Case 2:17-cv-00140-WCB-RSP Document 291 Filed 01/18/19 Page 1 of 11 PageID #: 12756
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`CYWEE GROUP LTD.,
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`Plaintiff
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`v.
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`SAMSUNG ELECTRONICS CO., LTD.
`AND SAMSUNG ELECTRONICS
`AMERICA, INC.,
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`Defendants.
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`NO. 2:17-CV-00140-WCB-RSP
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`DEFENDANTS SAMSUNG ELECTRONICS CO., LTD. AND SAMSUNG
`ELECTRONICS AMERICA, INC.’S MOTION TO STAY
`PENDING INTER PARTES REVIEW PROCEEDINGS
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`The majority of the asserted claims in this case are likely to be invalidated by recently
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`instituted inter partes review proceedings (“IPRs”). A stay of this case pending these IPRs is
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`warranted because it will likely significantly simplify the issues for trial. CyWee will not be
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`prejudiced by this stay, and in fact has already agreed to stay five parallel cases asserting the
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`same patents in light of these IPRs. Therefore, Samsung respectfully requests a stay of this case
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`until the Patent Trial and Appeal Board (“PTAB”) concludes the IPRs as to U.S. Patent Nos.
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`8,441,438 (the “’438 Patent”) and 8,552,978 (the “’978” Patent) and any appeals have been
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`exhausted.
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`I.
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`BACKGROUND
`A.
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`Nature and Stage of the Proceedings
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`Plaintiff CyWee Group Ltd. (“CyWee”) brought this action against Samsung Electronics
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`Co., Ltd. (“SEC”) and Samsung Electronics America, Inc. (“SEA”) (collectively “Samsung”) on
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`February 17, 2017 alleging infringement of the ’438 and ’978 Patents. CyWee filed its First
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`Case 2:17-cv-00140-WCB-RSP Document 291 Filed 01/18/19 Page 2 of 11 PageID #: 12757
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`Amended Complaint on March 3, 2017. Dkt. No. 9. CyWee served its original infringement
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`contentions on July 12, 2017, alleging direct infringement of Claims 1, 3–5, 14–17, and 19 of the
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`’438 Patent and Claims 10 and 12 of the ’978 Patent. CyWee served supplemental infringement
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`contentions on September 18, 2017, September 10, 2018, October 4, 2018, and October 25,
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`2018. The same asserted claims are identified in each set of infringement contentions.
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`Significant case milestones lie ahead. Although the deadline for expert discovery passed
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`on January 10, 2019 (Dkt. No. 280), CyWee has been unable to make its damages expert, Mr.
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`Walter Bratic, available for his deposition until February 20, 2019. Ex. 1.1 CyWee does not
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`oppose this deposition occurring after the deadline and will not oppose a motion to extend the
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`February 6, 2019 deadline for motions that relate to Mr. Bratic. Ex. 1. Thus, certain critical
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`expert discovery still remains in this case. As noted above, the deadline for dispositive motions
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`and motions to strike expert testimony is February 6, 2019. Dkt. No. 280. The pretrial conference
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`is set for April 29, 2019, and jury selection is set for May 13, 2019. Id.
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`B.
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`Overview of the IPR Proceedings
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`On June 14, 2018, Google LLC filed two IPR Petitions asking the PTAB to invalidate
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`Claims 1 and 3–5 of the ’438 Patent (IPR2018-01258) and Claims 10 and 12 of the ’978 Patent
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`(IPR2018-01257). Of the claims asserted in this case, only Claims 14–17 and 19 of the ’438
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`Patent are not challenged in the IPRs. The PTAB granted Google’s IPR Petitions on December
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`11, 2018, finding that Google had demonstrated a “reasonable likelihood of success” that the
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`challenged claims are unpatentable. On January 8, 2019, SEC moved for joinder to Google’s
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`IPRs and, accordingly, filed its own IPR Petitions; SEA is identified as a real-party-in-interest in
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`each. Samsung Elecs. Co., Ltd. v. CyWee Grp. Ltd., IPR2019-00534, Paper 1 (PTAB Jan. 8,
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`1 CyWee further maintains that one of its three survey experts, Dr. Arvind Raghu, is unwilling to
`appear for deposition unless compelled, which has required Samsung to seek his deposition via a
`Letter of Request under the Hague Convention. Dkt. No. 279.
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`Case 2:17-cv-00140-WCB-RSP Document 291 Filed 01/18/19 Page 3 of 11 PageID #: 12758
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`2019) (“IPR2019-00534”) (Ex. 2); Samsung Elecs. Co., Ltd. v. CyWee Grp. Ltd., IPR2019-
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`00535, Paper 1 (PTAB Jan. 8, 2019) (“IPR2019-00535”) (Ex. 3); IPR2019-00534, Paper 3 (Ex.
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`4); IPR2019-00535, Paper 3 (Ex. 5). As a result, SEC’s IPR Petitions, mirroring Google’s
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`instituted petitions, challenge the validity of a majority of the asserted claims in this case,
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`including all asserted claims of the ’978 Patent.
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`II.
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`ARGUMENT
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`A district court has broad discretion to stay proceedings as part of its power to control its
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`own docket. See Clinton v. Jones, 520 U.S. 681, 706 (1997). The specific question of whether to
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`stay a case pending IPR is committed to the court’s discretion. See Ethicon, Inc. v. Quigg, 849
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`F.2d 1422, 1426–27 (Fed. Cir. 1988). Courts typically consider three factors when determining
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`whether to grant a stay in these circumstances: (1) whether the stay will likely simplify the case;
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`(2) whether the stay will unduly prejudice the nonmoving party; and (3) whether the case before
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`the court has reached an advanced stage. See NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-
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`1058-WCB, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015). Based on those factors, courts
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`weigh the benefits of a stay against the costs of postponing resolution of the litigation. EchoStar
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`Techs. Corp. v. TiVo, Inc., No. 5:05-cv-81, 2006 WL 2501494 (E.D. Tex. July 14, 2006).
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`This Court has noted that “special attention should be given to minimizing the burdens of
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`litigation.” NFC Tech., 2015 WL 1069111, at *2. “[A]fter the PTAB has instituted review
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`proceedings, the parallel district court litigation ordinarily should be stayed.” Id. at *7. Indeed, in
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`recent years “courts have been nearly uniform in granting motions to stay proceedings in the trial
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`court after the PTAB has instituted inter partes review proceedings.” Id. at *6. Nothing in this
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`case calls for a departure from that general practice, and the three factors weigh in favor of a
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`stay.
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`A.
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`The IPRs Will Significantly Simplify This Case
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`The first factor weighs strongly in favor of a stay because the PTAB has instituted the
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`IPRs and is likely to cancel nearly half of the asserted claims of the ’438 Patent and all of the
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`asserted claims of the ’978 Patent. In November 2018, 64% of instituted IPRs, PGRs, or CBMs
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`found all of the challenged claims unpatentable, and another 17% found at least some claims
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`unpatentable. Ex. 6 at 10. And whether or not the PTAB cancels all of the challenged claims, a
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`stay will simplify the litigation.
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`Given that the PTAB has instituted these IPRs, the likelihood of simplification here is
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`concrete and substantial. NFC Tech., 2015 WL 1069111, at *4. As noted by this Court, “the
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`grant of inter partes review has been treated as a highly significant factor in the courts’
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`determination of whether to stay cases pending PTAB review.” Id. The Federal Circuit also has
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`noted that institution “weighs heavily in favor of granting the stay.” VirtualAgility Inc. v.
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`Salesforce.com, Inc., 759 F.3d 1307, 1314 (Fed. Cir. 2014).
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`The Court has recognized many benefits of IPRs, including the following four. First, “in
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`those cases resulting in effective invalidity of the patent, the suit will likely be dismissed.” NFC
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`Tech., 2015 WL 1069111, at *4. Second, “[t]he outcome of the reexamination may encourage a
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`settlement without the further use of the Court.” Id. Third, “[i]ssues, defenses, and evidence will
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`be more easily limited in pre-trial conferences after a reexamination.” Id. Finally, “[t]he cost will
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`likely be reduced both for the parties and the Court.” Id. Certain of these benefits will be realized
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`even if the PTAB confirms patentability of all challenged claims, which as noted above is highly
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`unlikely.
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`For example, even if all challenged claims are confirmed patentable, estoppel principles
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`will apply and may narrow the invalidity defenses for presentation at trial. SEC has filed its own
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`IPR petitions and sought joinder to Google’s instituted IPRs. SEA is a real party in interest to
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`SEC’s IPR petitions. Therefore, estoppel will prevent both SEC and SEA from raising validity
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`challenges “on any ground that the petitioner raised or reasonably could have raised during that
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`inter partes review.” 35 U.S.C. § 315(e)(2). That estoppel may limit the issues and evidence that
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`can be presented at trial. The parties and Court would surely recognize cost and time savings as a
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`result.
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`If the PTAB invalidates most or all of the challenged claims, as is very likely, the case
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`would be substantially simplified and the scope of any trial would be narrowed. Moreover, such
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`a decision could encourage settlement before trial, yielding significant cost and time savings for
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`the parties and the Court.
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`The IPRs very likely will dispose of most of CyWee’s case. Only a few of the asserted
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`claims in this case are not challenged in the IPRs: Claims 14–17 and 19 of the ’438 Patent. The
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`Court has held in a closely analogous case that IPRs need not cover every asserted claim to
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`simplify the case. NFC Tech., 2015 WL 1069111, at * 7. In NFC v. HTC, the IPRs challenged all
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`asserted claims from one patent but only some asserted claims from the other patent. This Court
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`granted the stay. “In any event, even if the PTAB restrict[ed] its review to the claims of the ’551
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`patent and the initially asserted claims of the ’664 patent, any disposition by the PTAB is likely
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`to simplify the proceedings before this Court, at the very least with respect to the ’551 patent.”
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`Id. This case is highly analogous. Even though not all asserted claims are at issue in Google’s
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`IPRs, they are very likely to simplify this case, supporting a stay.
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`B.
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`A Stay Will Not Unduly Prejudice CyWee
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`CyWee will not suffer any undue prejudice, which heavily favors a stay. It is important to
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`note that “the mere fact of a delay alone does not constitute prejudice sufficient to deny a request
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`for stay.” E-Watch, Inc. v. Lorex Canada, Inc., No. CIV.A. H-12-3314, 2013 WL 5425298, at *2
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`(S.D. Tex. Sept. 26, 2013). Instead, the Federal Circuit has held in a highly analogous context
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`that “whether the patentee will be unduly prejudiced by a stay . . . focuses on the patentee’s need
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`for an expeditious resolution of its claim.” VirtualAgility, 759 F.3d at 1318.
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`It is unlikely that CyWee has a legitimate need for “expeditious resolution of its claim.”
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`In fact, CyWee recently agreed to a joint stipulation to stay its parallel litigations against Google,
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`Huawei, ZTE, Motorola, and LG Electronics regarding the same IPRs. Exs. 7–11. The fact that
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`CyWee readily agreed to defer resolution of infringement claims of the very same asserted
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`patents in five other cases undercuts any claim that CyWee requires an expeditious resolution of
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`the same or similar claims in this case.
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`Further, CyWee has itself previously pushed trial dates twice in this case. See Dkt. Nos.
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`90, 155. In April 2018, within six months of the scheduled trial date, CyWee filed an unopposed
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`motion to move deadlines, including extension of the trial date to a date to be determined. Dkt.
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`No. 79. In August 2018, within five and a half months of the scheduled trial date, CyWee again
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`agreed to continue the trial date to an undetermined time. Dkt. No. 155. Accordingly, CyWee’s
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`own willingness to push the trial dates evidences the fact that CyWee would not be unduly
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`prejudiced by a delay of the trial date.
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`Additionally, CyWee makes no products and does not compete with Samsung. Courts
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`find that this “strongly favor[s] granting the stay” since “the plaintiff does not risk irreparable
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`harm by the defendant’s continued use of the accused technology and can be fully restored to the
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`status quo ante with monetary relief.” Evolutionary Intelligence LLC v. Yelp Inc., No. C-13-
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`03587, 2013 WL 6672451, at *5 (N.D. Cal. Dec. 18, 2013) (citation omitted). Even if CyWee is
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`successful both at the PTAB and in this case, damages will continue to accrue during the stay
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`and CyWee will be fully restored to the status quo when it receives any judgment.
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`In determining whether there is undue prejudice, courts may also look for evidence of
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`“dilatory moves or tactics” by the moving party. e.Digital Corp. v. Arcsoft, Inc., No. 15-CV-56-
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`BEN (DHB), 2016 WL 452152, at *2 (S.D. Cal. Feb. 3, 2016). In prior cases where, as here, a
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`third party initially filed the IPR Petitions, the court looked to whether defendants delayed in
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`moving for a stay once the PTAB granted review. Id. In e.Digital, defendants moved for a stay
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`roughly three weeks after the PTAB granted review, which the court found was not dilatory. See
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`e.Digital Corp. v. ArcSoft, Inc., No. 15-CV-56-BEN (DHB), Dkt. No. 50-1 at 13 (S.D. Cal. Jan.
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`8, 2016) (Ex. 12) (noting that the petitions were granted on December 21–22, 2015). In this case,
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`the IPRs were instituted on December 11, 2018, and Samsung has filed this motion to stay
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`roughly one month later. During that time, Samsung acted quickly to determine whether to join
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`the IPRs and subsequently whether to move for a stay. Like the defendants in the e.Digital case,
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`Samsung has not delayed.
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`Accordingly, a stay will not unduly prejudice CyWee, and this factor weighs further in
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`favor of a stay.
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`C.
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`The Stay Will Likely Help Avoid Significant Trial and Pre-Trial Costs
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`Although this case is not in its infancy, significant and burdensome milestones lie ahead.
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`The pretrial conference is set for April 29, 2019 and jury selection for May 13, 2019. Dkt. No.
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`280. These events will impose “significant expenses on the parties that might be avoided if the
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`stay results in the simplification (or obviation) of further court proceedings.” NFC Tech., 2015
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`WL 1069111, at * 3.
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`Although the deadline to complete expert discovery was January 10, 2019 (Dkt. No.
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`280), despite Samsung’s repeated, timely requests, CyWee was unable to make its damages
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`expert Mr. Bratic available for his deposition before that date.2 On January 14, 2019, CyWee
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`confirmed that Mr. Bratic would not be available for deposition until February 20, 2019. Ex. 1.
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`CyWee does not oppose the taking of this deposition after the deadline, and will not oppose a
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`motion to extend the February 6, 2019 deadline for motions that relate to Mr. Bratic. Id. Thus,
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`certain critical expert discovery still remains in this case. Samsung further expects the burden
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`and expense of preparing its motions for summary judgment and motions to strike expert
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`testimony, due February 6, 2019, to be significant. These burdens and expenses will be
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`minimized or avoided completely if a stay is granted. See NFC Tech., 2015 WL 1069111, at *2
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`(noting that “special attention should be given to minimizing the burdens of litigation”).
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`The proximity to trial is not dispositive. For example, the Eastern District of Texas stayed
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`a case pending IPR when the case was just two months away from trial. SSL Servs., LLC v. Cisco
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`Sys., Inc, No. 2:15-CV-433-JRG-RSP, 2016 WL 3523871, at *3 (E.D. Tex. June 28, 2016).
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`Although the case was at a late stage it was “not yet on the eve of trial,” and the Court noted that
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`“expert discovery is ongoing and the deadline to file dispositive motions and motions to strike
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`has not yet passed.” Id. at *2. Although the advanced stage of the case weighed against the stay,
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`the Court nonetheless granted it since “there is a high likelihood of issue simplification” and
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`“[t]his factor weighs heavily in favor of a stay.” Id. at *3. Here, as in SSL, discovery is not
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`entirely complete, and the deadlines for dispositive motions, motions to strike, pre-trial
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`submissions, and trial are upcoming. Also, as in SSL, the issues are highly likely to be simplified,
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`which should tip the scales in favor of a stay. In addition, this case is further from trial than in
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`SSL (four months versus two months).
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`2 As noted above, CyWee further maintains that one of its three survey experts, Mr. Raghu, is
`unwilling to appear for deposition unless compelled to do so.
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`As yet another example, the Eastern District of Texas stayed another case pending IPR
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`even where the case was “amid final trial preparation and within two months of the trial date that
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`has been set for more than 10 months.” Ericsson Inc. v. TCL Commc’n Tech. Holdings, Ltd., No.
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`2:15-CV-00011-RSP, 2016 WL 1162162, at *2 (E.D. Tex. Mar. 23, 2016). Although the
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`advanced stage of the litigation again weighed against the stay, the Court granted it since there
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`was a “high likelihood of issue simplification” which weighed “heavily in favor of a stay.” Id. at
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`*3. That compares very favorably to this case, which is further from trial and where the issues
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`are highly likely to be simplified. Accordingly, a stay would likewise be appropriate in this case.
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`Indeed, the Eastern District of Texas has in fact granted a stay pending IPR on the eve of
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`trial, finding that even at a pre-trial hearing after expert discovery and summary judgment
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`briefing, the “benefits of a stay outweigh[ed] the costs of delaying trial.” Image Processing
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`Techs., LLC v. Samsung Elecs. Co., No. 2:16-cv-00505-JRG, 2017 WL 7051628, at *1 (E.D.
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`Tex. Oct. 25, 2017).
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`Samsung has been diligent in seeking this stay. As discussed above, once the PTAB
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`instituted these IPRs on December 11, 2018, Samsung acted quickly to join the IPRs and move
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`for a stay.
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`Given the significant burdens and expenses of pre-trial and trial yet to be imposed on the
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`parties and the Court, and in light of the fact that the IPRs will very likely simplify the issues in
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`this case, the requested stay should be granted.
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`III. CONCLUSION
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`Collectively, the three factors weigh strongly in favor of a stay in this case. The instituted
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`IPRs are highly likely to significantly simplify the issues in this case, CyWee will not be unduly
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`prejudiced by the stay, and the stay is likely to help the parties and the Court avoid burdensome
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` 12765
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`and costly pre-trial and trial work that remains to be done. Thus, Defendants respectfully request
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`that the Court stay this case pending final resolution of IPR2019-00534 and IPR2019-00535.
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`DATED: January 18, 2019
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`Respectfully submitted,
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`By: /s/ Christopher W. Kennerly
`Christopher W. Kennerly
`TX Bar No. 00795077
`chriskennerly@paulhastings.com
`PAUL HASTINGS LLP
`1117 S. California Ave.
`Palo Alto, California 94304
`Telephone: (650) 320-1800
`Facsimile:
`(650) 320-1900
`
`Barry Sher (pro hac vice)
`NY Bar No. 2325777
`barrysher@paulhastings.com
`Zachary Zwillinger (pro hac vice)
`NY Bar No. 5071154
`zacharyzwillinger@paulhastings.com
`PAUL HASTINGS LLP
`200 Park Avenue
`New York, New York 10166
`Telephone: (212) 318-6000
`Facsimile:
`(212) 319-4090
`
`Elizabeth L. Brann (pro hac vice)
`CA Bar No. 222873
`elizabethbrann@paulhastings.com
`PAUL HASTINGS LLP
`4747 Executive Drive, 12th Floor
`San Diego, California 92121
`Telephone: (858) 458-3000
`Facsimile:
`(858) 458-3005
`
`Melissa R. Smith
`TX Bar No. 24001351
`melissa@gillamsmithlaw.com
`GILLAM & SMITH, LLP
`303 S. Washington Ave.
`Marshall, TX 75670
`Telephone: (903) 934-8450
`Facsimile: (903) 934-9257
`
`-10-
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`Case 2:17-cv-00140-WCB-RSP Document 291 Filed 01/18/19 Page 11 of 11 PageID #:
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`Attorneys for Defendants
`SAMSUNG ELECTRONICS CO., LTD AND
`SAMSUNG ELECTRONICS AMERICA,
`INC.
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`CERTIFICATE OF CONFERENCE
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`Pursuant to Local Rules CV-7(h) and (i), counsel for the Defendants met and conferred
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`with counsel for the Plaintiff on January 16, 2019 via email in a good faith attempt to resolve the
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`matters raised by this motion. No agreement could be reached. Plaintiff indicated it opposes the
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`relief requested by this motion. Thus, these discussions have conclusively ended in an impasse
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`and leave an open issue for the Court to resolve.
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`CERTIFICATE OF SERVICE
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`I hereby certify that a true and correct copy of the foregoing document was filed
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`electronically in compliance with Local Rule CV-5 on January 18, 2019. As of this date, all
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`counsel of record had consented to electronic service and are being served with a copy of this
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`document through the Court’s CM/ECF system under Local Rule CV-5(a)(3)(A).
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`
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`-11-
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