IN THE UNITED STATES DISTRICT COURT
` FOR THE DISTRICT OF DELAWARE
`
`1
`
`TOPIA TECHNOLOGY, INC.,)
` )
` Plaintiff, ) C.A. No. 21-1821-CJB
` )
`v. )
` )
`EGNYTE, INC., )
` )
` Defendant. )
`
`
`
`
`
`Monday, March 6, 2023
`10:00 a.m.
`
`844 King Street
`Wilmington, Delaware
`
`BEFORE: THE HONORABLE CHRISTOPHER J. BURKE
` United States District Court Judge
`
`APPEARANCES:
` RICHARDS, LAYTON & FINGER, P.A.
` BY: GRIFFIN SCHOENBAUM, ESQ.
` -and-
` SUGHRUE MION, PLLC
` BY: L. ROMAN RACHUBA, ESQ.
` BY: RAJA N. SALIBA, ESQ.
` BY: J. WARREN LYTLE, JR., ESQ.
`
`Counsel for the Plaintiff
`
`Hawkins Reporting Service
`855 Arthursville Road Hartly, Delaware 19953
`(302) 658-6697 FAX (302) 658-8418
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`Topia Exhibit 2001
`Page 1 of 55
`
`
` FOR THE DISTRICT OF DELAWARE
`
`1
`
`TOPIA TECHNOLOGY, INC.,)
` )
` Plaintiff, ) C.A. No. 21-1821-CJB
` )
`v. )
` )
`EGNYTE, INC., )
` )
` Defendant. )
`
`
`
`
`
`Monday, March 6, 2023
`10:00 a.m.
`
`844 King Street
`Wilmington, Delaware
`
`BEFORE: THE HONORABLE CHRISTOPHER J. BURKE
` United States District Court Judge
`
`APPEARANCES:
` RICHARDS, LAYTON & FINGER, P.A.
` BY: GRIFFIN SCHOENBAUM, ESQ.
` -and-
` SUGHRUE MION, PLLC
` BY: L. ROMAN RACHUBA, ESQ.
` BY: RAJA N. SALIBA, ESQ.
` BY: J. WARREN LYTLE, JR., ESQ.
`
`Counsel for the Plaintiff
`
`Hawkins Reporting Service
`855 Arthursville Road Hartly, Delaware 19953
`(302) 658-6697 FAX (302) 658-8418
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`Topia Exhibit 2001
`Page 1 of 55
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`2
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`APPEARANCES CONTINUED:
`
` FISHER BROYLES, LLP
` BY: CARL D. NEFF, ESQ.
` BY: RYAN BEARD, ESQ.
` BY: CHRISTOPHER R. KINKADE, ESQ.
`Counsel for the Defendant
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`THE COURT: Good morning,
`everyone. It's Judge Burke here. And I know we
`have our court reporter with us and we thank our
`court reporter for their service and I know we
`have the parties with us as well. So why don't
`we go on the record and let me just then say a
`few things for the record, which is that we're
`here this morning by way of video conference in
`the matter of Topia technology, Inc., versus
`Egnyte, Inc. It's civil action number
`21-1821-CJB here in our court. And we're here
`today for argument on the motion to stay filed
`by the defendant in this case.
`Before we go further, let's have
`counsel for each side identify themselves for
`the record. We'll start first with counsel for
`the plaintiff's side and we'll begin there with
`Delaware counsel.
`MR. SCHOENBAUM: Good morning,
`Your Honor. Griffing Schoenbaum from Richards,
`Layton & Finger for plaintiff Topia Technology.
`I'd like to introduce my co-counsel from Sughrue
`Mion, Raja Saliba and Roman Rachuba. And as
`indicated to the Court, Mr. Rachuba will be
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`presenting for Topia today.
`THE COURT: Okay. Very good.
`Thank you. And let's do the same for counsel on
`defendant's side --
`MR. LYTLE: Excuse me, Your Honor.
`Jay Lytle for Topia Technology. I'm here with
`Mr. Rachuba.
`
`THE COURT: Okay. Thank you, Mr.
`
`Lytle.
`
`All right. Let's do the same for
`counsel on defendant's side. Again we'll begin
`with Delaware counsel.
`MR. NEFF: Yes. Good morning,
`Your Honor. Carl Neff of the law firm of
`FisherBroyles on behalf of defendant Egnyte,
`Inc. With me on the video call are my partners,
`Ryan Beard and Chris Kinkade also of the law
`firm of FisherBroyles and who each have been
`admitted pro hac vice. Mr. Kinkade will be
`taking the lead for Egnyte.
`THE COURT: Okay. Very good.
`Since it's defendant's motion, let me turn first
`to their counsel. Mr. Kinkade, I'll give you
`the chance to make some brief argument and I'll
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`jump in with a couple questions and after we're
`finished, we'll turn to your colleague on the
`other side, okay?
`MR. KINKADE: Thank you, Your
`Honor. Good morning to the Court and counsel.
`May it please the Court. Egnyte respectfully
`requests that the Court stay this proceeding
`except for the pending and fully briefed 101
`motions under rule 12(c) pending the completion
`of the IPRs that have been filed by Unified
`Patents and the Box and Dropbox defendants in
`co-pending litigation.
`Your Honor, now is the most
`logical time for the Court to stay the case.
`We're before all the major discovery events in
`the case. We're just prior to the start of
`claim construction briefing, with that to
`commence later this month and a hearing in about
`three month's time. We're before expert
`discovery and the most significant discovery and
`claim construction events are on the horizon.
`And this court and others have routinely
`recognized that stay should be implemented when
`the most significant events are yet to come.
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`For example, the Ioengine case made that quite
`clear.
`
`THE COURT: Mr. Kinkade, let me
`jump in and ask exactly where we stand in
`discovery date-wise. Seems like we're fairly
`far along. I know -- I think I read something
`in the briefs that deposition discovery has not
`really started in earnest, but exactly where do
`we stand at least with document discovery? How
`close are we to the end of that phase?
`MR. KINKADE: You're correct, Your
`Honor. We have not started any depositions.
`Written discovery has been served. Documents
`are being produced. Document production will be
`substantially complete in the near future. But
`that's really not the measure of significance
`here. You know, if we had put a number on it,
`I'd say only about 20 percent of the actual
`discovery substance is done. You know,
`documents will be produced in any event, but we
`haven't got to any fact witnesses, any expert
`witnesses. When, in fact, in the Unified
`Patents IPR there's already substantive
`arguments now being made by plaintiff. Just
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`within the last two weeks they've submitted some
`substantive arguments to the PTAB. So there's
`going to be more substantive developments coming
`out of that that we will need to address both in
`claim construction and fact and expert discovery
`in this case. So I would submit that even
`though we have gone forward with document
`discovery, the most actual substantive
`significance is still yet to come. And, you
`know, Topia does take some issue with that, both
`saying that we filed too soon and too late. Too
`soon because the Box/Dropbox IPRs have not been
`instituted yet and too late because Unified
`Patents filed their IPR back in April of last
`year. I would submit that we filed at exactly
`the right time. As the Court's aware, we had
`moved under rule 12(c) that all the asserted
`patents are invalid under 101. Your Honor
`initially held two of them invalid and ordered
`supplemental briefing and that was in December
`of last year. And that was only a few weeks
`after the Unified Patents IPR was instituted, so
`it was logical for us to await the Court's
`hearing on that, since it was fully briefed,
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`await the Court's decision and await Topia's
`motion for leave to amend which was filed in
`January.
`
`THE COURT: Mr. Kinkade, is there
`anything you want to say -- obviously one of the
`issues that's come up in terms of simplification
`is the fact that your client itself is pursuing
`these IPRs that you're asking me to stay the
`case in favor of, so that has some potential
`implications in terms of estoppel. Anything you
`want to say about why it is that Egnyte didn't
`file a petition for IPR on its own?
`MR. KINKADE: Well, yeah.
`Obviously without going into all of our legal
`strategies, Your Honor, we felt strongly about
`our 101 arguments. We were aware, of course, of
`the Unified Patents IPR, but we made, based on a
`value proposition in our case, the decision not
`to pursue the IPRs directly. We weren't
`involved in the preparation of the IPRs by the
`Box and Dropbox defendants in the other case.
`So we don't think it's right that Egnyte should
`have to agree or be bound by any estoppel
`provisions, because as the the Court knows,
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`estoppel is very broad in the IPR context and we
`didn't have any opportunity to even consider
`what references would be asserted in those IPRs.
`THE COURT: And I typically have
`not -- in fact, I don't know that I've ever kind
`of, you know, issued one of those orders that
`says, well, you could have a stay so long as you
`agree to be bound by X or Y. You know, I tend
`to agree it's certainly you and your client's
`choice about how to litigate the case and that
`you control. I guess there was some suggestion,
`I thought in the briefing, that maybe there's
`some coordination between counsel for Egnyte and
`counsel for at least one of the two third-party
`IPR petitioners. Am I wrong about that? Is
`there some overlap or am I messing that up?
`MR. KINKADE: Your Honor, there is
`a joint defense group that's been formed by the
`defendants in some of the co-pending
`litigations, but that is related to issues in
`the litigations. And so while we've exchanged
`some materials related to our common defenses,
`like non-infringement, invalidity, we did not
`participate in any of their meetings related to
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`the IPR process. I think the other alleged
`coordination that plaintiff has raised is that
`counsel who argued the 101 motions for Egnyte at
`Cooley is also representing the Box/Dropbox
`defendants in the IPRs that they filed. I can
`disclose to the Court that Egnyte has a long
`history with Cooley. Cooley has been Egnyte's
`long-time corporate counsel, so there's already
`existing engagements there. Obviously Cooley's
`representing another defendant in our joint
`defense group. And Ms. O'Keefe, I believe, has
`extensive experience before Your Honor, before
`this court in similar issues, so that's why the
`decision was made to have her argue the 101
`motions. It was not related to any coordination
`with respect to the IPRs.
`THE COURT: I mean, just on that
`point, I think -- because I think earlier what
`you said as Egnyte, we don't have any say or
`control over what Box or Dropbox puts forward or
`doesn't put forward in the IPRs. And from what
`you're saying, that's literally the case.
`Obviously Egnyte itself can't tell Box or
`Dropbox, hey, you know, I want you to make this
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`argument or, you know, don't press these
`arguments about these prior publications or
`whatever. But I guess the other side is saying
`well, that's true, but counsel for Egnyte in
`this case is the counsel in the IPRs for Box and
`Dropbox who is helping these entities make their
`decisions about what part to put forward and
`what part not to and why. So that's technically
`true that Egnyte can't make the decisions, but
`it's about as close as you can get in terms of
`coordinating and understanding, et cetera, as
`you might. Anything wrong with looking at it
`that way?
`
`MR. KINKADE: I hear what Your
`Honor is saying and I don't disagree that
`counsel is overlapping. But the fact that we
`haven't actually contributed to any of the
`expenses, any of the briefing, any of the claim
`charting in the IPR process and that Ms.
`O'Keefe's representation was solely for purposes
`of the 101 hearing, which the IPRs were not a
`part of, they had not yet been filed. So I
`think the two events on the timeline can
`certainly be separated as well. And that also
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`feeds back into the timeline I was discussing on
`the timeliness of our request, which of course
`was within about three weeks of the Box/Dropbox
`IPRs being filed. Some of those took several
`weeks, I think even by the end of January a
`few -- two of the IPRs had not yet been publicly
`docketed, so that was part of the delay on our
`part. We had heard they had been filed, but we
`were waiting for them to be docketed at the PTAB
`while we had briefed out motion. And I think it
`was even the Princeton Digital case that we
`cited to the Court where only one of several
`defendants had filed IPRs and the Court still
`stayed the litigations against all the
`defendants based on the IPRs that had been
`filed.
`
`THE COURT: Though Princeton
`Digital is the only case in which I've stayed a
`case prior to the institution decision on the
`IPRs at issue and that case was, as you can see,
`almost 10 years old, at a time when the PTAB was
`instituting on something like over 90 percent of
`all petitions.
`That said, and just in terms of
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`simplification, couple questions there. The
`other side says that if ultimately what the PTAB
`does is institute on some of the Box and Dropbox
`art, you know, maybe that might be relevant to
`some of the patents that it's attempting to put
`in IPR, but doesn't institute on other patents,
`that that won't have much of a material impact
`on discovery in this case because there's going
`to be great overlap between the discovery, at
`least the five patents other than the '942, that
`are being sought to have been the PTAB take up
`an IPR. What's your response to that?
`MR. KINKADE: Yes, Your Honor.
`And that's why I believe that the existence of
`document discovery to date is not a significant
`factor, because I agree that if some of the
`patents are not instituted against or if some of
`the patents survive, of course we already have
`the one institution. So unlike Princeton
`Digital, there actually is one institution now
`with Unified Patents, makes it likely the PTAB's
`probably going to institute more. But if not
`all the patents are instituted, I would agree
`that most of the document discovery is going to
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`be substantially the same. But it's when we get
`into the witness testimony, the inventor
`testimony on issues of claim construction,
`infringement, validity, experts, that's where a
`lot of what Topia does during the IPR process is
`going to be critical for us. We don't want a
`situation where we come back to the Court and
`need a second claim construction hearing. We
`don't want to go through with the first claim
`construction hearing on terms that maybe we
`don't need construction anymore after we see the
`positions they take or maybe those claim terms
`change during amendments during the IPR process.
`And plaintiff has pointed out that Egnyte may be
`the only party who's affirmatively requesting
`claim construction here. So it certainly could
`be an efficiency that's gained if something
`changes in the IPR process and we no longer need
`certain claim construction or there might be
`other terms we need.
`I would also briefly reference the
`prejudice factor. There's no prejudice to Topia
`here. We're not competitors in the space. They
`didn't seek a preliminary injunction here, which
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`the Softview and Virtual Agility courts
`recognized as being very indicative of a lack of
`prejudice from a brief stay. And we're here
`talking about maybe a four- or five-month delay
`in ultimate resolution of the case when Topia
`delayed at least two years, two and a half years
`in filing suit after they sent Egnyte an
`original cease and desist letter in June of 2019
`and then didn't file suit until December of
`2021. Risking another four- or five-month delay
`when monetary damages is the only real remedy
`being sought here would not be significant. If
`it's all for nought, then they'll be covered by
`interest. And I think it was the '454
`LifeSciences case which Topia cited to in their
`papers as well as Ioengine that explicitly
`referenced that delay alone is not sufficient to
`find prejudice.
`And then also bouncing back to
`Your Honor's previous question or statement
`about Princeton Digital being one of the few
`cases pre institution where you granted a stay,
`I would also point out that many of the cases,
`if not all, that were cited by Topia, such as
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`Universal Secure, Invensys Corp case and I think
`there was another one, Advanced Microscopy, the
`Court specifically noted in those cases that the
`petition would be acted on by the PTAB prior to
`any of the significant events, so either prior
`to the claim construction briefing commencing,
`prior to depositions. So in there it was kind
`of safe to delay the decision because those
`events would still come after the institution
`decision. And so those were all denied without
`prejudice of course pending the institution
`decision. Here, you know, the most efficiency
`will be gained now before we spend the next
`three to four months doing heavy claim
`construction and depositions.
`THE COURT: Do you recall when
`Egnyte -- had Egnyte sought to file for IPR,
`when your one-year deadline would have been? Am
`I right it would have been like sometime in
`December of 2022?
`MR. KINKADE: Yeah. It would have
`been December because this case was filed
`towards the end of December 2021.
`THE COURT: Obviously I think part
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`of the argument just then was look, the way
`things are going to go in the next four or five
`or six months here, there's going to be
`significant work, you know, work for the Court
`with regard to markman, work for the parties.
`We're not going to hear from the PTAB on
`institution with regard to the Box and Dropbox
`IPRs until after that happens, sometime in the
`summer. So the other side might push back and
`say well, you know, that's because the defendant
`here is kind of trying to free ride off of those
`other parties' IPR petitions. Maybe the
`defendant here should have gone to the PTAB if
`they wanted to seek, you know, the benefits of
`simplification. So that made me think, well,
`what would the outcome have been if Egnyte had
`went to the PTAB and would it effect the timing
`at all. I guess, I suppose you could have
`waited until December, that you could have filed
`earlier. Couldn't you have -- had you gone to
`the PTAB yourselves, might we have been able to
`avoid getting too close to markman here, putting
`you in a better spot to argue for efficiency?
`MR. KINKADE: Your Honor, yes.
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`And a lot of courts have of course recognized
`that waiting until even right up to that one
`year deedline is not unreasonable delay in
`filing. Had we done that, hypothetically, we
`only would have been a couple of weeks earlier
`than the Box/Dropbox IPRs. We're talking three
`to four weeks. Over the holidays and of course
`and after having just come out of Your Honor's
`101 hearing which we wanted to hear the result
`of first too. So obviously it was a little bit
`of, you know, decision making on our part and
`with our client directly without regard to what
`the other parties are doing had made the
`decision, well, we've already got the oldest
`patent in the case subject to the Unified
`Patents IPR, which would be the most significant
`event for past damages here and then we're
`challenging the rest of them under 101, so we
`made the strategic decision to just follow
`through with those courses of action. But then
`once the other defendants filed their IPRs,
`subsequent to our statutory deadline, so it was
`no longer an option for us, it just made it seem
`that it was most efficient that we should wait
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`in a money damages case until all the IPRs are
`acted upon.
`
`THE COURT: I guess two other
`questions and one relates to that which is, you
`know, there's a way to look at this as, look,
`understandably Egnyte kind of made a choice. It
`knew there were other third parties that might
`well be filing IPRs. There could certainly be
`some benefit to it were those IPRs to work out
`in a certain way, because they involved the same
`patents, but Egnyte kind of made its choice.
`Its choice was the best way for it to go, the
`most efficient way was to press an early 101
`motion in our court to see if it could either
`eliminate the case or narrow it. That's where
`it put it's resources and where you asked the
`Court to put its resources. And the Court did.
`We had that hearing and at least as of now,
`status quo, Egnyte cut the case by a third, you
`know, which will stay the case and which will
`continue to be the case unless the other side is
`successful with their motion to amend. So,
`okay. Like Egnyte made its choice. Didn't work
`out entirely the way they had hoped, but it
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`worked out partially the way it hoped, so it's
`got to live with that choice in a sense. You
`know, otherwise I think the plaintiff might say,
`Egnyte is trying to have it both ways. Made its
`own choice about what to pursue and how that
`might work. And now having not been entirely
`successful at stay in this case through that
`path, it's going to option number two trying to
`rely on third parties in a way that it doesn't
`want to agree to estoppel, so not going to
`generate potentially enough efficiency with that
`path number two. How come that line of
`thinking, that kind of Egnyte, you know, put its
`eggs in one basket and should have to live with
`that basket?
`MR. KINKADE: I would answer in
`two parts, Your Honor. First, it's just in
`general a changed circumstance that I think
`benefits all the parties. I know plaintiffs
`always want to press forward with their case, so
`that alone shouldn't count as prejudice when the
`plaintiffs, the Court and the defendant can
`otherwise conserve resources, because the
`general circumstances of the case have changed
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`as if something had happened to a witness, you
`know, being hospitalized that causes delay or
`some other event that might cause the parties to
`reconfigure their litigation positions. And
`then secondly -- sorry, I've talked myself out
`of my second thought, but --
`THE COURT: I talked too long with
`my question, Mr. Kinkade. Probably had both
`thoughts right in your head and then the judge
`kept talking, one minute questions, probably
`made you lose it. If it comes back, let me
`know.
`
`MR. KINKADE: Thank you, Your
`
`Honor.
`
`THE COURT: I have one other
`question for you related to simplification and
`the estoppel issue. The other side said
`something to the affect of the following, which
`is, look, there are a certain number of
`references that are at issue in the Box and
`Dropbox petitions, but if you factor them out,
`it still leaves, I think they cited like 29
`different references that Egnyte is pressing in
`their invalidity contentions in this case that
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`aren't going to be touched by the PTAB. Now, in
`response I think you said something like, look,
`we have a big chunk of our invalidity case that
`couldn't be at issue in the PTAB, you know, non
`prior publication art and rule 112 defenses, et
`cetera. But if we just focus on 102, 103 prior
`publication art, is it right to say that, you
`know, you all have put roughly 32 references at
`issue in this case and 29 of them, roughly,
`aren't going to be discussed by the PTAB in the
`Box and Dropbox petitions?
`MR. KINKADE: Yes, Your Honor.
`And thank you also for getting me back to my
`other response, which was that the non printed
`publication prior art that we're going to rely
`on, which could not be subject to the IPR
`anyway, so that's kind of outside the purviews
`of any estoppel discussion. And we believe it
`will play a significant role here. As to the
`other prior art references, I would agree
`there's only four or five references between the
`primary and secondary references being addressed
`in the Box and Dropbox IPRs. But again, what
`the PTAB does with those references, what Topia
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`does to distinguish itself, amend its claims
`around those references could be very relevant
`to the remaining prior art that we plan to
`assert. And half of those may no longer be
`relevant. There may be new prior art references
`we now need to find because of narrowing
`amendments that are made during the IPR process.
`So it's a little bit too speculative now to know
`what exactly we'll ultimately be relying on at
`trial.
`
`THE COURT: All right. Thank you.
`Anything further before I turn to your
`colleagues on the other side?
`MR. KINKADE: No. Thank you, Your
`
`Honor.
`
`THE COURT: All right. Let me do
`that. And Mr. Rachuba, you're going to be
`taking this for the plaintiff's side?
`MR. RACHUBA: Yes, I am, Your
`
`Honor.
`
`THE COURT: All right. Let me let
`you begin and again I'll jump in with some
`questions before we're finished.
`MR. RACHUBA: Thank you, Your
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`Honor. It's Topia's position that Egnyte's
`motion to stay should be denied for three
`primary reasons. First, the motion is
`premature. There's no indication that any of
`the most recent Box/Dropbox IPRs would be
`instituted or that any of the IPRs, including
`the Unified IPRs, would result in any
`cancellation of any claims. Second, Topia would
`be prejudiced by a stay because of Egnyte's
`refusal to be estopped in any way and the way in
`this litigation that results in a stay. And
`third, a stay would not substantially simplify
`any of the issues in this litigation which has
`already progressed to a meaningful degree. And
`additionally, the six most recent Box and
`Dropbox IPRs would not receive a final written
`decision until after trial in this case.
`Now, with respect to Egnyte's
`motion being premature, the Box and Dropbox IPRs
`have not been instituted and there will be no
`institution decision until middle of August this
`year actually. But despite that, there's no
`evidence that those IPRs will even be
`instituted. So with respect to the Unified IPR
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`on the '942 Patent, that IPR has absolutely no
`bearing whatsoever on five of the six Box and
`Dropbox IPRs, excluding the common '942 IPR.
`THE COURT: And the '942, that is
`at least currently not moving forward in this
`case pending the decision on the motion to
`amend, right? So in some ways if you look at it
`a certain way, right now this case is a
`four-patent case, not a six-patent case and the
`'942, which is the one patent that's at issue in
`the IPRs, is one of those two patents that is
`not currently moving forward in that court.
`Have I gotten that right?
`MR. RACHUBA: That's correct, Your
`Honor, subject to our motion to amend.
`THE COURT: Sure. Understood.
`MR. RACHUBA: Now, with respect to
`the patents being distinct, each of the six
`patents at issue are different. It's black
`letter law that the patent claims, not the
`specification, define the invention and each set
`of claims is what is examined in the IPR, not
`the patents themselves, not the overall patents,
`but the specification. Indeed, as you just
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`mentioned, this Court has found that four of the
`six patents are distinct from the two patents
`that were presently held invalid under 101.
`So in sum, even if Unified's IPR
`provided some evidence of institution that one
`of the Box/Dropbox IPRs would be instituted, the
`'942 Patent, there's zero evidence that that
`institution is relevant to the remaining five.
`THE COURT: Mr. Rachuba, though,
`aren't you in some ways trying to have it both
`ways there? Weren't you trying to convince me
`in another context about how related all these
`patents are? In other words, you were noting to
`me that even if the PTAB instituted on some of
`the petitions but not all, that Box and Dropbox
`had put forward, the patents are still related,
`they share a common spec across all or at least
`similar language such that, you know, document
`discovery is not going to be much different
`between them. And so if like two of the four
`remaining patents going forward in our case were
`instituted on and two weren't, your point there
`was the patents are so related that we're going
`to have the same discovery anyway, which you and
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`Mr. Kinkade, I think, agreed with. Now you're
`emphasizing the differences between those
`patents in terms of your claims. Isn't that
`trying to have it both ways?
`MR. RACHUBA: Your Honor, the
`point is a little more nuanced than that. So
`with respect to IPR institutions, it's based on
`the patent claims, which are not -- which are
`separate and distinct and not similar. Now, the
`specifications of the patents we agree are
`similar. And the specifications, which will be
`used to more guide discovery, because they're
`broader than the individual patent claims.
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