Case 5:19-cv-00036-RWS Document 107 Filed 10/22/19 Page 1 of 11 PageID #: 4769
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
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`Plaintiff,
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`Case No. 5:19-cv-00036-RWS
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`JURY TRIAL DEMANDED
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`MAXELL, LTD.,
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`v.
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`APPLE INC.,
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`Defendant.
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`MAXELL, LTD.’S OPPOSITION TO APPLE INC.’S
`MOTION TO STAY PENDING DECISION ON ITS
`MOTION TO TRANSFER VENUE PURSUANT TO 28 U.S.C. § 1404(a)
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`Plaintiff Maxell, Ltd. (“Maxell”), by and through its undersigned counsel, hereby submits
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`this response in opposition to Defendant Apple Inc.’s (“Apple”) Motion to Stay Pending Decision
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`on its Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (“Motion to Stay”) (D.I. 97).
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`I.
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`INTRODUCTION
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`Apple’s motion is nothing more than Apple’s formal request that its practice in this case of
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`delay, delay, delay be approved and encouraged. Although explicitly prohibited by this Court’s
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`rules, Apple has essentially already implemented a unilateral stay. It has been stonewalling
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`discovery and has attempted to delay every effort by Maxell to move this case forward to resolution
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`on the merits. Nowhere is this more plainly stated than in Apple’s opposition to Maxell’s Motion
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`for Leave to Supplement Infringement Contentions (D.I. 96)—which even Apple has admitted it
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`does not oppose on its merits.
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`Apple has finally acknowledged its practice by now moving the Court seeking an
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`unnecessary stay. It does so under the guise of conserving resources on proceedings that may have
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`to be redone in the Northern District of California. Given the Court’s indication that it will issue
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`an Order in the short term, and the stage of the case, however, there is no such efficiency to be
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`gained by a stay. The work the parties are currently doing on the case—discovery and claim
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`construction—will have to be done regardless of location, and there is no reason to believe it would
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`have to be redone if the case were transferred. Further, should the case remain in this District,
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`which Maxell believes is appropriate, there is also no reason to pause case activities. Apple does
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`not want to conserve resources. It simply wants to delay the case by any means possible.
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`Contrary to the substance of Apple’s Motion to Stay, Apple is not entitled to a stay merely
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`because it filed a motion to transfer. In fact, this Court’s discovery order requires active
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`participation in discovery, even when motions to transfer are pending. See D.I. 42, Discovery
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`Order at ¶ 10 (“No Excuses…Absent court order to the contrary, a party is not excused from
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`disclosure because there are pending motions to dismiss, to remand or to change venue.”)
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`(emphasis added). Nevertheless, Apple has failed to establish that any of the relevant factors weigh
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`in favor of a stay. Rather, Maxell will suffer significant prejudice if the stay is granted because,
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`among other things, a stay will delay Maxell’s day in court while Apple continues to infringe on
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`Maxell’s patents, causing Maxell and its licensees substantial harm. Apple cannot complain that it
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`is being prejudiced by continuing case preparation before this Court. Whether or not this case is
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`transferred, discovery and claim construction must proceed. In other words, the stay would prevent
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`nothing because everything that needs to be done (e.g., discovery and claim construction) will still
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`need to be done whether the case is transferred or not. All a stay would do is delay getting these
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`thing done. Because Apple has not articulated any need to stay this case, the Court should deny
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`Apple’s Motion.
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`II.
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`APPLICABLE LAW
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`“The district court has the inherent power to control its own docket, including the power
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`to stay proceedings.” Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D.
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`Tex. 2005). In deciding whether to stay a proceeding, the Court “must weigh competing interests
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`and maintain an even balance.” Landis v. North American Co., 299 U.S. 248, 254-255 (1936). In
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`particular, the Court “must first identify a pressing need for the stay, and then balance those
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`interests against interests frustrated by the action.” In re Sacramento Mun. Util. Dist., 395
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`Fed.Appx. 684, 687–88 (Fed. Cir. 2010) (citing Cherokee Nation of Okla. v. United States, 124
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`F.3d 1413, 1416 (Fed. Cir. 1997)). In the Fifth Circuit, “the moving party bears a heavy burden to
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`show why a stay should be granted absent statutory authorization.” Coastal (Bermuda) Ltd. v. E.W.
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`Saybolt & Co., Inc., 761 F.2d 198, 203 n.6 (5th Cir. 1985). In deciding whether to stay litigation,
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`courts typically consider: (1) whether a stay will unduly prejudice or present a clear tactical
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`disadvantage to the nonmoving party, (2) whether a stay will simplify the issues in question and
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`trial of the case, and (3) whether discovery is complete and whether a trial date has been set.
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`Soverain Software, 356 F. Supp. 2d at 662. “Absent court order to the contrary, a party is not
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`excused from disclosure because there are pending motions to dismiss, to remand or to change
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`venue.” D.I. 42, Discovery Order at ¶ 10.
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`III. ARGUMENT
`A.
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`Apple Does Not Cite to Any Case Law that Supports its Motion
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`None of the cases cited by Apple support its request for a stay in this case. In fact, Apple’s
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`Motion to Stay does not cite to a single case that states “all proceedings should be stayed pending
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`disposition of a transfer motion,” as Apple asserts. Motion at 3. For example, in In re Fusion-IO,
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`petitioner requested that the Federal Circuit transfer a case from the Eastern District of Texas to
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`the District of Utah. 489 F. Appx. 465 (Fed. Cir. 2012). The district court had not addressed the
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`merits of petitioner’s motion for transfer; it had only severed petitioner’s claims from the claims
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`against other defendants and denied petitioner’s motion to transfer without prejudice to refile the
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`same motion in the new case. Id. The Federal Circuit declined to transfer the case before the district
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`court had weighed the facts and considerations relevant to petitioner’s transfer motion, and stated
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`that it “fully expect[ed]” petitioner “to promptly request transfer in the lead case along with a
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`motion to stay proceedings pending disposition of the transfer motion, and for the district court to
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`act on those motions before proceeding to any motion on the merits of the action.” Id. at 465-466.
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`Thus, In re Fusion-IO stands only for the proposition that pending motions to transfer should be
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`promptly resolved. But that proposition is not in dispute here, as neither Maxell nor this Court
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`have ever suggested otherwise. It certainly does not hold that all proceedings should be stayed
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`pending disposition of a transfer motion, no matter how Apple spins the case.
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`The liberties Apple takes with the case law continue with its citation to In re Google Inc.,
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`2015 WL 5294800 (Fed. Cir. July 16, 2015). In this case, petitioner filed a motion to transfer
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`venue, and the district court proceeding continued for eight months without a ruling on the motion
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`to transfer. Id. at *1. The Federal Circuit emphasized the importance of addressing motions to
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`transfer in a timely manner and stated that the district court’s refusal to consider the merits of its
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`transfer motion was improper. Id. at *1-2. Therefore, the Federal Circuit ordered the magistrate to
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`rule on the motion to transfer within 30 days and to stay all proceedings pending completion of
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`the transfer matter. Id. at *2. Here, however, the motion to transfer has not been pending for eight
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`months, or anything near that. Apple filed its motion to transfer on August 9, 2019, and briefing
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`was complete on September 6, 2019. (D.I. 57. 65, 69, and 76). The Court promptly held a hearing
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`concerning Apple’s motion to transfer on September 17, 2019, less than two weeks after briefing
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`on the motion was complete. (D.I. 80). There is no evidence that this Court has delayed or refused
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`to consider the merits of Apple’s transfer motion. If there has been any delay, it has been on
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`Apple’s part, as this case was filed on March 15, 2019 but Apple did not move to transfer until
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`nearly 5 months later on August 9, 2019 after previously requesting this Court to rule on its
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`substantive motion to dismiss. Importantly, In re Google also does not hold that all proceedings
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`should be stayed pending disposition of a transfer motion.
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`In In re Nintendo Co., petitioners moved to sever and stay the claims against Nintendo’s
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`retailers and transfer the case against Nintendo from the Eastern District of Texas to the Western
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`District of Washington. 544 F. Appx. 934, 936 (Fed. Cir. 2013). Petitioners then filed a second
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`motion to sever, this time seeking to sever all non-Nintendo product claims. Id. The district court
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`rejected the motion to sever the non-Nintendo claims against the retailers and found the motion to
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`sever the retailers and transfer the case against Nintendo moot. Id. The Federal Circuit noted that
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`the district court made these judgments without considering the merits (i.e., without considering
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`whether the transferee venue was clearly more convenient for trial of the claims against Nintendo).
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`Id. at 941. As a result, the Federal Circuit ordered the district court to analyze whether the litigation
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`had any meaningful connection to the Eastern District of Texas. A proper reading of In re Nintendo
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`Co. (and the cases cited therein) again stands for the proposition that motions to transfer should be
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`addressed promptly—something not in contention here. It does not hold that all proceedings should
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`be stayed pending disposition of a transfer motion. Similarly, In re EMC Corp. stands solely for
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`the proposition that transfer motions should be addressed “at the outset of litigation” (501 F. Appx.
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`973, 975 (Fed. Cir. 2013)), not that cases should be stayed pending disposition of a transfer motion.
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`In Nexus Display Technologies LLC v. Dell, Inc., the Court merely stated that Dell “could
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`have requested a stay” pending a ruling on its transfer motion. 2015 WL 5043069, at *5, n. 4 (E.D.
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`Tex. Aug. 25, 2015). A party’s ability to request a stay and whether a court should actually grant
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`a stay are two entirely different matters, and Nexus Display says nothing about whether such a stay
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`was actually warranted. Accordingly, none of the cases Apple cited support the contention that
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`“all proceedings should be stayed pending disposition of its transfer motion,” as Apple states.
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`Motion to Stay at 3.
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`B. Maxell Will Be Prejudiced by a Stay
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`Apple has no intention of complying with its discovery obligations or of litigating this case
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`on the merits. As a result, Apple does not see a failure to move this case forward as any sort of
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`prejudice. Yet Apple’s suggestion that Maxell will not be prejudiced or disadvantaged by a stay
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`(Motion to Stay at 4) is contradicted by the undisputed facts. This case has been pending for over
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`seven months, and further delay of the discovery schedule would interfere with the “just, speedy,
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`and inexpensive determination” of this action. Fed. R. Civ. P. 1. The prejudice that would result
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`from even a short delay is obvious—the current case schedule would be destroyed, and Apple will
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`be able to further defer its discovery obligations, as it has attempted to do throughout this case
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`(with woefully deficient document and source code productions). Moreover, the Markman process,
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`which has been under way for weeks, would come to a complete stop. The parties are already set
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`to complete claim construction discovery, including expert depositions, by November 6, 2019, just
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`as briefing on Apple’s Motion to Stay would be finished. Moreover, there is no doubt that, were
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`transfer granted, Apple will attempt to spin a stay in this case into an argument before the Northern
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`District of California that an extended case schedule is somehow warranted because of the work
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`left to be done in the case. To the contrary, were Apple finally to comply with its discovery
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`obligations, document production and interrogatory responses would be nearing completion. Even
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`if a transfer were warranted (and it is not), the interests of justice will be best served by dealing
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`with that contingency when and if it occurs, rather than putting inevitable litigation tasks
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`pointlessly on hold.
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`Apple’s argument that Maxell will not be prejudiced because Maxell does not practice the
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`asserted patents or otherwise compete with Apple is similarly unavailing. First, this Court has
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`acknowledged that entities which do not compete are nevertheless prejudiced by a stay. Realtime
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`Data LLC v. Actian Corporation, No. 6:15-cv-463, 2016 WL 3277259, at *2 (E.D. Tex. June 14,
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`2016) (stating that plaintiff, a non-practicing entity, would be prejudiced by a stay because plaintiff
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`“has an interest in the timely enforcement of its patent rights.”). Moreover, Maxell’s licensees, the
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`users of the technology of the Asserted Patents, compete for market share with Apple. These
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`licensees took a license from Maxell so that they could rely on the advantages of the technology
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`of the asserted patents in order to gain a competitive edge in the marketplace. A stay would allow
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`Apple additional time to use the technology of the asserted patents without a license, further
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`threatening and eroding the market share of Maxell’s licensees. This in turn causes direct and
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`substantial harm to Maxell as a licensor, including but not limited to damaged relationships with
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`Maxell’s licensees who paid for the competitive advantage of the asserted patents. By contrast,
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`Apple fails to identify any prejudice that would be caused by continuing trial preparations here.
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`See Evolutionary Intelligence LLC v. Facebook, Inc., No. 6:12-cv-784, 2013 WL 12144118, at *2
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`(E.D. Tex. Feb. 27, 2013) (denying motion to stay pending motion to transfer in part because
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`“Defendants have not identified any hardship or inequity that would result if these actions are not
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`stayed”). Maxell is prepared to proceed under the existing case schedule, and further delay of the
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`proceedings will prejudice Maxell and not further the ultimate resolution of this matter.1
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`C.
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`A Stay Will Not Simplify the Issues
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`Apple’s motion to transfer is not a motion to dismiss. Even if Apple’s motion to transfer is
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`granted, this litigation will continue, and Apple’s discovery burden will remain the same. Fed. R.
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`Civ. P. 26(b)(1). Document productions, fact depositions, and the claim construction process must
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`occur in this action, whether the case is tried here or in California. The substance of each of these
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`activities will not change if the case is transferred to California, nor will the substantive issues of
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`1 Indeed, Apple has been trying to delay resolution of this dispute since 2013. Apple employed its delay tactics first
`through disingenuous negotiations, then through insincere offers to discuss business prospects, and now with
`discovery misconduct. This is just another step in Apple’s years-long effort to avoid paying for the intellectual
`property it has been knowingly using for over 6 years.
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`infringement, validity, and damages. Even if this case were to be transferred, continuing to work
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`now will permit the case to be transferred with more of the discovery out of the way. Indeed,
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`should it be transferred, discovery will continue until the case schedule is later modified by the
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`transferee court. See Mondis Tech. Ltd. v. LG Elecs., Inc., No. 2:14-cv-702-JRG, 2015 WL
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`11117316, at *1 (E.D. Tex. June 9, 2015) (explaining that, before and after transfer, “all pending
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`deadlines—except those for hearings and trial—will remain in effect until [the transferee] court
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`enters an order altering such deadlines”).
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`Moreover, the Northern District of California’s local patent rules are “nearly identical” to
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`this District’s local patent rules, meaning that the discovery conducted in this District will be
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`equally applicable if the case is ultimately transferred. See Edward D. Ioli Trust v. Avigilon Corp.,
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`No. 2:10-cv-605, 2012 WL 5830711, at *2 (E.D. Tex. Nov. 16, 2012) (stating that the scope of the
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`Northern District of California’s Patent Local Rule 3.4 governing document discovery “is nearly
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`identical to this District’s P.R. 3-4(a) and was the source from which this District’s P.R. 3-4(a)
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`was originally crafted.”). The same is true of claim construction. There is absolutely no reason
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`why transfer of the case should alter the parties’ claim construction positions. A stay would do
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`nothing other than create delay by pushing discovery and claim construction down the road,
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`procrastinating on necessary work with no resource savings or efficiency gains for anyone.
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`D.
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`The Stage of the Case Disfavors a Stay
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`In accordance with the Local Rules and the Docket Control Order, Maxell has expended
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`significant time, resources, and expense engaging in discovery with Apple, including substantially
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`completing its document production, reviewing Apple’s document production, reviewing source
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`code, exchanging initial and supplemental infringement contentions, invalidity contentions,
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`interrogatory responses, and privilege logs, and noticing and beginning the process of scheduling
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`30(b)(6) depositions. Both parties have also served significant third-party discovery. And the
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`parties have already exchanged preliminary proposed claim construction and extrinsic evidence
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`supporting the same pursuant to P.R. 4-2, exchanged expert declarations in support of their claim
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`construction positions pursuant to P.R. 4-3(b), prepared and filed the Joint Claim Construction and
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`Prehearing Statement pursuant to P.R. 4-3(a), and scheduled and begun conducting expert
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`depositions on claim construction issues. The Court has held a case management conference, set a
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`date for a Markman hearing (January 8, 2020), and set a date for trial (October 26, 2020). The
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`well-developed posture of the case weighs against a stay. Cummins-Allison Corp. v. SBM Co.,
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`Ltd., No. 9:07-cv-196, 2008 WL 11348281, at *2 (E.D. Tex. May 21, 2008) (denying stay where
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`parties exchanged infringement contentions, invalidity contentions, and preliminary proposed
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`claim construction, and the court set aside dates for a Markman hearing and trial); Alacritech, Inc.
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`v. CenturyLink, Inc., No. 2:16-cv-00693, 2017 WL 4231459, at *2 (E.D. Tex. Sept. 22, 2017)
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`(denying stay because a stay would “clearly affect the parties’ ability to prepare for trial” which
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`was nine months away).
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`IV. CONCLUSION
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`It is abundantly clear that the only effect a stay would have is to delay resolution of this
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`case, prejudicing Maxell and confirming for Apple that delay, delay, delay is a viable litigation
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`strategy. The Court should make clear to Apple that this is not so. Maxell is entitled to timely
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`enforcement of its patent rights, and Apple has not shown that it will suffer any prejudice if the
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`stay is denied. None of the cases cited by Apple support its request for a stay in this case.
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`Accordingly, Maxell respectfully requests that the Court deny Apple’s Motion to Stay.
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`Dated: October 22, 2019
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`By:
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`/s/ Jamie B. Beaber
`Geoff Culbertson
`Kelly Tidwell
`Patton, Tidwell & Culbertson, LLP
`2800 Texas Boulevard (75503)
`Post Office Box 5398
`Texarkana, TX 75505-5398
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`9
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`Case 5:19-cv-00036-RWS Document 107 Filed 10/22/19 Page 10 of 11 PageID #: 4778
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`Telephone: (903) 792-7080
`Facsimile: (903) 792-8233
`gpc@texarkanalaw.com
`kbt@texarkanalaw.com
`
`Jamie B. Beaber
`Alan M. Grimaldi
`Kfir B. Levy
`James A. Fussell, III
`Baldine B. Paul
`Tiffany A. Miller
`Saqib J. Siddiqui
`Bryan C. Nese
`William J. Barrow
`Alison T. Gelsleichter
`Clark S. Bakewell
`MAYER BROWN LLP
`1999 K Street, NW
`Washington, DC 20006
`Telephone: (202) 263-3000
`Facsimile: (202) 263-3300
`jbeaber@mayerbrown.com
`agrimaldi@mayerbrown.com
`klevy@mayerbrown.com
`jfussell@mayerbrown.com
`bpaul@mayerbrown.com
`tmiller@mayerbrown.com
`ssiddiqui@mayerbrown.com
`bnese@mayerbrown.com
`wbarrow@mayerbrown.com
`agelsleichter@mayerbrown.com
`cbakewell@mayerbrown.com
`
`Robert G. Pluta
`Amanda Streff Bonner
`MAYER BROWN LLP
`71 S. Wacker Drive
`Chicago, IL 60606
`(312) 782-0600
`rpluta@mayerbrown.com
`asbonner@mayerbrown.com
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`Counsel for Plaintiff Maxell, Ltd.
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that all counsel of record who are deemed to have consented to
`electronic service are being served this 22nd day of October, 2019, with a copy of this document
`via the Court’s CM/ECF system.
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`/s/ Jamie B. Beaber
`Jamie B. Beaber
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