Case 6:16-cv-00961-RWS-JDL Document 81 Filed 12/08/16 Page 1 of 8 PageID #: 3478
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`REALTIME DATA LLC d/b/a IXO,
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`LEAD Case No. 6:16-cv-961
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`Plaintiff,
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`v.
`RACKSPACE US, INC.; NETAPP, INC.;
`and SOLIDFIRE, LLC,
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`Defendants.
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`DEFENDANTS NETAPP, INC. AND SOLIDFIRE, LLC’S REPLY IN SUPPORT OF
`MOTION TO STAY LITIGATION PENDING INTER PARTES REVIEW
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`pa-1766295
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`Realtime Ex. 2008
`NetApp v. Realtime
`IPR2017-01660
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`I.
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`INTRODUCTION
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`The Patent Trial and Appeal Board has instituted inter partes reviews (“IPRs”) on four of
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`the six closely-related patents that Realtime has asserted against the NetApp Defendants. The
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`record created in those IPRs will inevitably affect the proceedings in this case before the
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`scheduled trial date, even for claims for which IPRs have not been instituted. The Court, which
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`has not yet reviewed any substantive briefing, and the parties, who have significant work ahead,
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`would all benefit from staying this case pending resolution of the pending petitions for IPR. The
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`Court should grant the NetApp Defendants’ stay motion.
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`II.
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`ALL FACTORS WEIGH IN FAVOR OF STAYING THE CASE
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`A.
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`A Stay Would Simplify the Issues in the Case
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`Realtime’s suggestion that a stay will complicate the issues in this case fails to address at
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`least two important points raised in the NetApp Defendants’ motion. First, the PTAB instituted
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`IPRs on two of Realtime’s six asserted patents on June 27, 2016. Dkt. No. 51 at 4 (noting that
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`IPRs for the ’992 and ’513 patents were instituted on June 27, 2016). Second, 35 U.S.C.
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`§ 316(a)(11) requires the PTAB to make a final determination in an IPR within one year of the
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`date of institution, a date that can be extended by up to six months. Thus, the PTAB will likely
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`complete its review on these two patents by June 2017, and in no event later than December
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`2017—approximately a month before the scheduled trial date in this case of January 2018. See
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`Dkt. No. 74. Similarly, under the one-year time period, final determinations in the IPRs on the
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`’530 and ’908 patents that were instituted in November 2016 are expected by November 2017.
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`Decisions on whether to institute IPRs related to the ’728 patent are expected before the April
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`2017 Markman hearing in this case, and on November 14, 2016, defendants in a related case
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`filed a petition for IPR directed at claims 104 and 105 of the ’506 patent. See IPR No. 2017-
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`00176. In fact, as of the date of this reply brief, IPR petitions directed at each of Realtime’s
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`asserted patents have been requested and/or instituted. A stay pending resolution of these IPRs
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`will allow the parties and the Court to make use of the PTAB’s analysis as they consider claim
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`construction, infringement, and invalidity issues in this case. Without a stay, this Court will
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`address claim construction in parallel to the PTAB, and the parties may be placed in the
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`undesirable position of seeking leave to amend their contentions to account for the outcome at
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`the PTAB.
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`The instant case is distinguishable from Trover Group, Inc. v. Dedicated Micros USA,
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`No. 2:13-CV-1047-WCB, 2015 WL 1069179, at *6 (E.D. Tex. Mar. 11, 2015), which Realtime
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`cites for the proposition that “when the PTAB has not yet acted on a petition for inter partes
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`review, the courts have uniformly denied motions for a stay.” In Trover, the district court denied
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`a stay pending IPR without prejudice where the PTAB was months away from deciding whether
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`to institute review on the only patent remaining in the case. See id. at *3. In the instant case, by
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`contrast, the PTAB has already instituted review for the bulk of the claims that Realtime has
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`asserted. In that respect, this case is more analogous to another case decided the same day in this
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`District, NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at *4
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`(E.D. Tex. Mar. 11, 2015) (granting stay where IPR proceedings had been instituted based on
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`two of defendants’ three petitions).
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`Because all of Realtime’s asserted patents and claims are closely related, the fact that
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`IPRs have not yet been instituted on all asserted claims does not justify denying a stay. All of
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`the asserted patents in this case have the same inventor, and all of the asserted patents claim
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`priority to one of two patent applications. The ’530 and ’909 patents claim priority to U.S.
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`Patent No. 6,601,104, and the ’506, ’992, ’513, and ’728 patents claim priority to U.S. Patent No.
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`6,195,024. Within each of the two families of asserted patents, the specifications are largely the
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`same. Even between the two families, the specifications have strong similarities. Compare ’513
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`patent, fig. 3a with ’530 patent, fig. 6a (both describing the steps of “receive initial data block
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`from input data stream,” “count . . . data block,” “buffer data block,” “compress data block with
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`encoder(s),” and “count . . . data block,” among others); see also ’513 patent, fig. 4 and ’530
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`patent, fig. 8. Realtime’s opposition brief does not dispute that the arguments Realtime makes
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`before the PTAB, and the rulings that the PTAB makes in response to those arguments, will be
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`relevant to understanding not only the particular claims that the PTAB is considering in a given
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`review but other, related claims as well.
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`Realtime’s argument that a stay will not simplify the Court’s consideration of claims for
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`which no IPR has yet been instituted (including ’728 patent claim 17) or claims for which no IPR
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`has been requested (including ’530 patent claim 20 and ’908 patent claim 3) is thus incorrect.
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`For example, ’728 patent claim 17 is similar in substance to ’513 patent claim 12, for which an
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`IPR was instituted in June 2016. Both claims address the effectiveness of content-independent
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`compression. Claim 20 of the ’530 patent depends from claim 1 of the same patent, for which an
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`IPR has been instituted, and the only difference between the two is that claim 20 recites two
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`additional data blocks. Realtime’s arguments and the PTAB’s rulings on claim 1 of the ’530
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`patent will inform the construction and scope of claim 20 of that patent. Finally, claim 3 of the
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`’908 patent depends from claims 1 and 2 of that patent, and an IPR has been instituted for claims
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`1 and 2. The only thing that claim 3 adds to claims 1 and 2 of the ’908 patent is the storage of a
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`second data descriptor. Again, the PTAB’s rulings on claims 1 and 2 of the ’908 patent will
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`inform the construction and scope of claim 3 of that patent.
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`Realtime’s concern that the NetApp Defendants might waste time by repeating invalidity
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`arguments in this Court that fail before the PTAB is unfounded. If the PTAB were to consider
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`and reject a particular anticipation or obviousness argument, a jury would likely give strong
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`deference to the PTAB’s conclusion. Thus, even if 35 U.S.C. § 315(e)(2) does not estop the
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`NetApp defendants from raising invalidity arguments in this Court that fail in an IPR proceeding
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`in which the NetApp defendants are not petitioners, the NetApp Defendants would have a strong
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`reason not to re-litigate arguments that fail during the IPR process following a stay.1 Of course,
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`if the PTAB invalidates Realtime’s claims, then the jury would not have to consider the parties’
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`invalidity arguments either. On the other hand, if the Court does not stay this action,
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`inefficiencies would result because the parties would proceed on parallel paths —potentially
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`involving the same or similar prior art. A stay would be the best way to simplify the claims in
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`this action.
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`B.
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`Realtime Fails To Show Any Concrete Prejudice That a Stay Would Cause
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`Realtime, like all patent owners, has a general right to timely enforcement of its patent
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`rights. But Realtime does not articulate any specific harm that it might face from the modest
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`delay a stay pending IPRs would cause. Even if the stay required postponing the trial date, for
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`example, the Court and parties would be greatly aided by the additional record (and case
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`narrowing) to be provided in the IPRs. Moreover, Realtime “has not made any showing as to
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`particular evidence or discovery that is at risk of being lost.” NFC Tech., 2015 WL 1069111, at
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`*3. “A blanket statement that evidence may become stale or be lost does not amount to a
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`compelling showing of prejudice.” Id. Nor does Realtime have an absolute right to have the
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`validity of its patent claims tested before the district court rather than the PTAB. Realtime’s
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`choice of forum is entitled to little deference where, as here, Realtime filed its complaint against
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`1 In any event, consistent with the precedent in this jurisdiction, if the case is stayed, the NetApp Defendants are
`willing to stipulate not to raise invalidity arguments in this case that the PTAB considers and rejects during IPR
`proceedings that the PTAB institutes at the request of other petitioners, consistent with 35 U.S.C. § 315(e)(2).
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`the NetApp Defendants after other petitioners had successfully petitioned for the institution of
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`two IPRs against Realtime’s asserted patents. Compare Dkt. No. 1 (Complaint (filed June 29,
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`2016)) with Dkt. Nos. 52-3, 52-10 (decisions instituting IPRs (filed June 27, 2016)).
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`Realtime does not attempt to weigh the hypothetical prejudice it claims it will suffer
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`against the inevitable duplication of effort between the PTAB and the district court that will
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`occur if a stay is denied. Accordingly, this factor does not weigh against a stay.
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`C.
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`This Case Is in Its Early Stages
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`Realtime’s opposition brief spends less than a page arguing that the status of this case
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`weighs against a stay. Realtime is incorrect. While it is true that since the NetApp Defendants
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`filed their motion, the Court has entered a Docket Control Order as well as some procedural
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`orders, the parties have not yet expended substantial resources in the case.2 Realtime has served
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`infringement contentions, but Defendants have not yet served invalidity contentions. The parties
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`have not submitted claim construction briefing. Little discovery has taken place.
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`Moreover, as explained above, under the current case schedule, the PTAB is statutorily
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`required to issue final determinations in its IPRs on at least two and as many as four of the
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`asserted patents before the January 2018 trial date in this case. Realtime also fails to
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`acknowledge the NetApp Defendants’ pending transfer motion to the Northern District of
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`California. A stay at this stage would conserve significant resources for the parties and the Court.
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`III. CONCLUSION
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`For the foregoing reasons, this case should be stayed until final resolution of the inter
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`partes review petitions of the asserted patents at the Patent Trial & Appeal Board.
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`2 The NetApp Defendants acknowledge that their motion incorrectly indicated that Rackspace had not yet filed an
`answer. The NetApp Defendants regret this oversight.
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`Dated: December 8, 2016
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`Respectfully submitted,
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`
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`/s/ Colette Reiner Mayer
`Melissa R. Smith
`State Bar No. 24001351
`GILLAM & SMITH, L.L.P.
`303 S. Washington Avenue
`Marshall, Texas 75670
`Telephone: (903) 934-8450
`Facsimile: (903) 934-9257
`melissa@gillamsmithlaw.com
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`Michael A. Jacobs (CA SBN 111664)
`(admitted in the Eastern District of Texas)
`Robert J. Esposito (CA SBN 267031)
`MORRISON & FOERSTER LLP
`425 Market Street
`San Francisco, California 94105-2482
`Telephone: (415) 268-7000
`Facsimile: (415) 268-7522
`mjacobs@mofo.com
`resposito@mofo.com
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`Colette Reiner Mayer (CA SBN 263630)
`(admitted in the Eastern District of Texas)
`MORRISON & FOERSTER LLP
`755 Page Mill Road
`Palo Alto, CA 94304
`Telephone: (650) 813-5600
`Facsimile: (650) 494-0792
`CRMayer@mofo.com
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`Attorneys for Defendants
`NETAPP, INC. and SOLIDFIRE, LLC
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a true and correct copy of the foregoing document
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`has been served on December 8, 2016, to all counsel of record who are deemed to have
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`consented to electronic service via the Court’s CM/ECF system per Local Rule CV-5(a)(3).
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`/s/ Colette Reiner Mayer
`Colette Reiner Mayer
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