Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 1 of 8 PageID #: 13395
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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 REPLY IN SUPPORT OF THEIR
`MOTION TO STAY PENDING INTER PARTES REVIEW PROCEEDINGS
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`Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 2 of 8 PageID #: 13396
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`Recently instituted inter partes review (“IPR”) proceedings are likely to invalidate most
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`of the asserted claims in this case. Accordingly, a stay of this case pending these IPRs (IPR2019-
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`00534 and IPR2019-00535) will likely significantly simplify the issues for trial. CyWee will not
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`be prejudiced by this stay and in fact readily agreed to stay five parallel cases asserting the same
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`patents. Samsung thus respectfully requests a stay of this case until the Patent Trial and Appeal
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`Board (“PTAB”) concludes the IPRs and any appeals have been exhausted.
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`I.
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`ARGUMENT
`A.
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`CyWee’s Claimed Prejudice Is Overblown and Unsupported by Law or Fact
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`CyWee Group Ltd., the Plaintiff in this case, contends that it is not a non-practicing entity
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`and therefore will suffer prejudice if the trial of this case is delayed.
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` CyWee cannot reasonably assert that it competes
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`with Samsung. And CyWee offers no reason why an award of damages would not adequately
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`compensate it for any losses it may prove in this case.
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`Although the Court in Realtime Data LLC v. Actian Corp. recognized that a non-
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`practicing entity may experience prejudice from a stay, as it still “has an interest in the timely
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`enforcement of its patent rights,” a non-practicing entity suffers less prejudice than a competitor.
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`No. 6:15-CV-463-RWS-JDL, 2016 WL 9340796, at *3 (E.D. Tex. Nov. 29, 2016). Such
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`prejudice is generally applicable to any patentee, and is “not an especially strong claim of actual
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`prejudice.” Trover Grp., Inc. v. Dedicated Micros USA, No. 2:13-cv-1047-WCB, 2015 WL
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`1069179, at *4–5 (E.D. Tex. Mar. 11, 2015). Moreover, CyWee’s argument that it stands to
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`suffer losses to its business that cannot be measured in monetary terms is belied by the five stays
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`-1-
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`Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 3 of 8 PageID #: 13397
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`pending these IPRs that CyWee agreed to in parallel district court cases against other allegedly
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`practicing entities.1
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`CyWee’s suggestion that Samsung should have moved for a stay seven months earlier,
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`when the Google IPRs were first filed, is inconsistent with the law. The defendant in NFC
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`Technologies v. HTC America, Inc. filed its motion to stay six months after filing its IPR
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`Petitions, which CyWee admits was “very prompt[].”No. 2:13-cv-01058-WCB, 2015 WL
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`1069111, at *1 (E.D. Tex. Mar. 11, 2015). As this Court noted, whether an IPR is instituted is “a
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`highly significant factor in courts’ determination of whether to stay . . . .” Id. at *4. Further, “the
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`majority of courts [addressing] the issue have postponed ruling on stay requests or have denied
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`stay requests when the PTAB has not yet acted on the petition for review.” Freeny v. Apple Inc.,
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`No. 2:13-cv-00361-WCB, 2014 WL 3611948, at *1–2 (E.D. Tex. Jul. 22, 2014).
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`Here, Samsung promptly and properly moved to stay following the PTAB’s institution of
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`Google’s IPRs based on a reasonable likelihood that the challenged claims are unpatentable. See
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`35 U.S.C. § 314(a). Consistent with the law and the circumstances at the time, four of the five
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`stipulated stays to which CyWee agreed were filed between January 10 and 18, 2019. Samsung’s
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`opposed motion was also filed on January 18, 2019. Given that the close of expert discovery was
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`set for January 10, 2019, with significant expert discovery to be conducted as well as the holiday
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`season during the intervening period, Samsung was not dilatory in evaluating, preparing, and
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`filing its motion to stay just five weeks after institution of the IPRs.
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`The fact that CyWee elected to forego depositions of Samsung’s experts has no bearing
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`on its purported prejudice, and that waiver was neither expected nor sought by Samsung. CyWee
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`1 The suggestion that Samsung filed its motion to stay in response to the Court setting the case
`for trial and a desire to avoid CyWee’s dispositive motions is undermined by the similar timing
`of the motions to stay in the parallel cases, which are in various earlier stages of litigation.
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`-2-
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`Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 4 of 8 PageID #: 13398
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`asserts that it was forwent those depositions to “avoid further delay” and “eas[e] [the] burden on
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`the parties.” But, in the same letter where CyWee stated it would not depose Samsung’s experts,
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`CyWee sought consent to supplement its infringement contentions and expert reports—an
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`expansion of the case likely to increase delay and increase the burden on the parties. Ex. 14.
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`B.
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`CyWee’s Arguments Regarding the Eve of Trial Miss the Point
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`CyWee’s arguments about the stage of the case focus on what has occurred. However, the
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`relevance of the stage of the case with respect to a motion to stay pending IPR relates to avoiding
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`unnecessary expense going forward. In Smartflash LLC v. Apple Inc., the court had already held
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`hearings on claim construction, dispositive motions, and Daubert challenges, conducted a pre-
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`trial hearing, and completed a jury trial for one defendant. 621 F. App’x 995, 1005 (Fed. Cir.
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`2015). The Federal Circuit acknowledged “the substantial time and effort already spent in this
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`case,” but nonetheless reversed the lower court’s denial of the second defendant’s motion to stay.
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`Id. The court reasoned that “the most burdensome task is yet to come,” recognizing that “[t]he
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`primary cost of litigation is incurred pretrial and in a trial on the merits.” Id. at 1004–05. CyWee
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`agrees that certain depositions of its experts,2 dispositive motions, Daubert challenges, pre-trial
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`matters, and trial still remain in the case. All of these would impose significant burdens that may
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`be substantially reduced by the resolution of the pending IPRs. Although this case is not in its
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`infancy, granting a stay nonetheless has the potential to simplify issues and avoid unnecessary
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`burdens and costs to the Court and parties. See Image Processing Techs., LLC v. Samsung Elecs.
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`Co., No. 2:16-cv-00505-JRG, 2017 WL 7051628, at *1 (E.D. Tex. Oct. 25, 2017) (granting a
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`2 CyWee’s characterization that expert discovery is substantially complete is somewhat
`inaccurate. CyWee has not yet made Mr. Bratic (its damages expert) or Dr. Raghu (one of its
`survey experts) available for deposition. The likely importance of Mr. Bratic’s deposition is self-
`evident. And Mr. Bratic relies almost exclusively on the survey experts’ report as the basis for
`his reasonably royalty damages opinions. Merely because CyWee does not intend to call Dr.
`Raghu at trial does not dispose of Samsung’s right to take Dr. Raghu’s deposition.
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`-3-
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`Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 5 of 8 PageID #: 13399
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`motion to stay pending IPR at a pre-trial hearing, after expert discovery and summary judgment
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`briefing, finding that the “benefits of a stay outweigh[ed] the costs of delaying trial”).
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`C.
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`CyWee’s Petition for Rehearing Is Not Relevant
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`CyWee argues without basis that its request for rehearing of the PTAB’s institution of
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`Google IPRs renders Samsung’s motion speculative. The PTAB has already instituted the IPRs,
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`and under 37 C.F.R. § 42.71(c), the standard of review is for abuse of discretion. Further, CyWee
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`already agreed to stay five other cases, belying any belief the IPRs might not proceed. CyWee’s
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`request for rehearing should not be afforded any weight. Cf. MLC Intellectual Prop., LLC v.
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`Micron Tech., Inc., No. 14-CV-03657-SI, 2016 WL 9175599, at *2 (N.D. Cal. Mar. 29, 2016)
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`(ordering that stay be lifted despite pending motion for rehearing of PTAB decision denying
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`institution). Also notable is the inconsistency in CyWee’s position that Samsung filed its motion
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`for stay too late, while here CyWee argues Samsung filed its motion to stay too soon.
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`D.
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`The Potential for Simplification of the Case Clearly Favors a Stay
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`While ’438 Patent Claims 14–17 and 19 are not challenged in the IPRs, each of Claims 1
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`and 3–5 of the ’438 Patent and Claims 10 and 12 of the ’978 Patent are asserted against Samsung
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`and are challenged in the IPRs. Accordingly, the IPRs will most likely dispose of the majority of
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`the asserted claims and the entirety of one of the asserted patents. The law is clear that complete
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`overlap between the claims asserted in this case and the instituted claims before the PTAB is not
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`necessary to simplify the case. In NFC, where the IPRs challenged all asserted claims from one
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`patent but only some asserted claims from another patent, the Court found that “even if the
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`PTAB restrict[ed] its review to the claims of the ’551 patent and the initially asserted claims of
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`the ’664 patent, any disposition by the PTAB is likely to simplify the proceedings before this
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`Court, at the very least with respect to [one patent].” NFC Tech., 2015 WL 1069111, at *7.
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`-4-
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`Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 6 of 8 PageID #: 13400
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`CyWee highlights that Samsung ultimately elected different prior art combinations in its
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`final invalidity contentions to argue that the IPRs have no merit. But Samsung’s election of prior
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`art for trial does not speak to the merits of the prior art at issue in the IPRs. The only relevant
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`evidence at present of the merits of the IPRs are the PTAB’s decisions to institute them. In
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`MacroPoint LLC v. Ruiz Food Products, Inc., No. 6:16-cv-01133-RWS-KNM (E.D. Tex. Apr.
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`17, 2018) (Ex. 15), the prior art defendant asserted in a related IPR similarly did not overlap with
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`the prior art in its invalidity contentions. Id. at 3–4. The Court nonetheless found that because the
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`PTAB had instituted review, a stay would likely result in simplifying the case. Id. at 4.
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`CyWee also inaccurately characterizes the estoppel that will apply in this case. To be
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`clear, upon the PTAB’s final written decision Samsung will be estopped from asserting that a
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`“claim is invalid on any ground that [it] raised or reasonably could have raised during that inter
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`partes review.” 35 U.S.C. § 315(e)(2). Because Samsung will be estopped from asserting
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`grounds it reasonably could have raised during the IPRs, this has the potential to simplify the
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`case even in the unlikely event the validity of all challenged claims is confirmed. See
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`MacroPoint, No. 6:16-cv-01133-RWS-KNM, slip op. at 3.
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`II.
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`CONCLUSION
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`Collectively, the NFC factors clearly favor a stay and are not outweighed by CyWee’s
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`purported prejudice. See NFC Tech., 2015 WL 1069111, at *4. The instituted IPRs are likely to
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`result in dismissal of one asserted patent and nearly half the asserted claims of the other. See id.
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`at *7. That fact and the estoppel associated with the IPRs are likely to significantly simplify the
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`issues for trial. Moreover, a stay will very likely reduce the burdens and costs for the parties and
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`the Court. And regardless of the outcome of the IPRs, those decisions may advance negotiations
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`between the parties. Thus, Defendants respectfully request that the Court stay this case pending
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`final resolution of IPR2019-00534 and IPR2019-00535.
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`-5-
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`Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 7 of 8 PageID #: 13401
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`DATED: January 29, 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
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`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
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`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
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`Attorneys for Defendants
`SAMSUNG ELECTRONICS CO., LTD AND
`SAMSUNG ELECTRONICS AMERICA,
`INC.
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`-6-
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`Case 2:17-cv-00140-WCB-RSP Document 302 Filed 01/31/19 Page 8 of 8 PageID #: 13402
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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 29, 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) and by email.
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`CERTIFICATE OF AUTHORIZATION TO SEAL
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`I hereby certify that under Local Rule CV-5(a)(7), the foregoing document is filed under
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`seal pursuant to the Court’s Protective Order entered in this matter.
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`-7-
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