Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 1 of 9 PageID #: 10088
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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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`Defendant.
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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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`MAXELL, LTD.’S SUR-REPLY IN OPPOSITION TO APPLE INC.’S 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 289 Filed 04/22/20 Page 2 of 9 PageID #: 10089
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`This District has clearly and consistently denied motions for stay when petitions for inter
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`partes review have not yet been instituted. Apple knows this; yet, it doubles-down on its
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`incredulous argument that this (post-fact discovery) case is “still early” and that a likely two-year
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`delay would not cause Maxell “any prejudice whatsoever.” Neither argument is supported by the
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`evidence, and neither warrants a stay. What is undeniable, however, is that the fact that, right now,
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`any potential simplification of the case is purely speculative. And, once the PTAB has acted on all
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`pending petitions, the parties will be in middle of trial preparations. In view of this, it is clear that
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`Apple’s request for a stay is not motivated by increasing efficiencies, but is rather just another
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`attempt to unduly delay trial.
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`I.
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`The Speculative Nature of Any Simplification Favors Denial of Apple’s Motion
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`Although Apple relies on an alleged lack of prejudice as the primary justification for a stay,
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`courts in this District have held that “the most important factor… is the prospect that the inter
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`partes review proceeding will result in simplification of the issues before the Court.” NFC Tech.
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`LLC v. HTC Am., Inc., No. 2:13-cv-1058, 2015 WL 1069111, at *4 (E.D. Tex. Mar. 11, 2015).
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`And where, as here, the PTAB has not yet instituted any IPRs, the same courts have held that
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`simplification is too speculative to justify a stay. See, e.g., Fall Line Patents, LLC v. Am. Airlines
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`Grp., No. 6:17-cv-202, 2018 WL 4169251, at *1 (E.D. Tex. May 21, 2018).
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`Apple turns to statistics to argue that some issues will be simplified. But this District has
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`squarely addressed this type of argument and held that “overall statistics for the number of petitions
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`that are reviewed and the number of claims that are invalidated are not especially enlightening as
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`to the likely disposition of any particular patents or claims, since the likelihood of invalidation
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`depends entirely on the particulars of the patents and claims in dispute.” Trover Grp., v. Dedicated
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`Micros USA, No. 2:13-cv-1047-WCB, 2015 WL 1069179, at *4 (E.D. Tex. Mar. 11, 2015). The
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`Court further held that “it would be speculative for the Court to extrapolate from the statistics and
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`Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 3 of 9 PageID #: 10090
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`conclude that it is likely that the PTAB will institute inter partes review in this case and invalidate
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`some or all of the claims of the [asserted] patent.” Id. It is no more appropriate for Apple to attempt
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`to extrapolate from Maxell’s statistics than its own, as neither address “the particulars of the patents
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`and claims in dispute.”1 The closest the parties could get to doing so would be to evaluate the
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`statistics for the IPRs previously filed on the asserted patents. Of the ten asserted patents, five
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`previously had IPRs filed against them that received decisions on institution. And every single
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`decision was a denial of institution. Thus, if anything, the most on-point statistics establish that
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`simplification is unlikely.2
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`Apple asserts that Maxell’s arguments about Apple’s future products is irrelevant to the
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`simplification factor as that factor relates to “existing disputes before the Court.” Reply at 4
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`(emphasis in original). But the infringing nature of accused features is an existing dispute, whether
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`included in already-released or to-be-released products. NFC does not hold otherwise. In NFC, the
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`Court merely held that the fact an instituted IPR did not address certain asserted claims did not
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`support denial of a stay where 1) the claims were not asserted until after the IPR was filed, 2) the
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`defendant had promptly petitioned for the claims to be added, and 3) the claims bore a relationship
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`to claims for which review was already granted. NFC, 2015 WL 1069111, at *7.
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`Notably, Apple did not address the fact that its IPR petitions do not address the 35 U.S.C.
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`§ 112 issues or the invalidity arguments under § 101 that Apple has raised in this case. Courts have
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`recognized the negligible impact on simplification that results from IPRs where, as here, a
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`defendant’s invalidity theories in the litigation exceed the scope of the pending IPR. See Opp. at
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`11.
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`1 Maxell provided the statistics to underscore the fact that they are not a reliable indicator.
`2 Apple’s argument that “even an IPR denial may lead to case simplification” highlights that Apple’s motivation is
`delay, not efficiency. Given that decisions on institution will be rendered prior to trial, the parties would be free to
`use disclaimers, assuming any are made, at trial for this case. No stay would be necessary to enable such use.
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`Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 4 of 9 PageID #: 10091
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`II.
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`The Stage of The Case Favors Denial of Apple’s Motion
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`By the time Apple filed its motion, this case was advanced. The claim construction process
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`was complete, the parties had briefed (or at least begun briefing) nearly twenty issues, and fact
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`discovery was one week away from officially closing. The Court, too, has invested significant time
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`and resources on this case, contrary to what Apple is representing to the Patent Office to support
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`its IPRs.3 And although the parties sought a few additional weeks to complete depositions in view
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`of COVID-19, such depositions will be complete by April 30. D.I. 283. Courts in this District have
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`held that this factor weighs against a stay in cases that were even less far along than the one here.
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`See Opp. at 9. In its Motion, Apple attempted to detract from the advanced stage of litigation by
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`arguing that there were “a number of pending discovery requests and disputes.” Mot. at 4. Maxell
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`responded by pointing out that Apple created such support for itself through its own discovery
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`misconduct in this case. Maxell’s brief and argument were unrelated to the extension sought to
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`accommodate depositions in view of COVID-19.4
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`Apple argues that, “[b]ecause ‘the bulk of the expenses that the parties would incur… are
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`still in the future,’ the stage-of-the-litigation factor favors a stay.” Mot. at 4; see also Reply at 4.
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`Although Apple asserts Maxell “cannot dispute” this argument, Maxell does. And that is why
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`Maxell provided a discussion of the resources it has expended in the litigation (prior to Apple’s
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`filing of its Motion) in its Opposition. Apple cannot make a blanket assertion and then argue that
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`3 Apple argues, “The Court has little substantive investment: Apart from the Markman proceedings, the district court
`has not invested other substantive efforts and the litigation is not ‘advanced.’” See Ex. D, Apple v. Maxell,
`IPR2020-00199, Paper 8 at 8 (PTAB April 21, 2020).
`4 While Apple’s discovery misconduct was not the impetus for the extension, such misconduct certainly made the
`situation worse than it had to be. If Apple had timely provided discovery and not waited until the final weeks to
`present its witnesses, for example, the COVID-19 crisis would have had far less impact on this case. Moreover,
`Apple’s representation that it believed the depositions could have proceeded remotely within the original fact
`discovery period paints a picture far different than what has transpired. After the initial extension was granted,
`Apple immediately flipped its position and flat out refused video depositions in this case (even while simultaneously
`providing such depositions in Optis Wireless Tech. LLC v. Apple Inc., No. 2:19-cv-66-JRG (E.D. Tex.)). And, it was
`Apple’s inability to fit all the depositions within the initial three week extension that necessitated the parties’ second
`request for an additional week of extension, which was just granted. D.I. 283.
`3
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`Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 5 of 9 PageID #: 10092
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`Maxell’s response in opposition is “of no moment.” The Federal Circuit has not held that such
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`consideration cannot be taken into account with respect to this factor. Rather, the Court in Versata
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`held that, when evaluating the factor of “Reduced Burden of Litigation” in connection with stays
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`pending CBM reviews, Courts are to focus prospectively on the impact of the stay on the litigation
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`rather than the burdens caused by previously filed motions. Versata Software, Inc. v. Callidus
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`Software, Inc. 771 F.3d 1368, 1375 (Fed. Cir. 2014). With respect to the stage of litigation, the
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`Federal Circuit “recognized… that it is entirely appropriate … to wait for the institution decision
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`before ruling on the motion” and “courts are not obligated to ignore advances in the litigation that
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`occur as of the date that the PTAB granted CBM review.” Id. at 1373.
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`III. The Prejudice to Maxell From a Length Stay Favors Denial of Apple’s Motion
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`Courts in this District have repeatedly rejected the argument made by Apple that a plaintiff
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`who does not sell competing products is precluded from experiencing prejudice. See, e.g., Danco,
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`Inc. v. Lavelle Indus., Inc., No. 5:16-cv-48-CMC, 2017 WL 1732024, at *2 (E.D. Tex. Jan. 25,
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`2017); NFC, 2015 WL 1069111, at *2. Again, even the case cited by Apple in its Reply states
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`“[t]he fact that [Plaintiff] is a non-practicing entity and is merely pursuing monetary damages
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`would not preclude that [Plaintiff] from experiencing prejudice if the Court granted Defendants’
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`motion to stay” because a plaintiff “has an interest in the timely enforcement of its patent rights.”
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`Realtime Data, LLC v. Rackspace US, Inc., 2017 WL 772654, at *4 (E.D. Tex. Feb. 28, 2017).
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`While Courts have held that such prejudice is “generally too generic, standing alone, to defeat a
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`stay motion,” they have not held that this type of prejudice actually favors stay. Id. And,
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`importantly, Maxell is not relying on its prejudice alone to defeat Apple’s motion; Maxell has also
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`shown that a stay is inappropriate based on the speculative nature of simplification and the
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`advanced stage of this case.
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`Maxell also does not “baldly assert[] that monetary damages are insufficient” in this case.
`4
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`Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 6 of 9 PageID #: 10093
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`Reply at 1. Maxell’s assertion is supported by Maxell’s pleadings and arguments. See D.I. 1
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`(Complaint) at ¶ 167 (requesting remedy of injunction); Opposition at 2 (discussing harm to
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`Maxell licensees who are impacted by unlicensed competitor); Ex. E (Excerpt of Interrogatory
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`Response providing basis for claim of injunction).
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`Although Apple asserts Maxell misrepresents the facts regarding Apple’s delay in filing its
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`IPRs, Apple does not actually point to any misrepresentation, nor could it. The IPRs were filed
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`between 10-12 months after Maxell filed its complaint and Apple did wait until the second to last
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`possible day to file its last IPR petition. See Opp. at 3. The dispute is whether waiting as long as
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`Apple did compounds the prejudice on Maxell. Seeing as Apple took the entirety of its statutory
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`permissible time to file its IPRs in order to seek the longest possible delay of this case (including
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`delay while the parties merely await decisions on institution), the answer is that it absolutely does.5
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`IV. Apple Should Not Be Permitted to Re-Litigate This Issue
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`Given that the PTAB is not likely to issue institution decisions on all pending petitions
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`until September 25, 2020, Apple’s motion should be denied with prejudice. While Apple has
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`pointed to one decision granting a stay shortly before trial, the IPRs in that case had been granted
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`on three of only four asserted claims. Image Processing Techns., LLC v. Samsung Electronics Co.,
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`Ltd., No. 2:16-cv-505-JRG, D.I. 306 at 2 (E.D. Tex. Oct. 25, 2017). And, notably, such decision
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`was rendered prior to SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018). As set forth in Maxell’s
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`Opposition, post-SAS institution decisions provide a weaker indicator of simplification than that
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`provided by pre-SAS decisions. Opp. at 7. Apple was in control of when it filed its IPRs and chose
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`to wait until the last minute. It should not be given leave to raise the issue again down the line.
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`5 As Maxell set forth in its Opposition, Apple’s claim that it was diligent in view of the date Maxell narrowed its
`claims is an after-the-fact attempt to justify its delay, as demonstrated by the fact that Apple’s IPRs were not limited
`to the narrowed claims, but rather were filed on 86 of the 90 originally asserted claims. Opp. at 9. Apple noticeably
`does not address this point in its Reply.
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`5
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`Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 7 of 9 PageID #: 10094
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`Dated: April 22, 2020
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`By:
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`6
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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
`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
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`Robert G. Pluta
`Amanda Streff Bonner
`Mayer Brown LLP
`71 S. Wacker Drive
`Chicago, IL 60606
`(312) 782-0600
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`Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 8 of 9 PageID #: 10095
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`rpluta@mayerbrown.com
`asbonner@mayerbrown.com
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`Counsel for Plaintiff Maxell, Ltd.
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`Case 5:19-cv-00036-RWS Document 289 Filed 04/22/20 Page 9 of 9 PageID #: 10096
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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 April 2020, with a copy of this document via
`the Court’s CM/ECF system per Local Rule CV-5(a)(3).
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`/s/ Jamie B. Beaber
`Jamie B. Beaber
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`8
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