Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 1 of 8 PageID #: 9969
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
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`MAXELL, LTD.,
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`Plaintiff
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`Defendant.
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`v.
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`APPLE INC.,
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`Civil Action NO. 5:19-cv-00036-RWS
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`JURY TRIAL DEMANDED
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`APPLE INC.’S REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING
`DETERMINATION OF INTER PARTES REVIEW OF THE PATENTS-IN-SUIT
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`Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 2 of 8 PageID #: 9970
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`I.
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`INTRODUCTION
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`Maxell’s Opposition presents no factual or legal contradiction to the conclusion that a
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`stay is plainly warranted. Maxell does not practice the Asserted Patents, and its opposition
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`presents no evidence from which this Court could conclude that a stay would cause it any
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`prejudice whatsoever. The case is still early—fact depositions are ongoing and trial is months
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`away, and Maxell castigating Apple for COVID-19 delays, while irrelevant, is rich given that it
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`was Maxell that asked to postpone depositions. And finally, even Maxell’s IPR statistics show
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`that at least some case simplification is nearly guaranteed. Thus, a stay is appropriate.
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`II. MAXELL WILL SUFFER NO UNDUE PREJUDICE OR TACTICAL
`DISADVANTAGE
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`Maxell does not compete with Apple, nor does it allege it practices any Asserted Patent.
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`D.I. 267, Opp. at 2. Because the parties would try whatever remains of Maxell’s claims after
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`IPR concludes, a stay would not “avoid a fair trial” as Maxell repeatedly asserts. Id. at 1, 3, 4, 6,
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`9, 13. The only way the parties would “avoid” a trial is if the PTAB invalidated all asserted
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`claims—confirming a trial never should have occurred in the first place. Maxell baldly asserts
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`that monetary damages are insufficient (id.), but it has not sought a preliminary injunction and
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`has no basis to seek a permanent injunction; this “belie[s] its claims that it will be unduly
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`prejudiced by a stay.” See VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1318-20
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`(Fed. Cir. 2014). Maxell complains that a stay would prevent “timely enforcement” of its patent
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`rights, but that excuse is “too generic” to defeat Apple’s motion and avoid a stay. Realtime
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`Data, LLC v. Rackspace US, Inc., 2017 WL 772654, at *4 (E.D. Tex. Feb. 28, 2017).
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`Maxell’s generic claim of “undue prejudice” is equally baseless and is unsubstantiated
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`attorney argument that deserves no attention. See, e.g., Ericsson Inc. v. TCL Commc’n Tech.
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`Holdings, Ltd., No. 2:15-CV-00011-RSP, 2016 WL 1162162, at *2 (E.D. Tex. Mar. 23, 2016)
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`1
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`Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 3 of 8 PageID #: 9971
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`(“[a]bsent a showing of any specific prejudice” there is no “undue prejudice” preventing a stay);
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`Finjan, Inc. v. Symantec Corp., 139 F. Supp. 3d 1032, 1038 (N.D. Cal. 2015) (offering “nothing
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`but attorney argument” will not establish “undue prejudice” defeating a stay); Prime Focus
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`Creative Servs. Canada Inc. v. Legend3D, Inc., No. CV-15-2340-MWF, 2015 WL 12746207, at
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`*6 (C.D. Cal. Sept. 23, 2015) (staying case where plaintiff did not “substantiate its undue
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`prejudice assertion with any evidence of the potential competitive injury”). Similarly, Maxell’s
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`unsubstantiated claim that its licensees will suffer prejudice also cannot defeat a stay.
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`Transocean Offshore Deepwater Drilling, Inc. v. Seadrill Am., Inc., No. CIV.A. H-15-144, 2015
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`WL 6394436, at *2-3 (S.D. Tex. Oct. 22, 2015) (rejecting argument that a stay would prejudice a
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`patentee’s licensees because patentee presented no evidence of such prejudice).
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`Maxell argues that Apple “unreasonabl[y] delay[ed]” its IPR filings, but this
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`misrepresents the facts—Apple diligently prepared and filed all ten of its IPRs against the
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`Asserted Patents. Apple only learned of Maxell’s 90 originally-asserted claims in June 2019 and
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`timely prepared its invalidity contentions for those claims by August 2019. As ordered by the
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`Court, Maxell narrowed its claims to 40 in November 2019, and Apple then evaluated and
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`identified prior art appropriate for IPR for each of those claims, engaged and coordinated with
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`technical experts, and drafted and filed IPRs—all within four and a half months. This is simply
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`not a record on which Maxell can credibly claim that it has suffered undue prejudice or tactical
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`disadvantage. Opp. at 3-4, 8-9; see also, e.g., Software Rights Archive, LLC v. Facebook, Inc.,
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`No. 12–3970, 2013 WL 5225522, at *6 (N.D. Cal. Sept. 17, 2013) (staying case where defendant
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`filed IPRs four months after plaintiff identified asserted claims). Maxell has not otherwise
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`identified, and cannot identify, any undue prejudice or tactical disadvantage from a stay. Thus,
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`this factor favors a stay.
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`2
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`Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 4 of 8 PageID #: 9972
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`III. THE PROCEEDINGS HAVE NOT REACHED AN ADVANCED STAGE AND
`DISCOVERY IS NOT YET COMPLETE
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`Contrary to Maxell’s argument, the relevant time to measure the “stage of litigation”
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`under this factor is the time Apple moved to stay, not some later point. VirtualAgility, 759 F.3d
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`at 1316. At the time Apple filed its motion, fact depositions were ongoing, expert discovery had
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`not begun, and trial was months away. Opp. at 5. By the time this motion is fully briefed, fact
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`depositions will still be ongoing, expert discovery still will not have started, and trial still will be
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`months away.
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`In its haste to repeat the tiresome trope about Apple’s “discovery misconduct” and claim
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`that it necessitated schedule changes, Maxell contradicts what it has already told the Court. It
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`was Maxell that actually pressed to amend the schedule: it complained that “video depositions”
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`were “all but impossible,” and explained that travel restrictions on its counsel and experts
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`necessitated the change. D.I. 231 at 4-5. Apple accommodated Maxell’s request even though it
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`believed these depositions could have proceeded remotely. Id. at 3-4. Maxell’s accusation that
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`Apple “manipulate[d] the schedule” is misplaced, at best, and misleading, at worst. Opp. at 6.
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`Relatedly, the resources Maxell has allegedly expended in the litigation are of no moment
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`to this factor or to the Court’s consideration of a stay. See Versata Software, Inc. v. Callidus
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`Software, Inc., 771 F.3d 1368 (Fed. Cir. 2014) (“the district court clearly erred in evaluating the
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`burden-of-litigation factor exclusively through [a] backward-looking lens” as “[t]he correct test
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`is one that focuses prospectively on the impact of the stay on the litigation, not on the past
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`actions of the parties”). Maxell cannot be heard to complain about litigation expense when it
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`was the party that brought this case and chose to assert an unreasonably large number of patents
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`and claims against thousands of different combinations of products and software versions.
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`Notably, Maxell concedes that a stay now would avoid the parties’ “exchang[ing] pretrial
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`Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 5 of 8 PageID #: 9973
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`disclosures and attend[ing] the hearing on dispositive motions” and making “significant
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`expenditures on pre-trial preparation.” Opp. at 6-7, 12-13. Such voluminous work remaining
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`actually favors a stay. Starting on the day when Apple filed this motion, which is the correct
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`date to analyze the stay factors, VirtualAgility, 759 F.3d at 1316, Maxell cannot dispute that “the
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`bulk of the expenses that the parties would incur … are still in the future.” NFC Techs. LLC v.
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`HTC Am., Inc., No. 2:13-CV-1058, 2015 WL 1069111, at *3 (E.D. Tex. Mar. 11, 2015).
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`IV.
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`THE STAY WILL LIKELY SIMPLIFY THIS CASE
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`Maxell’s own statistics show that it is highly probable that the PTAB will institute at least
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`some of the IPRs and will hold at least some claims unpatentable, and thus that at least some
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`simplification will occur. See Opp. at 101; Mot. at 6-7. While true that the PTAB may deny
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`some of Apple’s IPR petitions, Maxell ignores that these same statistics show it likely that the
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`PTAB will institute most of Apple’s petitions and such proceedings will simplify the issues in
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`this case, even if all claims survive review. See Opp. at 9-11; Mot. at 5-9. And Maxell does not
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`dispute that even an IPR denial may lead to case simplification based on disclaimers made before
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`the PTAB. See Mot. at 7 (citing Aylus Networks, Inc. v. Apple Inc., 856 F.3d 1353, 1362 (Fed.
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`Cir. 2017)). Thus, it is highly probable that a stay will materially simplify this complex case.
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`Maxell’s specious arguments about Apple’s future products is irrelevant to the case
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`simplification factor, which considers the likelihood that a stay would simplify the existing
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`disputes before the Court. See NFC, 2015 WL 1069111, at *2. Applying Maxell’s logic, no
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`court should ever stay a case because there is always some possibility that the case becomes
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`more complex during the stay from a hypothetical future dispute. In view of the overwhelming
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`1 Maxell argues that 60% of prior IPRs filed against Maxell’s patents were denied institution.
`Opp. at 10. Even assuming this to be correct, the likelihood that all 10 Apple IPR petitions being
`denied institution is less than 1%.
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`Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 6 of 8 PageID #: 9974
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`statistics demonstrating a high likelihood of case simplification for the disputes currently before
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`the Court, this factor favors a stay.
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`V.
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`SHOULD THE COURT DENY A PRE-INSTITUTION STAY, APPLE’S MOTION
`SHOULD BE DENIED WITHOUT PREJUDICE
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`Maxell’s arguments for a denial with prejudice are unsupported, and are inconsistent with
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`the practice of this District. Courts in this district have stayed cases pending IPRs well into the
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`pre-trial process. See, e.g., Image Processing Techns., LLC v. Samsung Electronics Co., Ltd.,
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`No. 2:16-cv-505-JRG, D.I. 265 (E.D. Tex. Oct. 3, 2017) (scheduling trial for November 13,
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`2017); D.I. 306 (E.D. Tex. Oct. 25, 2017) (staying case pending IPRs a week after completion of
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`Pretrial Conference and three weeks before trial). Indeed, the significant expenditures and
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`resources the parties and the Court will expend over the next few months demonstrate the
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`efficiencies to be gained by granting Apple’s motion for a stay. Opp. at 12-13. These same
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`considerations support Apple’s request for expedited briefing when institution decisions issue, in
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`the event the Court denies a stay beforehand. A stay at the time of institution, and expedited
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`briefing on the issue, would present another opportunity for both the Court and the parties to
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`conserve significant resources in the pretrial period. See Armor All/STP Prod. Co. v. Aerospace
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`Commc’ns Holdings Co., 2016 WL 6397269, at *4 (E.D. Tex. Oct. 28, 2016).
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`VI. CONCLUSION
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`Apple respectfully requests the Court grant Apple’s Motion to Stay.
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`Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 7 of 8 PageID #: 9975
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`DATED: April 14, 2020
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`Respectfully submitted,
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`/s/ Luann L. Simmons
`Luann L. Simmons (Pro Hac Vice)
`lsimmons@omm.com
`O’MELVENY & MYERS LLP
`Two Embarcadero Center
`28th Floor
`San Francisco, CA 94111
`Telephone: 415-984-8700
`Facsimile: 415-984-8701
`
`Xin-Yi Zhou (Pro Hac Vice)
`vzhou@omm.com
`O’MELVENY & MYERS LLP
`400 S. Hope Street
`Los Angeles, CA 90071
`Telephone: 213-430-6000
`Facsimile: 213-430-6407
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`Laura Bayne Gore (Pro Hac Vice)
`lbayne@omm.com
`O’MELVENY & MYERS LLP
`Times Square Tower, 7 Times Square
`New York, NY 10036
`Telephone: 212-326-2000
`Facsimile: 212-326-2061
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`Melissa R. Smith (TX #24001351)
`melissa@gilliamsmithlaw.com
`GILLIAM & SMITH, LLP
`303 South Washington Avenue
`Marshall, Texas 75670
`Telephone: (903) 934-8450
`Facsimile: (903) 934-9257
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`Attorneys for Defendant Apple Inc.
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`Case 5:19-cv-00036-RWS Document 278 Filed 04/14/20 Page 8 of 8 PageID #: 9976
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`CERTIFICATE OF SERVICE
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`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 April 14, 2020.
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`/s/ Melissa R. Smith
`Melissa R. Smith
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