`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF PENNSYLVANIA
`
`
`KONINKLIJKE PHILIPS N.V. and
`PHILIPS ELECTRONICS NORTH
`AMERICA CORPORATION,
`
`
`ZOLL LIFECOR CORPORATION,
`
`
`
`
`
`
`
`Defendant.
`
`ZOLL LIFECOR CORPORATION’S OPPOSITION TO
`PHILIPS’S MOTION TO LIFT STAY
`
`
`
`
`
`
`
`Defendant ZOLL LifeCor Corporation (“ZOLL”), hereby opposes the motion of
`
`Plaintiffs Koninklijke Philips N.V. and Philips Electronics North America Corporation
`
`(collectively, “Philips”) to lift the stay in the present litigation. ZOLL respectfully requests oral
`
`argument on the motion should the Court find it beneficial.
`
`I.
`
`Introduction
`
`Recognizing the size and complexity of this litigation, a complexity Philips engineered
`
`by bringing three largely-overlapping lawsuits in three different states, this Court previously
`
`opted for efficiency and good sense in temporarily staying this case. It was the Court’s hope that
`
`“a hearty mediation with a skilled mediator” might bring about a global resolution to the parties’
`
`disputes. Mem. Order at 4, Feb. 6, 2013, ECF No. 45. Despite ZOLL’s best efforts—it brought
`
`its President, General Counsel, Director of Intellectual Property, and its lead outside litigation
`
`counsel—the mediation was unsuccessful.
`
`That the mediation failed, however, does not change the facts that formed the foundation
`
`of the Court’s rationale. The parties are currently concentrated on preparing for trial in October
`
`
`
`
`
`
`
`
`
`Plaintiffs,
`
`
`
`Civil Action No. 2:12-cv-1369
`
` v.
`
`Judge Nora Barry Fischer
`
`Electronically Filed
`
`
`
`
`
`Philips Exhibit 2016
`Zoll Lifecor v. Philips
`IPR2013-00618
`
`Page 1 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 2 of 9
`
`in the Massachusetts litigation, a trial that will decide infringement and validity of five of the
`
`eight asserted patents in this matter. The results of that trial are likely to have a significant
`
`impact on both the scope of this litigation and the parties’ settlement postures. Efficiency and
`
`pragmatism dictate that the stay remain in place for just a few more months, at which time the
`
`Court can reevaluate the scope of this case and the parties can reassess their settlement positions.
`
`Lifting the stay would only serve Philips’s broader strategy to harry ZOLL with duplicative
`
`litigations.
`
`II.
`
`Nature and Stage of the Proceedings
`
`This action is one battle in a broader, multi-state patent war that Philips initiated against
`
`ZOLL. The Court is familiar with the background of the parties’ various litigations so ZOLL
`
`will not dwell on that here. See, e.g., Mem. Order at 1-3, Feb. 6, 2013, ECF No. 45; ZOLL’s Br.
`
`in Supp. of its Mot. for Sanctions for Plaintiffs’ Failure to Mediate in Good Faith at 3-8, May 4,
`
`2013, ECF No. 58. At the Court’s direction, the parties engaged in an unsuccessful mediation on
`
`April 17, 2013. The Court had stayed this matter to give the ADR process time to play itself out.
`
`See Mem. Order, Feb. 6, 2013, ECF No. 45.
`
`The most advanced of the parties’ litigations is set for trial in the District of
`
`Massachusetts in October. At issue in that trial will be five of the eight patents Philips is
`
`asserting in this case.1 While Philips makes the odd assertion that “it is less clear now …
`
`whether the Massachusetts trial will commence in October,” Philips’s Mem. in Supp. of its Mot.
`
`to Lift Stay at 2, Jun. 21, 2013, ECF No. 82 (hereinafter, “Philips’s Mem.”), the operative
`
`scheduling order in the Massachusetts case makes it quite clear that trial is scheduled for
`
`October. See Order, No. 10-cv-11041 (D. Mass. Aug. 18, 2011) (Ex. A) (“Jury Trial set for
`
`1 Philips dropped from the Massachusetts litigation a sixth patent that had been asserted in
`both cases.
`
`ZOLL’S OPPOSITION TO PHILIPS’S MOTION TO LIFT STAY—PAGE 2
`
`Page 2 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 3 of 9
`
`10/7/2013 at 9:00 AM in Courtroom 4 before Judge Nathaniel M. Gorton.”). Indeed, just days
`
`after making this representation to this Court, in trying to get ZOLL precluded from relying on
`
`certain allegedly-late produced documents, Philips argued to Judge Gorton that its prejudice was
`
`particularly acute because trial is “fast approaching” and “imminent.” Mem. in Supp. of
`
`Plaintiffs’ Mot. to Preclude ZOLL’s Reliance on Documents Not Produced as Required by Rule
`
`26(a) at 4, No. 10-cv-11041 (D. Mass. Jun. 26, 2013) (Ex. B) (“[A]t this juncture, trial is fast
`
`approaching. The pre-trial conference is set for September 10, 2013, and the trial, which the
`
`parties expect to last three weeks, is set to begin on October 7, 2013.”); see also id. at 7 (“trial is
`
`imminent”). The parties have also had conversations with the clerk about that date, and the
`
`Court has been issuing orders setting deadlines for pretrial disclosures that reflect that trial will
`
`indeed commence on October 7.
`
`III. The Court Should Leave the Stay in Place For a Few More Months to Conserve
`Judicial and Party Resources
`
`Despite the failure of the Court-ordered mediation, compelling reasons exist to maintain
`
`the stay in place for a little while longer. First, the Court’s original rationales for temporarily
`
`staying the litigation—that “the parties’ numerous pending litigations in multiple jurisdictions
`
`are a burden both on judicial resources and on the parties” (ECF No. 45 at 4), and “the general
`
`principle [] to avoid duplicative litigation,” Colorado River Water Cons. Dist. v. United States,
`
`424 U.S. 800, 817 (1976)—still hold true. At present, the parties are busy preparing for trial in
`
`the first Massachusetts case. Summary judgment motions have been briefed and pretrial
`
`preparations are well underway. Meanwhile, the parties have been content to let the second
`
`Massachusetts litigation (transferred from Washington State) sit relatively idle. The parties are
`
`exchanging initial contentions in that matter, but discovery and claim construction are on hold
`
`until after the October trial in the first Massachusetts litigation. The Delaware litigation is
`
`ZOLL’S OPPOSITION TO PHILIPS’S MOTION TO LIFT STAY—PAGE 3
`
`Page 3 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 4 of 9
`
`likewise still in its initial phases, and Philips—relying on the stay that ZOLL obtained in this
`
`case—has moved to stay the Delaware case for about eighteen months on the grounds that
`
`economies and efficiencies will abound as a result of its recently filed (but not yet granted)
`
`challenge to the validity of ZOLL’s patent in the U.S. Patent & Trademark Office (“USPTO”).2
`
`There simply is no reason, at a time when the parties are focusing their resources on preparing
`
`for the October trial, to ramp up activity in this case.
`
`The jury verdict expected in October will materially affect the scope of this case and
`
`should also affect the parties’ views of the overall set of cases between them. The jury will pass
`
`judgment on the alleged infringement and validity of five of the asserted patents in this matter, as
`
`well as three others. That is approximately one-third of the total number of patents Philips is
`
`asserting against ZOLL in the various litigations. Additionally, in light of “the general principle
`
`[] to avoid duplicative litigation,” the Court would likely want to take stock of where this case
`
`stands following the October verdict. For example, a finding of invalidity with regard to any of
`
`the overlapping patents will be binding on Philips in this litigation as well. It would make little
`
`sense to require the same parties to appear in this District to make the same arguments a second
`
`time.
`
`
`2 On May 31, 2013, Philips’s subsidiary Respironics Inc. filed in the USPTO a Petition for
`Inter Partes Review (“IPR”) against ZOLL’s U.S. Patent No. 6,681,003, the patent at issue in the
`Delaware litigation. IPR is a new USPTO procedure akin to reexamination, where the parties
`engage in a limited amount of discovery on narrow questions of validity followed by a decision
`from USPTO Administrative Law Judges as to whether the patent’s claims should remain intact,
`be modified, or be cancelled altogether. The USPTO has not decided yet whether to institute an
`IPR against ZOLL’s patent—Philips’s petition will only be granted if it establishes a “reasonable
`likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in
`the petition,” 35 U.S.C. § 314(a)—but, by statute, the USPTO must make that decision no later
`than November 30, 2013. 35 U.S.C. § 316(a)(11). Even though granting the petition is only the
`first step in the process (if the petition is granted, the parties will engage in a 12-18 month
`process to dispute the patent’s validity before the USPTO), the USPTO’s decision as to whether
`to grant the petition should provide the parties with some additional clarity.
`
`ZOLL’S OPPOSITION TO PHILIPS’S MOTION TO LIFT STAY—PAGE 4
`
`Page 4 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 5 of 9
`
`By November, the parties should also know whether the USPTO has granted Philips’s
`
`IPR Petition, which may have an immediate impact on the Delaware litigation (e.g., even if
`
`Philips’s Petition is not granted, it will still be estopped from using any of the prior art that it
`
`raised in its Petition, or could have raised). Thus, the most sensible and efficient approach is to
`
`maintain the current stay in this action through the Massachusetts trial, then hold a status
`
`conference in November to reevaluate the scope of this case and reassess the parties’ interests in
`
`additional mediation.
`
`To the extent Philips suggests that the Court’s stay has expired, see Philips’s Mem. at 2-
`
`3, the Court’s stay powers are broad, discretionary, and “incidental to the power inherent in
`
`every court to control the disposition of causes on its docket with economy of time and effort for
`
`itself, for counsel and for litigants.” Bechtel Corp. v. Local 215, Laborers’ Int’l Union, 544 F.2d
`
`1207, 1215 (3d Cir. 1976) (quoting Landis v. North Amer. Co., 299 U.S. 248, 254-55 (1936));
`
`see also Wonderland Nurserygoods Co., Ltd. v. Thorley Indus., LLC, 858 F. Supp. 2d 461, 463
`
`(W.D. Pa. 2012). Thus, it is well within the Court’s discretion to forego lifting the stay for a few
`
`more months while the events in Massachusetts play out. See Complaint of Bankers Trust Co. v.
`
`Chatterjee, 636 F.2d 37, 40 (3d Cir. 1980) (“a district court may properly consider the
`
`‘conservation of judicial resources and comprehensive disposition of litigation,’ and attempt to
`
`avoid duplicating a proceeding already pending in a federal district court.”) (quoting Kerotest
`
`Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183 (1952), quoted in
`
`Colorado River, 424 U.S. at 817); Crosley Corp. v. Hazeltine Corp., 122 F.2d 925, 929 (3d Cir.
`
`1941), cert. denied, 315 U.S. 813 (1942) (“Courts already heavily burdened with litigation with
`
`which they must of necessity deal should therefore not be called upon to duplicate each other’s
`
`work in cases involving the same issue and the same parties.”).
`
`ZOLL’S OPPOSITION TO PHILIPS’S MOTION TO LIFT STAY—PAGE 5
`
`Page 5 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 6 of 9
`
`Philips correctly points out that any verdict in Massachusetts will not dispose of all of the
`
`issues pending in this litigation and that any verdict in that case is likely to be appealed.
`
`Philips’s Mem. at 6-7. But that by no means renders the October trial insignificant. It cannot be
`
`disputed that any verdict in Massachusetts will be a significant development in the parties’
`
`broader patent war, and will provide a greater degree of clarity than the parties currently possess,
`
`particularly in view of the high degree of overlap between this case and the Massachusetts case.
`
`Leaving the stay intact for a few more months is not only the most minimal of inconveniences to
`
`Philips, but an entirely sensible and efficient conservation of resources. Even when parallel
`
`proceedings are not “truly duplicative” (thus precluding strict application of Colorado River
`
`abstention), courts routinely have found it well-advised and well within their discretionary
`
`powers to stay cases based on the presence of overlapping of issues. E.g. Landis, 299 U.S. at
`
`255 (“we find ourselves unable to assent to the suggestion that before proceedings in one suit
`
`may be stayed to abide the proceedings in another, the parties to the two causes must be shown
`
`to be the same and the issues identical.”); U.S. ex. rel. FLFMC, LLC v. William Bounds, Ltd.,
`
`2010 WL 2990725 (W.D. Pa. Jul. 28, 2010) (“In exercising its discretion, a district court can
`
`‘hold one lawsuit in abeyance to abide the outcome of another which may substantially affect it
`
`or be dispositive of the issues.’ The issues and the parties to the two causes need not be identical
`
`before one suit may be stayed to abide the proceedings of another.”) (quoting Bechtel, 544 F.2d
`
`at 1215); Mediterranean Enterprises, Inc. v. Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir.
`
`1983) (trial court may properly “find it is efficient for its own docket and the fairest course for
`
`the parties to enter a stay of an action before it, pending resolution of independent proceedings
`
`which bear upon the case. This rule applies whether the separate proceedings are judicial,
`
`administrative, or arbitral in character, and does not require that the issues in such proceedings
`
`are necessarily controlling of the action before the court.”) (quoting Leyva v. Certified Grocers of
`
`ZOLL’S OPPOSITION TO PHILIPS’S MOTION TO LIFT STAY—PAGE 6
`
`Page 6 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 7 of 9
`
`California, Ltd., 593 F.2d 857, 864 (9th Cir.), cert. denied, 444 U.S. 827 (1979) ); Gov’t of
`
`Virgin Islands v. Neadle, 861 F. Supp. 1054, 1055-56 (M.D. Fla. 1994) (district court has
`
`discretion to stay an action which duplicates one pending in another federal district court even
`
`without complete identity of parties and issues).
`
`IV.
`
`Lifting the Stay Would Only Further Philips’s Litigation Strategy
`
`Philips’s broad-based litigation strategy involves bringing multiple patent infringement
`
`suits against ZOLL on overlapping patents and technology in courts around the country to
`
`increase its leverage in licensing discussions. Once the parties’ initial discussions turned to
`
`cross-licensing (because of Philips’s exposure to ZOLL’s patent portfolio), Philips launched a
`
`wave of patent lawsuits against ZOLL—first in Massachusetts, then Washington State, then
`
`Pennsylvania—in a transparent attempt to gain leverage in the negotiations. In furtherance of its
`
`strategy, Philips prefers to keep ZOLL on defense so that it can pursue its various offensive
`
`actions against ZOLL while tabling discussion of its own exposure. Lifting the stay in this case
`
`would only advance that strategy.
`
`When ZOLL countersued in Delaware for infringement of ZOLL’s ‘003 patent, Philips
`
`filed a Petition for Inter Partes Review and moved to stay that litigation indefinitely. Mem. in
`
`Supp. of Respironics, Inc.’s Mot. to Stay Pending Inter Partes Review, No. 12-1778 (D. Del.
`
`May 31, 2013), ECF No. 19 (Ex. C). Despite the fact that the USPTO has not even decided
`
`whether to grant the petition yet, Philips argued that significant efficiencies are virtually
`
`guaranteed. Id. at 6-7. Philips sees no prejudice to ZOLL in staying ZOLL’s case for at least 12-
`
`18 months through the completion of the IPR (not counting appeal). Id. at 8-9. If, as Philips
`
`contends, an incipient USPTO procedure that might affect the scope of the asserted patent is
`
`grounds to stay a litigation indefinitely, then surely an “imminent” jury verdict, which will, one
`
`ZOLL’S OPPOSITION TO PHILIPS’S MOTION TO LIFT STAY—PAGE 7
`
`Page 7 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 8 of 9
`
`way or another, tell us something about the strength of Philips’s patents justifies continuing the
`
`stay in this case for just a few more months.
`
`V.
`
`Conclusion
`
`In light of the foregoing, ZOLL respectfully requests that the Court deny Philips’s
`
`motion.
`
`
`
`Dated: July 8, 2013
`
`Respectfully submitted,
`
`By: /s/Henry M. Sneath
`
`Henry M. Sneath (Pa. ID No. 40559)
`Robert L. Wagner (Pa. ID No. 308499)
`Joseph R. Carnicella (Pa. ID No. 200294)
`PICADIO SNEATH MILLER & NORTON, P.C.
`Four Gateway Center
`444 Liberty Avenue, Suite 1105
`Pittsburgh, PA 15222
`(412) 288-4000
`(412) 288-2405 (fax)
`
`OF COUNSEL:
`
`Kurt L. Glitzenstein (pro hac vice)
`Adam J. Kessel (pro hac vice)
`Brian K. Wells (pro hac vice)
`Gauri M. Dhavan (pro hac vice)
`FISH & RICHARDSON P.C.
`One Marina Park Drive
`Boston, MA 02210
`(617) 542-5070
`(617) 542-8906 (fax)
`
`Attorneys for Defendant
`ZOLL LifeCor Corporation
`
`
`ZOLL’S OPPOSITION TO PHILIPS’S MOTION TO LIFT STAY—PAGE 8
`
`Page 8 of 9
`
`
`
`Case 2:12-cv-01369-NBF Document 85 Filed 07/08/13 Page 9 of 9
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that this document(s) filed through the ECF system will be sent
`
`electronically to the following registered participants as identified on the Notice of Electronic
`
`Filing (NEF) on this 8th day of July, 2013.
`
`Dara A. DeCourcy
`George N. Stewart
`Zimmer Kunz
`600 Grant Street
`3300 USX Tower
`Pittsburgh, PA 15219
`
`David K. Mroz
`Michael Jakes
`Robert F. Shaffer
`Finnegan, Henderson Farabow, Garrett & Dunner, LLP
`901 New York Avenue, NW
`Washington, DC 20001
`
`Denise W. DeFranco
`Finnegan, Henderson Farabow, Garrett & Dunner, LLP
`Two Seaport Lane
`Sixth Floor
`Boston, MA 02210-2001
`
`/s/ Henry M. Sneath
`
`Henry M. Sneath, Esquire
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Page 9 of 9