Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 1 of 11 PageID #: 4389
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`BLITZSAFE TEXAS, LLC,
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`Plaintiff,
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`HONDA MOTOR CO., LTD, et al.,
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`Defendants.
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`No. 2:15-CV-01274 (Lead Case)
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`PLAINTIFF’S RESPONSE BRIEF IN OPPOSITION TO
`DEFENDANTS’ MOTION TO STAY
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 2 of 11 PageID #: 4390
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`Plaintiff, Blitzsafe Texas, LLC (“Plaintiff” or “Blitzsafe”), files this Response in
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`Opposition to Defendants’ Motion Stay pending the resolution of the current inter partes review
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`proceedings filed by the Volkswagen, Toyota, Honda, and Hyundai/Kia Defendants against U.S.
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`Patent Nos. 7,489,786 (the “’786 Patent”) and 8,155,342 (the “’342 Patent”) (collectively, the
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`“Asserted Patents”). (Dkt. 133.)
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`I.
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`INTRODUCTION
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`This Court should deny motion to stay because none of the three factors considered by
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`this Court are met. The prejudice or tactical disadvantage factor weighs against a stay because
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`the last of the currently pending IPRs, if instituted, would likely not be decided until February
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`2018. Since Defendants seek a stay through the conclusion of all appeals, the stay could
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`potentially last until the end of 2018. Given that this case is scheduled for trial on February 6,
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`2017, the prejudice to Plaintiff’s entitlement to a trial on the merits is overwhelming.
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`A stay is unlikely to lead to a simplification of the issues because none of the claims of
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`the ’786 Patent currently being asserted in this action is subject to an instituted IPR. Even if all
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`of the currently instituted claims of the ’342 Patent were cancelled, the breadth of the case would
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`not be significantly narrowed because every product that is accused of infringing the ’342 Patent
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`is also accused of infringing the ’786 Patent.
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`The final factor, whether discovery is complete and a trial date has been set, weighs
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`heavily against a stay because discovery will be complete at the time this motion is fully briefed,
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`and trial will be less than 5 months away. Opening expert reports will also have been
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`exchanged. In addition, the claim construction hearing was held two months ago and the
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`issuance of a claim construction order is expected imminently.
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`For these reasons, all three factors weigh against the issuance of a stay, and Defendants’
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`motion should be denied.
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`II.
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`STATEMENT OF FACTS
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`These consolidated actions were filed on July 16, 2015. The Markman hearing was held
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`on July 1, 2016. (Dkt. 56.) Fact discovery is scheduled to be completed and initial expert reports
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`exchanged on September 19, 2016. (Dkt. 117.) Expert discovery will be completed and motions
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`for summary judgment, if any, will be filed by October 31, 2016. (Id.) Trial is scheduled for
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`February 6, 2016. (Id.)
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`An IPR against the ’342 Patent was filed by Unified Patents Inc., on October 30, 2015.
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`(See Ex. A1.) Toyota, Honda and Nissan are subscribers of Unified Patents. (See Ex. B ¶ 3.)
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`The IPR was denied institution on April 27, 2016. (See Ex. C.)
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`Toyota filed four IPRs against the Asserted Patents on December 30, 2016: two against
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`the ’342 Patent and two against the ’786 Patent. One of the IPRs filed against the ’786 Patent
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`was denied institution (see Ex. D), and the other was instituted as to two claims, claims 44 and
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`47, that Plaintiff did not include in its preliminary election of asserted claims. (Dkt. 133-T3,
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`133-14.) Therefore, none of the claims of the ’786 Patent which are the focus of this lawsuit are
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`being challenged in an instituted IPR.
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`One of the two Toyota IPRs against the ’342 Patent was denied institution (Ex. E), but
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`the other was instituted on all claims asserted in Plaintiff’s preliminary election of asserted
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`claims. (Dkt. 133-3.) A hearing has been scheduled for February 9, 2016 (Dkt. 133-18, 133-19),
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`and a final written decision would be expected to issue in July 2017, approximately five months
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`after the trial date in this lawsuit.
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`1 All exhibits to Blitzsafe’s response in opposition to Defendants’ motion to stay are attached to the declaration of
`Peter Lambrianakos, attached hereto.
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 4 of 11 PageID #: 4392
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`The remaining IPRs against the Asserted Patents were filed just before the one-year bar
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`date at the end of July 2016 and were assigned filing dates in August 2016. Decisions on the
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`institution of those IPRs will not be due until February 2017, and final written decisions on the
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`instituted petitions, if any, would not be expected until February 2018.
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`III. ARGUMENT
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`District Courts use a three-part test to determine whether to grant a motion to stay
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`pending inter partes review of an asserted patent: “(1) whether a stay will unduly prejudice or
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`present a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify the
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`issues in question and trial of the case; and (3) whether discovery is complete and whether a trial
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`date has been set.” Rembrandt Wireless Technologies, LP v. Samsung Electronics Co., No.
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`2:13CV213–JRG–RSP, 2015 WL 627887, at *1 (E.D. Tex. Jan. 29, 2015); Lennon Image Techs.,
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`LLC, v. Macy’s Retail Hldgs, Inc., No. 2:13-cv-00235-JRG, 2014 WL 4652117, at *2 (E.D. Tex.
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`Sept. 18, 2014) (citing Soverain Software LLC v. Amazon, Inc., 356 F.Supp.2d 660, 662 (E.D.
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`Tex. 2005)).
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`A. A Stay Would Unduly Prejudice and Present a Clear Tactical Disadvantage to
`Plaintiff
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`The first factor considered in whether to issue a stay weighs in favor of denial because a
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`stay may delay Plaintiff’s ability to obtain a trial on the merits for at least one year and
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`potentially longer. Defendants seek a stay pending the resolution of all of the currently filed
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`IPRs, including IPRs filed in late July 2016—just prior to the one-year bar and after the
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`Markman hearing in this matter. If any of these IPRs is instituted, they are unlikely to be
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`concluded before February 2018, and any appeals will extend the date of final resolution into late
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`2018 at the earliest.
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 5 of 11 PageID #: 4393
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`In the meantime, this lawsuit is scheduled for trial on February 6, 2017. A stay of this
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`matter through the resolutions of all appeals of the pending IPRs (assuming that at least one is
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`instituted) could potentially result in the postponement of a trial in this matter into late 2018 or
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`early 2019—delaying trial nearly two years.
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`Courts have found that delaying trial for a year or more weighs against granting a motion
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`to stay because it weighs against the patent owner’s interest in the timely enforcement of its
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`patent rights. See Unifi Scientific Batteries, LLC v. Sony Mobile Comm’s AB, No. 6:12-cv-224
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`JDL, 2014 WL 4494479, at *2 (E.D. Tex. Jan 14, 2014) (denying a stay through September 2014
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`when the plaintiff had trial dates of November 10, 2014 and February 9, 2015 because the trial
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`would not occur until beyond 2015); Rembrandt Wireless Tech., 2015 WL 627887, at *2
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`(denying a motion to stay pending resolution of “recently-filed” IPRs because a trial scheduled
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`for the following month would be delayed, resulting in significant prejudice to plaintiff);
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`Invensys Sys., Inc., v. Emerson Electric Co., No. 6:12–CV–00799, 2014 WL 4477393, *2 (E.D.
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`Tex. Jul. 25, 2014) (refusing to stay a matter scheduled for trial on October 13, 2015 when the
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`PTAB’s final written decisions were expected by February 2016).
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`Plaintiff will also suffer prejudice because it is in the business of selling interface
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`products that compete with Defendants’ infotainment systems. (Dkt. 1 ¶ 1.) Defendants’
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`arguments that Plaintiff is a mere patent holding company, which is false, and that Plaintiff’s
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`parent company does not compete with Defendants because Defendants have installed Plaintiff’s
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`patented technology behind the dashboard of their automobiles, are disingenuous at best. (Dkt.
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`133 at 8, n.12.) In any event, this Court has recognized that allegations, even if true, that a
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`plaintiff is not practicing the asserted patents is not sufficient to demonstrate that a plaintiff is not
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`unduly prejudiced by the substantial delay of an imminent trial date. See Rembrandt Wireless
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`Tech., 2015 WL 627887, at *2.
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`The timing of these recently-filed IPRs demonstrates the tactical gamesmanship behind
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`this motion for a stay. Toyota prepared and filed four IPRs by December 30, 2015,
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`approximately five months after having been served with the complaint, but the remaining
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`Defendants held back their IPRs until the final weeks before the one-year bar took effect. There
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`is little question that parties with the resources of these automotive giants were capable of
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`diligently preparing petitions challenging the Asserted Patents in a timely manner. The filing of
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`seven petitions by Honda, Volkswagen and Hyundai within approximately one week of the one-
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`year bar date and filing of this motion to stay immediately thereafter reflects a tactical decision to
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`delay filing IPRs to cause the maximum amount of delay in an attempt to prejudice Plaintiff’s
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`right to a speedy trial. Defendants should not be rewarded for these sharp tactics.
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`This factor weights heavily against a stay.
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`B. A Stay Would Not Simplify the Issues for Trial
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`A stay in this case is unlikely to simplify the issues for trial because even if the currently
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`instituted IPRs were resolved in favor of Defendants, all of the currently asserted claims of the
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`’786 Patents would survive and virtually every product that is currently alleged to infringe the
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`Asserted Patents would remain in the case. The sole Toyota IPR that was instituted against the
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`’786 Patent covers only two claims, 44 and 47, which were not elected by Plaintiff when it
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`narrowed its set of asserted claims prior to the institution of the IPR. (Dkt. 133-14.) Staying the
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`case to await the cancellation of non-asserted claims obviously would not simplify the issues in
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`this case and serves no legitimate purpose.
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`Moreover, even if the claims of the ’342 Patent in the instituted IPR were cancelled, this
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`Court and the parties would still have to move forward with an infringement case against the
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 7 of 11 PageID #: 4395
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`same accused products because virtually every product that is accused of infringing the ’342
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`Patent is also accused of infringing the ’786 Patent. The ’786 Patent covers integration of
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`portable devices with a car stereo using a wired connection, and the ’342 Patent covers the same
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`type of integration but using a wireless connection. Since car stereos that support wireless
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`integration also support wired integration, the issues that will have to be adjudicated will not be
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`significantly narrowed.
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`Defendants argue that based on historical figures, the newly-filed IPRs have a high
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`probability of being instituted, and that there is a high probability that claims will be cancelled in
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`the instituted IPRs. (Dkt. 133 at 9-10.) What Defendants ignore is that Toyota’s and Unified
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`Patents’ actual performance in the PTAB against the Asserted Patents is drastically weaker.
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`Toyota was completely unsuccessful in convincing the PTAB to institute two IPRs against the
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`’786 Patent claims that were elected by Plaintiff. Although 70% of IPRs filed in the PTAB are
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`instituted, Toyota’s success rate against the claims of the ’786 Patent that are currently at issue in
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`this case is 0%.
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`Toyota’s and Unified Patents’ performance in the PTAB against the ’342 Patent was
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`nearly as abysmal. Only one out of the three IPRs filed against the ’342 Patent has been
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`instituted, a success rate of only 33%. Considering that the prior art references and arguments
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`asserted by the other Defendants in the new IPRs are significantly weaker than those that Toyota
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`and Unified Patents (on behalf of Toyota, Honda and Nissan) mostly failed on, Defendants’
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`attempt to cloak itself in the 70% and 80% success rate of other petitioners against other patents
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`is unpersuasive.
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`Defendants’ argument that the IPR proceedings could have an effect on this Court’s
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`proceedings because Blitzsafe made arguments based on the PTAB’s narrower claim
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 8 of 11 PageID #: 4396
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`constructions is false. (Dkt. 133 at 11-12.) In one of the failed ’786 IPRs, Blitzsafe argued in its
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`preliminary response that when Toyota’s construction of the “interface” is applied in a consistent
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`manner, Toyota’s arguments that the prior art invalidates the ’786 Patent must fail. Blitzsafe
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`never adopted the constructions that Toyota proffered, nor did Blitzsafe somehow agree with the
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`construction of the term “interface” that the PTAB adopted three months after Blitzsafe filed its
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`response. Blitzsafe merely identified the significant weaknesses in Toyota’s arguments that led
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`to the PTAB’s decision to deny institution of the IPR.
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`For these reasons, the second prong weighs against the issuance of a stay.
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`C. The Stage of the Litigation Weighs Against a Stay
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`The factor of whether discovery is complete and a trial date has been set weighs heavily
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`against a stay. The deadline for the completion of fact discovery and the exchange of opening
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`expert reports is September 19, 2016. Assuming that the parties submit reply and sur-reply
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`briefs according the timeframe provided in the Local Rules, fact discovery will be complete and
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`expert reports will have been exchanged as of the date that briefing of this motion is closed.
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`Also, the Court held a Markman hearing on July 1, 2016, and its claim construction is
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`forthcoming. The trial date, February 6, 2017, will be less than five months away.
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`Courts have frequently found this factor weighs against a stay when a trial date is
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`approaching and fact discovery is complete. See Lennon Image Techs., 2014 WL 4652117, at *3
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`(finding that this factor weighed against a stay when, at the time the motion was decided,
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`discovery was nearly complete and trial was less than six months away); Invensys Sys, 2014 WL
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`4477393, *3 (finding that this factor weighed in favor of a stay when, at the time the motion was
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`decided, discovery had recently closed and trial was 15 months away).
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`The decision in NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL
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`1069111 (E.D. Tex. Mar. 11, 2015), is distinguishable. First, as of the date of that decision, the
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 9 of 11 PageID #: 4397
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`NFC Tech. case was is a less advanced stage than this case. Fact discovery had not been
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`completed and a Markman hearing had not been held. See id. at *3. Second, the two instituted
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`IPRs in the NFC Tech. case covered all of the asserted claims of one asserted patent and all but
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`three claims of the second asserted patent. See id. at *7. Here, none of the currently asserted
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`claims of the ’786 Patent are included in an instituted IPR. As discussed above, this drastically
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`reduces the likelihood that the issues in this case will be significantly narrowed.
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`Accordingly, the third prong weighs against a stay.
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`III. CONCLUSION
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`For the foregoing reasons, Blitzsafe respectfully requests that the Court deny Defendants’
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`Respectfully submitted,
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`BROWN RUDNICK LLP
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`/s/ Peter Lambrianakos
`By:
`Alfred R. Fabricant
`Texas Bar No. 2219392
`Email: afabricant@brownrudnick.com
`Lawrence C. Drucker
`Email: ldrucker@brownrudnick.com
`Texas Bar No. 2303089
`Peter Lambrianakos
`Texas Bar No. 2894392
`Email: plambrianakos@brownrudnick.com
`Alessandra Carcaterra Messing
`Texas Bar No. 5040019
`Email: amessing@brownrudnick.com
`BROWN RUDNICK LLP
`7 Times Square
`New York, NY 10036
`Telephone: (212) 209-4800
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`Motion to Stay.
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`DATED: September 1, 2016
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 10 of 11 PageID #: 4398
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`Samuel F. Baxter
`Texas State Bar No. 01938000
`sbaxter@mckoolsmith.com
`Jennifer L. Truelove
`Texas State Bar No. 24012906
`jtruelove@mckoolsmith.com
`MCKOOL SMITH, P.C.
`104 E. Houston Street, Suite 300
`Marshall, Texas 75670
`Telephone: (903) 923-9000
`Facsimile: (903) 923-9099
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`ATTORNEYS FOR PLAINTIFF,
`BLITZSAFE TEXAS, LLC 
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`Case 2:15-cv-01274-JRG-RSP Document 142 Filed 09/01/16 Page 11 of 11 PageID #: 4399
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`CERTIFICATE OF SERVICE
`The undersigned hereby certifies that all counsel of record who are deemed to have
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`consented to electronic service are being served with a copy of this document via the Court's
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`CM/ECF system per Local Rule CV-5(a)(3) on September 1, 2016.
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`Peter Lambrianakos
`/s/
`Peter Lambrianakos
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