Case 5:19-cv-00036-RWS Document 511 Filed 08/25/20 Page 1 of 8 PageID #: 27560
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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 RENEWED MOTION TO STAY
`PENDING DETERMINATION OF INTER PARTES REVIEW
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`Case 5:19-cv-00036-RWS Document 511 Filed 08/25/20 Page 2 of 8 PageID #: 27561
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`Maxell does not (and cannot) credibly dispute that the PTAB proceedings on 40% of the
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`asserted claims and 40% of the asserted patents will simplify this case. Maxell, by contrast, has
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`refused to narrow this case in any meaningful manner, continuing to assert 20 claims (30 claims
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`including dependencies) across 10 Patents-in-Suit. The dispositive motion and trial phases of
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`this case, therefore, remain incredibly complex and burdensome on the Court and the parties,
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`especially in the middle of a pandemic: the parties collectively served 36 expert reports,
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`identified 75 “will call” and “may call” trial witnesses, including 20 experts, and filed 18
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`dispositive and Daubert motions. Any outcome from the PTAB proceedings is guaranteed to
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`simplify issues for trial, and the PTAB has already scheduled hearings in March and April 2021,
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`just months after the current trial date in this case. Thus, applying the stay factors leads to the
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`clear conclusion that this case should be stayed because issue simplification will result, waste of
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`judicial resources will be avoided, and Maxell will not suffer undue prejudice.
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`I.
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`A STAY IS GUARANTEED TO SIMPLIFY THIS CASE
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`The PTAB’s review of at least four Patents-in-Suit is guaranteed to simplify this case. If
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`the PTAB and Federal Circuit agree with Apple and invalidate the claims already under review,
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`40% of the asserted claims would be eliminated from the case. And if they agree with Maxell
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`and affirm the validity of these claims, Apple would be statutorily estopped from presenting
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`nearly 40% of its elected prior art. Either way, a stay will simplify the issues remaining for trial
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`under any outcome of the PTAB proceedings. Maxell’s argument to the contrary, that the IPRs
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`will only “potentially” simplify the case is plainly incorrect. Opp. at 11-15.
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`The PTAB need not review all asserted claims or patents for IPRs to simplify a district
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`court case. Indeed, in Image Processing Techs., LLC v. Samsung Elecs. Co., Ltd., the Court
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`found that “there [was] a material possibility that the outcome of all IPR proceedings [would]
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`streamline the scope and resolution of this case,” even though the PTAB was not reviewing all
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`Case 5:19-cv-00036-RWS Document 511 Filed 08/25/20 Page 3 of 8 PageID #: 27562
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`asserted claims (or patents). No. 2:16-cv-505-JRG, Dkt. No. 306 at 2-3 (E.D. Tex. Oct. 25,
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`2017). And at a stage more advanced than this case—after completion of the Final Pretrial
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`Conference and three weeks before trial—the Court found that the “benefits of a stay outweigh
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`the costs of delaying trial” because a “stay has the potential to decrease the burdens on the Court
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`and the parties.” Id. The same analysis applies here—a stay is guaranteed to eliminate certain
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`infringement or invalidity issues in this case, thus materially decreasing the burdens on the Court
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`and the jury in this complex case. Accordingly, the “most important factor” in the Court’s stay
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`analysis—case simplification—weighs heavily in favor of a stay. See NFC Tech. LLC v. HTC
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`Am., Inc., No. 2:13-cv-1058-WCB, 2015 WL 1069111, at *4 (E.D. Tex. Mar. 11, 2015).
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`Maxell’s specious argument about a stay introducing new issues into the case via Apple’s
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`future products (see Opp. at 14) fails for two reasons. First, the case simplification factor
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`considers the existing disputes before the Court and the likelihood that a stay would simplify
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`those disputes, not hypothetical disputes over future products not even in existence. See NFC,
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`2015 WL 1069111, at *2. Second, courts in this District typically proceed to trial without re-
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`opening discovery (or the addition of new accused products) upon lifting a stay pending IPRs.
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`See, e.g., Image Processing Techs., LLC v. Samsung Elecs. Co., Ltd., No. 2:20-cv-00050-JRG-
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`RSP, Dkt. No. 3. Thus, a stay will not add new issues to the case. And in view of the certainty
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`that the IPRs will simplify the disputes currently before the Court, this factor strongly favors a
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`stay.
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`II.
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`THE STAGE OF THE LITIGATION FAVORS A STAY BECAUSE IT AVOIDS
`THE WASTE OF RESOURCES AND REDUCES THE BURDEN OF TRIAL
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`The stage-of-litigation factor—which is analyzed as of the date when Apple first moved
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`to stay—also favors a stay. See VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1316-
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`17 (Fed. Cir. 2014). When Apple first moved, the parties were conducting fact depositions,
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`Case 5:19-cv-00036-RWS Document 511 Filed 08/25/20 Page 4 of 8 PageID #: 27563
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`expert discovery hadn’t started, and trial was months away. Opp. at 7-10. Maxell cannot dispute
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`that “the bulk of the expenses that the parties would incur … [were] still in the future,”
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`particularly given that the parties have since filed 18 dispositive and Daubert motions and
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`exchanged 36 expert reports. NFC Techs., 2015 WL 1069111, at *3. Even if the Court evaluates
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`this factor based on the timing of Apple’s renewed motion, as Maxell incorrectly suggests, it still
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`favors a stay. The Court and the parties still have significant, resource-intensive tasks to come:
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`preparing for and participating in an all-day hearing on the 18 pending motions, on which the
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`Court will then have to issue written opinions; filing and arguing motions in limine and other
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`pre-trial submissions, all of which the Court will have to resolve; preparing for and participating
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`in the pretrial conference; and—the “most burdensome task”—trial. Smartflash LLC v. Apple
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`Inc., 621 F. App’x 995, 1005 (Fed. Cir. 2015). Because much of this work may prove to have
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`been wasted when the PTAB decides the pending IPRs, the stage of this case favors a stay.
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`Moreover, trying claims that are currently under the PTAB’s review is not only a waste
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`of time and resources in and of itself, but could also result in requiring a second trial, thereby
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`actually doubling the resources needed to resolve the parties’ disputes. Absent a stay, the jury
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`will consider claims that may be cancelled or amended during IPR, thus necessitating another
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`trial to reevaluate damages issues and/or address amended claims. Because “the burden imposed
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`on a jury in a patent trial is extraordinary,” staying the case would undoubtedly reduce that
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`burden on the Court, the parties, and the jury. Robert Bosch LLC v. Pylon Mfg. Corp., No. 08-
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`542-SLR, 2009 WL 2742750, at *1 (D. Del. Aug. 26, 2009).
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`Furthermore, the resources Maxell has allegedly expended in the litigation are of no
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`moment to this factor or to the Court’s consideration of a stay. See Versata Software, Inc. v.
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`Callidus Software, Inc., 771 F.3d 1368, 1375 (Fed. Cir. 2014) (“the district court clearly erred in
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`Case 5:19-cv-00036-RWS Document 511 Filed 08/25/20 Page 5 of 8 PageID #: 27564
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`evaluating the burden-of-litigation factor exclusively through [a] backward-looking lens” as
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`“[t]he correct test is one that focuses prospectively on the impact of the stay on the litigation, not
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`on the past actions of the parties”). Maxell cannot complain about litigation expense when it was
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`the party that brought this case and chose to assert an unreasonably large number of patents and
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`claims against thousands of different combinations of products and software versions.
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`Moreover, despite Maxell’s arguments to the contrary, and its insistence on litigating this
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`case in a spaghetti-on-the-wall manner, the facts paint a clear picture of Apple’s diligence in
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`timely preparing and filing IPRs against all 10 of the Patents-in-Suit within the statutory
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`framework outlined in 35 U.S.C. § 315. Indeed, Apple filed all of the currently-instituted IPRs
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`within six months of Maxell identifying its asserted claims. Moreover, Apple filed its final IPR
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`petition just one month after Casio’s completion of its production in response to Apple’s third-
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`party subpoena for the Casio prior art. Mot. at 12. Maxell’s criticism of Apple’s timing willfully
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`ignores the difference between contentions and evidence (Opp. at 11), and, furthermore,
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`Maxell’s claim that Apple “unreasonably delayed” is just as tired as it is incorrect (id. at 10-11).
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`III. MAXELL WILL NOT SUFFER UNDUE PREJUDICE
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`Maxell has not identified—and cannot identify—any undue prejudice that it would suffer
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`from the proposed stay. In SSL Servs., LLC v. Cisco Sys., Inc., the Court found that any
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`“prejudice from delay in enforcing [the plaintiff’s] patent rights” is “present in every patent
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`case,” and therefore it does not constitute “undue prejudice.” No. 2:15-cv-433-JRG-RSP, 2016
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`WL 3523871, at *2 (E.D. Tex. June 28, 2016). The same analysis applies here—Maxell’s
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`complaint that a stay would prevent “timely enforcement” of its patent rights is simply “too
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`generic” to avoid a stay. Realtime Data, LLC v. Rackspace US, Inc., No. 6:16-CV-00961-RWS-
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`JDL, 2017 WL 772654, at *4 (E.D. Tex. Feb. 28, 2017).
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`Maxell would suffer no “case-specific prejudice” from a stay and it has presented no
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`Case 5:19-cv-00036-RWS Document 511 Filed 08/25/20 Page 6 of 8 PageID #: 27565
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`actual evidence of any prejudice whatsoever, relying exclusively on suppositional attorney
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`argument. SSL Servs., 2016 WL 3523871, at *2. Maxell cannot deny that it waited years—until
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`near expiration of most of the Patents-in-Suit—before filing this case. Opp. at 2-3. Nor can
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`Maxell deny that it effectively put its patent portfolio on ice with respect to Apple for three
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`years, until May 2018. Id. Trying to fill this gap, Maxell’s attorneys (without evidence) point to
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`unrelated business discussions and its lawsuits against other companies—none of which explains
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`why Maxell chose not to continue talking with Apple about its patents if it actually would suffer
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`any undue prejudice from a delay. Id.
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`Maxell also misrepresents the facts. Negotiations between Apple and Hitachi (Maxell’s
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`then corporate parent) did not “break[] down” in mid-2015, as Maxell contends without any
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`factual support. Id. at 2. The truth is: Apple purchased five patents from Hitachi in June 2015,
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`while declining to license other patents. See D.I. 69, Ex. W. And after selling patents to Apple,
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`Hitachi/Maxell chose to end the licensing discussions for other patents and waited three years
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`before having its litigation counsel contact Apple again in 2018. Mot. at 13-14. Maxell had no
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`problem waiting years to assert the Patents-in-Suit, and it cannot now claim it will suffer
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`prejudice from a likely shorter stay now.1 Indeed, forcing the Court and the parties to expend
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`more resources litigating mostly expired patent claims that the PTAB will likely invalidate
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`would unduly prejudice Apple. A stay is guaranteed to streamline and simplify the issues for
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`trial, which will reduce the burden on the Court, the jury, and the parties.
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`IV. CONCLUSION
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`Apple respectfully requests the Court grant Apple’s Renewed Motion to Stay.
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`1 The PTAB has already scheduled hearings on the pending IPRs for March and April 2021.
`Exs. CC-DD.
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`5
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`Case 5:19-cv-00036-RWS Document 511 Filed 08/25/20 Page 7 of 8 PageID #: 27566
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`DATED: August 25, 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
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`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 511 Filed 08/25/20 Page 8 of 8 PageID #: 27567
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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 August 25, 2020.
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`/s/ Melissa R. Smith
`Melissa R. Smith
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`7
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