`
`D.
`
`A Stay Will Not Unduly Prejudice SEL or Present a Clear Tactical
`_ Disadvantage for SEL, Which is Not a Competitor of CMI ............. 16
`
`IV.
`
`CONCLUSION .................................................~................i.................... 18
`
`- i —
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`Memorandum of Points and Authorities In Support
`Of Motion to Stay Pending Outc‘dme of Inter Partes
`Review
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`Case 8:12-cv-00021—-JST~JPR Document 100 Filed 10/22/12 Page 3 of 23 Page l-D
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`#: 1889
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`TABLE OF AUTHORITIES
`7
`1
`
`Page
`
`CASES
`
`1
`
`2,
`3
`
`i
`
`Akeena Solar Inc v. Zep Solar Inc,
`
`'
`
`.
`
`No. C09—05040 JSW, 2010WL 1526388 (N..D Cal.Apr. 14, 2010).........‘;.....16
`4 1
`5
`1 Anascape, Ltd. -v. Morosofi Corp,
`5
`475 F. Supp. 2d 612 (ED. Tex. 2007) ........................................................ 11, 12
`7 1 ASCII Corp. v. STD Enim’t,
`~
`8
`844 F. Supp, 1378 (N.D. Cal. 1994) ....................... 9
`
`
`
`
`
`10
`11
`
`12
`
`
`
`9 Aten Int’l Co. v. Emine Tech. Co,
`No.09cv—0—843, 2010 US. Dist. LEXIS 46226 (CD Cal. Apr. 12, 2010) ..........
`................................................................................................................. 8 9,15.
`.
`3
`Avago Tech. Fiber IP (Singapore) Pte. Ltd. v. IPZronics, Inc.,
`g5
`No. 10— CV-O2863-EJD, 2011 WL 3267768 (ND; Cal. July 28, 2011) ........... 11
`SE
`'
`.
`i3
`.
`13 . Bausch & Lomb Inc. v. Alcon Lab, Inc.,
`
`ES
`14
`914 F. Supp. 951 (W.D.N.Y. 1996).................................................................. 13
`2 15 Brass Smith, LLC’ v. AdvancedDesign Mfg. LLC,
`g 16
`CV 104945 PSG, 2010 U.S Dist. LEXIS 141422 (CD Ca1.Dec. 20,
`
`2010) ................................................................................................................. 8
`
`-
`
`1*:
`
`'19
`
`17
`‘
`18 Echostar Techs. Corp. v T2V0 Ina,
`No. 05———CV81, 2006 U.S. Dist. LEXIS 48431 (ED. TeX. July 14,2006) ..............
`.......................................................................................... 10,11,12,14
`
`'
`20 1 eSofl, Inc. 1). Blue Coat SyS., Ina,
`21
`505 F. Supp. 2d 784 (D. Colo. 2007) ............................ '. ............................ 1‘1, 12'
`
`‘-
`
`‘
`.
`22 Gould v. Control Laser Corp,
`23
`705 F.2d 1340 (Fed. Cir. 1983).; ........................................................................ 7
`
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`In re Translogic Tech, Inc,
`504 F.3d 1249 (Fed. Cir. 2007) ........................................................................ 14
`‘
`.
`
`Inogen, Inc. v. [nova Labs, Inc.
`Case No.8ACV11—1692—JST (Mar. 20, 2012)................. ................. 8, 9, 11,16
`'
`-
`I
`
`Memorandum ofPoints and Authorities In Support
`Of Motion to Stay Pending Outcome of Inter Panes
`_ Review
`
`

`

`Case 8:12-cv—00021 JST—JPR Document 100
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`#1890
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`Filed 10/22/12 Page 4 of 23 Page ID
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`TABLE OF AUTHORITIES
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`1
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`.IT. Eaton & Co. v. At. Paste & Glue. Co.,
`106 F.3d 1563 (Fed. Cir. 1997) ........................................................................ 12
`_
`1
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`'
`
`- Page
`
`fl Krzppelz v, Fora1 Motor Company,
`667 F.3d 1261 (Fed. Cir. 2012) ........................................................................ 12
`
`Lincoln Nat ’l Life Ins. Co. v. Transamerica Fin. Life Ins. Co. ,
`No. 08—CV—135, 2009 U.S. Dist. LEXIS 35121 (ND. Ind. April 24, 2009) ....... 11
`
`
`
`8 Marine Polymer Technologies, Inc. v. HemCon, Inc,
`9
`672 F.3d 1350 (Fed. Cir. 2012) (en banc) ..........................................................8
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`11417835., Inc. v. Peter MCNulty,
`CV 05—7263 DSF, 2006 U.S. Dist. LEXIS 98642 (CD. Cal. Oct. 23, 2006) ........
`......................................................................................................... 8, 10, 12, 15
`
`PragmatusAV, LLC v. Facebook, Inc,
`No. 11—CV—02168—EJD, 2011 WL 4802958 (N.D. Cal. Oct. 11, 2011) ............ 11
`
`Semiconductor Energy Laboratory Co., LTD. v. Samsung Electronics Co.
`LTD, et al.,
`204 F. 3d 1368 (Fed. Cir. 2000) ..................................................................... 2 .39
`
`
`
`Softview Computer Prods. Corp. v. Hawortlz, Inc,
`No. 97—CV—8815, 2000 U. S. Dist. LEXIS 11274 (S.DWNY Aug. 10,2000) ..........
`................................................................................................................... 10,12
`
`Translogic Tech, Inc. v. Hitachi, Ltd,
`250 Fed. Apr. 988 (Fed. Cir. 2007)
`
`............................. 14
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`LA 9063556111
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`Memorandum of Points and Authorities In Support
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`Case 8:1'2—‘cv—00021eJVST—JPR Document 100
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`TABLE OF AUTHORITIES
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`Page
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`STATUTES
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`35 U.S.C.
`§ 252 ......................................................................................‘........................ 1, 7 ‘
`§§301~319,etseq..............................................................................................6
`§ 307......~.................._........................................................7
`§§ 311—319..................................................................................................... 1, 2
`§ 313 ................................................................................................................ 15
`§ 314(1) .............................................................................................................7
`§314(b) .............................................................................................................7
`§315(e)(2) .........................................................................................................7
`§316(a)(8)............;.......................................................................................... 15
`§316(a)(11)..~............................_.........................................................................7
`§316(c)
`........................................................................................6
`§ 319............................................
`.................................. 15
`OTHER AUTHORITIES
`
`37 C.F.R. pt. 42............................-..................................................................;.'.......2
`37 C.F.R. § 42.100 Et Seq.......................................................................................1
`77 Fed Reg 157 (August 14, 012)
`2, 5
`2
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`' 035818212—CV-OOOZ’I-JST-JPRI Document 100
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`#:1892
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`Filed 10/22/12 Page 6 of 23 Page ID I
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`NOTICE OF MOTION AND MOTION
`TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
`PLEASE TAKE NOTICE THAT ON December 21, 2012 at 2:30pm.,
`or as soon thereafter as the matter may be heard before the Honorable Josephine
`Staton Tucker in Courtroom 10A ofthe United States District Court for the Central
`District of California, Southern Division, located at 411 West Fourth Street, Santa
`Ana, CA 92701-4516, Defendants Chimei Innolux Corporation ("CMI"), Chimei
`Optoelectronics USA, Inc. ("CMO USA"), Acer America Corporation (“Acer”),
`ViewSonic Corporation (ViewSonic”), and VIZIO, Inc. (“VTZIO”) (collectively, the
`“Defendants”) will move the Court to stay the litigation pending the outcome ofthe
`Inter Partes Review of each ofthe asserted patents to be conducted by the Patent
`Trial and Appeals Board of the United States Patent and Trademark Office.
`The Motion is made on the grounds that discovery has just begun, a stay
`will eliminate, or greatly simplify, the issues in question and trial ofthe case; and a
`stay will not cause SEL any undue prejudice or a clear tactical disadvantage.
`The MotiOn is based on this Notice, the attached Memorandum ofPoints
`and Authorities, the Cordrey Declaration, all matters which this Court takes judicial
`notice, the Court's files in this matter, and any other evidence and argument as may
`be presented at the hearing on the Motion.
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`
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`This Motion is further made following the conference of counsel
`pursuant to LR. 7—3 which took place on September 5, 201.2. ,
`
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`LA 9053555“
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`, Case 8:12-cv—000214JST4JPR . Document 100
`#:1893
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`Filed 10/22/12 Page 7 of 23 Page ID
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`
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`MEMORANDUM OF POINTS AND AUTHORITIES
`W, .
`Defendants CMI, CMO USA,,Acer, ViewSonic, and VIZIO (Collectively
`"Defendants-'9 respectfully submit this Memorandum in Support oftheir Motion to
`Stay the Action Pending the Outcome ofthe Inter Partes Review.
`I.
`INTRODUCTION .
`
`On October 19, 2012, Defendants filed their first petition for interpartes
`review ("IPR") of the Asserted Patents with the US. Patent and Trademark Office
`(“PTO”).I Defendants will file petitions on the remaining five patents—in—suit no later
`than November 15, 2012.
`V
`'
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`The Court should stay the case pending the interpartes review proceedings by
`the Patent Trial and Appeals Board of the United States Patent Office on of the
`Asserted Patents for the following three independent reasons:
`
`’First, the [PR process is fast and efficient. Taking a maximum of eighteen
`months (and more likely twelve to fifteen months), the IPR will be completed before
`the scheduled trial date for this matter.
`'
`Second, the IPR process will either eliminate the need for trial by invalidating
`the patents—in—suit or it will streamline the remaining issues for trial by narrowing the
`number of claims, narrowing the prior art, and interpreting claim terms. For instance,
`if the US. Patent and Trademark Office ("PTO") determines that the prior art
`invalidates all or,the asserted claims, then this case would end. In the event that the
`review results in amended claims, this Court and the parties will have the benefit of
`the PTO’s expertise and its decision. Past damages also will be eliminated (thus
`saving significant litigation expense) pursuant to 35- U.S.C. § 252. Review will thus
`simplify claim construction and invalidity issues, and potentially push the parties
`
`
`_‘ Request for Inter Partes Review ofUS. Patent No. 6,404,480‘Under 35 U.S.C. §§ 311-319 and 37
`C.F.R. § 42.100 Et Seq. was assigned Trial Number 2013—00028. A copy is attached as Ex. 1 to the
`Declaration ofGregory S. Cordrey ("Cordrey Decl.") in support ofMotion to Stay‘Pending
`Completion of the Inter Partes Review.
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`Filed 10/22/12 Page 8 of‘23 Page ID
`Case 8:12-0v—0002t-JST-JPR:' Document 100
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`towards settlementas a clearer understanding ofthe scope and validity ofthe claims
`; emerges.
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`6 .
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`Third, staying the case during the pendency ofthe IPR will prevent the parties
`‘ from engaging in costly parallel proceedings and prevent the Court from having to
`spend time on issues that potentially will be rendered moot.
`‘
`Defendants have filed this motion to stay im'rnediately after the filing of the
`IPR petitions. The IPR petitions themselves are being filed only about one month
`: after September 16, 2012 date they went into effect and about 10 weeks after SEL
`5
`first identified for'the claims it is asserting in this action.2 Consequently, there has
`been no delay on the part of Defendants presenting this motion to the Court for
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`2 See Cordrey Decl. Ex. 2 [Changes to Implement Inter Partes Review Proceedings, Post-Grant
`Review Proceedings, and Transitional Program for Covered Business Method Patents, 77 Fed. Reg.
`157 (August 14, 2012) (amending 37 CPR. pt. 42)]; see also 35 U.S.C.‘ §§ 311—319.
`M
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`consideration. Additionally, because this case is in its early stages and there has been '
`very minimal discovery, this case is ripe for a stay. For these reasons and the reasons
`set forth below, Defendants respectfully requests that this litigation be stayed as to the
`Asserted Patents.
`
`~ II.
`
`STATEMENT OF FACTS
`
`A.
`
`SEL’s Prior Litigation and Ineguitable Conduct
`
`Semiconductor Energy Laboratories Co., Ltd. ("SEL") is a non—practicing
`entity that “licenses” its patent portfolio through litigation. In the precess of
`defending its patents, SEL has been found to have engaged in inequitable conduct.
`See Semiconductor Energy Laboratory Co, LTD. v. Samsurzg Electronics Co., LTD,
`at al, 204 F. 3d 1368 (Fed. Cir. 2000). Specifically, SEL has intentionally deceived
`the PTO by limiting the disclosure ofand mischaracterizing material information. Id.
`at 1376 ("the record as a whole reflects a clear pattern and practice of initial
`
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`

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`, disclosure, followed by incremental disclosure only when compelled by the
`circurnstances to do so, follo'wed, at times, by mischaracterization") (citing SEL v.'
`Samsung; 4 F.Supp.2d 477 (ED Va. 1998)),
`
`Eight years ago in 2004, SEL sued Chi Mei Optoelectronics (“CMO”) in a
`failed attempt to forceCMO to take a license to its patent portfolio. Afier litigating
`against SEL for two years, CMO was able to Whittle SEL’s infiingement claims
`involving four patents down to a single patent (SEL voluntarily dismissed claims of
`
`one patent after claim construction, Judge Patel in the Northern District of California
`
`ruled that title others were not infiinged, and one of those two also was invalid).
`Consistent with SEL's history of inequitable conduct, Judge Patel also set a bench
`trial on the inequitable conduct ofthe '480 patent. Cordrey Decl., ‘ll 4, EX. 3. Shortly
`after these rulings and the scheduling of the bench trial forinequitable conduct, the
`parties settled the litigation.
`
`Nevertheless, as addressed in CMI'S Answer to SEL'S Complaint, SEL is once
`
`again asserting claims based upon patents, including claims based upon the ’480
`
`patent, despites their inequitable conduct. See CMI'S Answer and Counterclaims to _
`Complaint‘for Patent Infringement, Dkt. No. 76 at 20—25.
`
`
`
`B.
`
`' CMI and SEL are Not Competitors '
`
`CMI manufactures and supplies TFT-LCD panel modules to consumer
`
`electronics product makers worldwide.3 CMI's products span the full range of TFT-
`LCD panel modules and touch panels, including TV panels, desktop monitors and
`notebook computer panels, and AV & mobile panels. Conversely, SEL "engages in
`no manufacturing and supports its research efforts from revenues from patent
`
`licensing." Semiconductor Energy Laboratory Co., LTD. supra, 204 F. 3d at 1371.
`
`
`3 http://www.chimei-z’nnolux.com/opencms/cmo/about__us/company_0verview/?__“Zocale=en (last
`accessed on October 18, 2012). ~
`
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`Case 8:12—cv—00021~JST—JPR Document 100
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`#21896
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`Filed 10/22/12 Page 10 of 23 Page lD
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`‘ Consequently, CMI and SEL are not competitors.
`
`C. '
`
`i The Status of the Proceedings in this Case
`
`,
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`In its Complaint, SEL has accused thirteen different CMI modules ofinfringing
`one'or more of the six asserted patents.4 Defendants filed their answer to the
`Complaint on July 17, 2012. Pursuant to Patent L‘.R. 3—1 and 3—2, SEL has serVed
`652 pages of infringement contentions with 35,000 pages of support document
`production} Pursuant to Patent LR. 3—3 and 34, CMI served its invalidity
`contentions constituting approximately 700 pages of claim charts (including exhibits)
`along with nearly 2000 pages of prior art.
`I
`4 Aside from these required disclosures, very little has been~ done thus far in this
`case. For instance, While Defendants have produced some documents, much ofthe
`discovery expected in this matter has yet to be started. Moreover, the Customer
`Defendants sued in the Complaint have filed a Motion to Sever and Stay the case and
`thus have not participated in any discovery up to this point. See Dkt. N0. 92.6 No
`depositions have been taken or scheduled and no subpoenas have been served.
`Furthermore, SEL has not sought a preliminary injunction.
`
`‘
`
`L D.
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`Defendants Have Or Will Have Filed Their Petitions For'Inter
`Partes Review With The PTO Within A Few WeeksW
`On October 19, 2012 Defendants filed vvith the PTO its first of its petitions for
`
`
`4 Many ofthese modules are accused ofinfringing on multiple patents and thus, counted
`individually, there areforty-s'even (47) different infiingement claims against CMI modules.
`5 In this case, the Court has adopted the Patent Local Rules for the Northern District of California
`(“Patent L.R.”).
`,
`.
`
`6 On October 17, 2012, Magistrate Judge Rosenbluth denied SEL’s motion to compel production of
`documents from the Customer Defendants in response to Request for Production (“RFP”) Nos. 1-
`13, 15-26, 27—33, 36, 37, 39, 40, 42~45, 47—52, 54-55, 58, 63, and 66 and granted SEL’s motion with
`respect to RFP Nos. 14, 34, 35, 38, 41, 46, 53, 56, 57, 59-62, 64 and 65. See Dkt. No. 99.
`
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`LA 9063556v1
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`Memorandum of Points and Authorities In Support
`Of Motion to Stay Pending Outcome of Inter Partes
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`Case 8:12—0v-00021-JST—JPR Document 100
`#:1897-
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`Filed 10/22/12 Page 11 of 23 Page ID .
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`1.4
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`~]_ZPR (at least one petition for each ofthe Asserted Patents). Cordrey Dec1., EX. 1.
`Defendants will file petitions for each of the remaining patents over the next few
`7 weeks and complete the filings no later than November 15, 2012. Consequently, all
`petitions will be submitted before the Court hears this motion.
`A'
`'
`
`Defendants' petitions for IPR establish that there is prior art that discloses each
`and every feature claimed in the Asserted Patents. Indeed, in light of SEL's past
`conduct, as shown in their answer, Defendants believe that SEL acted deceptively
`when filing the applications for the Asserted Patents in order to get its claims allowed
`over the prior art. See e.g, Dkt. No. 76 at 20-25. Consequently, Defendants believe
`
`that the IPR will result in a finding by the Patent Trial and Appeal Board that the
`disclosed prior art anticipates and/or renders obvious each and every claim of the
`
`Asserted Patents.
`
`E.
`
`IfThe Stay Is Not Granted, The Parties Will Be Addressing The
`
`Same Issues In Two Different Forums At The Same'Time
`
`A comparison of the upcoming events, both in the litigation (as prescribed by
`
`the Court's Scheduling Order entered on July 11, 2012 (Dkt 56) and modified on
`
`September 5, 2012 (Dkt. 89)) and the IPR (applying the schedule outlined in Office
`
`Patent Trial Practice Guide, 77 Fed. Reg. 157 (August 14, 2012)), is shown in the
`
`table below. As this comparison illustrates, if the stay is not granted, the parties will
`
`be addressing many of the same issues in two different forums at the same time. '
`
`
`
`
`- Opening Claim Construction Brief
`- Responsive Claim Construction Brief
`l— o
`, Reply Claim Construction Brief
`0
`’Claim Construction Hearing
`'
`
`
`
`0 No action - await PTO ruling on the
`petitions .
`
`December 2012 -
`February 2013 -
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`*
`March 2013
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`'
`0 Work on scheduling order and
`discovery timeline with PTO
`Prepare and submit supplemental
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`0
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`Expert and Party Depositions
`6 Expert Depositions
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`LApril-June 2013
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`Memorandum of Points and Authorities In Suppert
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`Case 8:12—cv—00021~JST—JPR Document100 Filed10/22/12 Page12of'23 Page ID
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`#:1898
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`..
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`Engage in discovery
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`Engage in Motion Practice
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`
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`- Close ofFact Discovery
`0
`Expert Depositions
`July 2013
`
`q
`f
`SEL's Arguments
`
`0 V Opening Expert Reports
`0 Defendants‘ Response
`__L August 2013
`' - Responsive Expert Reports
`. Complete arguments
`September 2013
`
`0 Reply Expert Reports
`
`0
`
`Expert Depositions
`
`-
`
`File motions to exclude evidence
`
`October 2013
`
`November ~
`a Close of Expert Discovery
`December 2013 ‘
`0 Motion Filing Deadline
`
`
`
`
`o Oral hearing at PTO on petitlons
`
`Opening Deposition Designations
`Second and Third Rounds of
`
`Deposition Desi gnations. and
`‘ Objections
`Exhibit Lists Exchanged
`Objections to Exhibit Lists
`Last Day to Conduct Settlement
`Proceedings
`Last Day for Law & Motion Hearings
`
`Final Pretrial Conference
`Exhibit Conference
`Trial
`
`- ' Decision from the PTO
`
`January — March
`2014
`
`April - May 2014
`
`Inter Partes Review was designed to be a cost effective alternative to litigation
`
`and minimize the duplication of efforts:
`
`Likewise, it is anticipated that the rules will minimize
`duplication of efforts. In particular, the AIA provides more
`coordination between district court infringement litigation and
`inter partes review to reduce duplication of efforts and costs.
`For instance, 35 U.S.C. 3 15 (b), as amended, Will require that a
`petition for inter partes review be filed within one year of the
`date of service of a complaint alleging infringement of a patent.
`By requiring the filing of an inter partes review petition earlier.
`than a request for inter partes reexamination, and by providing '
`shorter timelines for inter partes review compared with
`
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`LA 9063556vl
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`Memorandum of Points and Authorities In Support
`Of Motion to Stay
`Pending Outcome of Inter Partes
`Review
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`Case 8:12~cv~00021—JST—JPR Document 100
`‘ #11899
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`Filed 10/22/12 Page 13 of 23 Page ID
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`WOOQO‘lkII-fi-UJNl—I
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`reexamination, it is anticipated that the current high level of
`' duplication between litigation and reexamination will be
`reduced.
`
`Ex. 2 at 48721.
`
`F.
`
`The New IPR Review Process Is Fast, Fair And Will" Either
`Eliminate The Need For Trial Or Streamline The Remaining Issues
`
`An inter pa’rz‘es review is an administrative proceeding conducted by the PTO
`
`for the purposes of determining the validity and scope of an existing patent. See 35
`
`U.S.C. §§ 301-319, et seq. Beginning on September 16, 2012, the Patent Trial and
`
`Appeals Board (“PTAB”), which is constituted of a technically trained, panel of three
`
`Administrative Patent Judges will examine patents for validity based On prior art in '
`the form ofprinted publications. 35 U.S.C. § 316(c).
`
`
`
`To institute an ER, the petitioner must demonstrate to the Patent Trial and
`
`Appeals Board that there is a reasonable likelihood that he/she would prevail as to at
`
`least one of the claims challenged. 35 U.S.C. § 314(1). Once a petition is filed, the
`
`PTO is statutorily required to decide whether to institute a review within three
`
`months of the PTO receiving a preliminary response by the patent owner or if no such
`
`preliminary response is filed, the last date on Which such response may be filed. 35
`
`U.S.C. § 314(b);
`
`
`Hl—‘HP-JWNl-‘O
`RECYCLED PAPER PTAB, both parties will be estopped from re—litigating the same invalidity issues that
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`JefferMangelsButler&MitchellLLP
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`H .b
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`If the proceeding is instituted and not dismissed, a final determination by the
`BoardOWill be issued within one year (extendable for good cause by six months). 35
`U.S.C. § 316(a)(11). When the entire review process is complete, the PTO will issue
`
`' an order that affirms the validity of the patent, cancels the patent, or modifies the
`
`patent. 35 U.S.C. § 307. Thus, the entire review process is completed quickly.
`
`In this case, Defendants have presented the PTO with prior art that has not
`
`'
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`previously been considered by the PTO and that affects and/or renders obvious the
`asserted claims. See Cordrey Decl, Ex. 1. Even though the Defendants are confident
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`26
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`27 1' that this prior art invalidates all of the asserted claims, once a decision is made by the
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`case 8tl2—ov—00021-JST~JPR' Document 100
`#11900
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`Filed 10/22/12 Page 14 of 23 Page lD
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`14
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`were raised or reasonably could have been raised during the IPR. See 35 U.S.C. §
`
`"315(c)(2).
`
`Even if the Asserted Patents survive the review process, any remaining claims
`could be substantively modified. These amendments to the claims and the arguments
`that result will narrow them and/or inform the parties and Court of the scope and
`constructiOn of claim terms in the asserted claims. 7
`'
`
`Any amendment or change of the Asserted Patents also could result in a
`determination of no liability'for activities occurring before the claims were amended
`
`as a consequence of absolute or equitable intervening rights pursuant to 35 U.S.C. §
`
`252; Marine Polymer Technologies, Inc. v. HemCon, Inc., 672 F.3d 1350 (Fed. Cir.
`
`2012) (en bane).
`
`Consequently, simply engaging in the IPR process will significantly shape and
`
`impact/limit both the extent of this litigation and the arguments put forth by each
`
`party. Accordingly, because the IPR will be fair, quick and most importantly, will
`
`drastically limit, if not completely eliminate, the issues to be litigated, staying the
`
`, case pending the outcome of the IPR is appropriate.
`
`III.
`
`STAYING THE CASE IS WARRANTED BECAUSE THE CASE IS IN
`
`ITS EARLY STAGES, THE REVIEW WILL SEVIPLIFY THE ISSUES
`I AT TRIAL AND NEITHER PARTY WILL BE PREJUDICED BY A
`
`A.
`
`Legal Standard
`
`As this Court is aware, it has the inherent power to grant a stay. MH Sys., Inc.
`
`v. Peter McNully, CV 05—7263 DSF, 2006 US. Dist. LEXIS 98642, at *2 (CD. Cal.’
`
`7 “One purpose of the [review] procedure is to eliminate trial of [a patent claim validity] issue (when
`the claim is cancelled) or to facilitate trial of that issue by providing the district court with the
`expert View of the PTO (when the claim survives the [review] proceeding)” Gould 12. Control Laser _
`Corp, 705 F.2d 1340, 1342 (Fed. Cir. 1983).
`
`.
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`LA 9063556vl
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`Memorandum of Points and Authorities In Support
`Of Motion to Stay Pending Outcome of Inter Partes
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`3 Case 8:12—cv—OOO21—JST—JPR DocumenyOO ‘Filed10/22/12 Page150f23 Page ID
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`:‘1901
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`1
`2
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`Oct. 23, 2006). “In patent infringement actions, district courts have often stayed
`actions until pending administrative proceedings are resolved.” Brass Smith, LLC v.
`
`3 Advanced Design Alfg. LLC, CV 10—4945’PSG, 2010 U.S. Dist. LEXIS 141422, at *2
`4 i (CD. Cal. Dec. 20, 2010).
`'
`5
`i
`-
`Furthermore, as this Court has noted, there is a liberal policy Within this
`6 District in favor of granting motions to stay proceedings pending the outcome of a
`7 i reviewlinthe patent office. See Inogen, Inc. v. [novaLabs, Inc. CaseNo. SACV 11-
`8
`i 1692-]ST (ANX) (Document No. 39) (Mar. 20, 2012); Aten Int’l Co. v. Emine Tech.
`9
`C0,, No. 09-cv—O843, 2010 U.S. Dist. LEXIS 46226, at *20 (CD. Cal. Apr. 12,
`
`Applying these factors, the Court should find that a stay pending review by the
`24
`PTO with respect to the Asserted Patents is appropriate.
`»
`25
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`B. " Discovery Has Just Beggn and Is Not Close to Being Completed
`27 i
`Because this case is in its early stages, this factor favors staying the case. See .
`28
`2333231»; “W ,
`“10“
`stats:trsiisszatattstttasst;
`
`Review
`
`10
`
`2010); Korm'z‘ Digital Ltd. v. All Am. Wg. & Supply Ca, SAVC 09-689 AG, 2010
`
`11 U.S. Dist. LEXIS 48395, at *5 (CD. Cal. Jan. 11, 2010). This is particularly true in
`g
`12 I circumstances Where, as here, the case is in its early stages and much ofthe discovery
`aE
`13 I remains to be conducted. Aten, 2010 U.S. Dist. LEXIS 46226, at *20; Kornz'z‘, 2010
`$2: 2
`14 U.S. Dist. LEXIS 48395, at *5.
`p
`ES
`15 L
`'
`V
`In considering Whether to stay an action, courts in this district generally
`2‘
`g 16 a consider three factors:
`8
`.
`H 17
`(1) Whetherdiscovery is complete and Whether a trial date has been set;
`18 i
`(2) Whether a stay Will simplify the issues in q