Case 5:19-cv-00036-RWS Document 530 Filed 09/04/20 Page 1 of 9 PageID #: 27992
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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
`RENEWED 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 530 Filed 09/04/20 Page 2 of 9 PageID #: 27993
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`Apple swung for the fences with its delayed IPR filings and missed; less than half of the
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`asserted claims are under IPR review with no guarantee of cancellation. Thus this case will proceed
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`to trial regardless of the outcome of the instituted IPR proceedings. The only point of debate is
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`whether the potential simplification of some issues with respect to less than 40% of the currently
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`asserted claims outweighs delaying justice for years at this late stage of the proceedings. Apple
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`insists that the IPRs are “guaranteed” to simplify the case with respect to the claims subject to
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`IPRs, but Apple’s insistence rests on an assumption that Apple will prevail. This is not something
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`Apple can guarantee—Apple was similarly confident that all IPRs would be instituted but was
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`proven very wrong. Although Apple’s argument provides no evidence of simplification, it does
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`reveal that Apple has every intention of appealing any PTAB decision it does not like. Indeed,
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`Apple has already appealed four of the five decisions denying institution to the Federal Circuit and
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`requested rehearing on the fifth. See Exs. EE-II. Apple even filed a lawsuit against the Patent
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`Office challenging the underlying basis for some of the denials. Ex. JJ. Thus, the fact that hearings
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`in the IPRs are scheduled in March and April 2021 in no way signals that Apple’s requested stay
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`will be short in duration or alleviate the prejudice on Maxell from a stay that would issue now
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`based on Apple’s delayed filing of the IPRs. Apple’s behavior proves quite the opposite.
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`I.
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`Apple Has Not Established the Absence of Prejudice
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`Maxell identified undue prejudice it would suffer from a stay, and the Court already held
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`that prejudice can result from the substantial delay of an imminent trial date. See Opp. at 5-7. But
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`Apple disregards all this and instead conflates precedent holding that such prejudice may not alone
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`defeat a stay with the proposition that such prejudice does not exist. Apple’s position is incorrect.
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`Courts in this District have repeatedly held that depriving a plaintiff of timely enforcement of its
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`patent rights cuts slightly against a stay. See id. (citing cases). Indeed, facing similar facts, Judge
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`Gilstrap held this factor “weighs heavily against” a stay where discovery was complete and the
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`Case 5:19-cv-00036-RWS Document 530 Filed 09/04/20 Page 3 of 9 PageID #: 27994
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`majority of litigation expenses had been incurred. Solas OLED Ltd. v. Samsung Display Co., Ltd.,
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`et al., C.A. No. 2:19-cv-152, 2020 WL 4040716, *2 (E.D. Tex. Jul. 17, 2020).
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`Apple’s ignorance of Maxell’s Opposition does not end with its misapplication of case law.
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`Apple also fails to address Maxell’s rebuttal regarding the parties’ pre-suit negotiations. Maxell
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`did not “effectively put its patent portfolio on ice with respect to Apple for three years.” Reply at
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`5. Rather, during the time in question,
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`. Opp. at 2-3, 6. In its Reply, Apple attempts to sidestep these facts by
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`asserting that 1) Maxell’s argument was presented without evidence, and 2) such argument did not
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`explain why Maxell chose to discontinue patent negotiations. Reply at 5. Apple’s attempt to dodge
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`the issue, however, fails for two reasons. First, Maxell did support its argument with evidence—
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`2, Ex. N. Second, Maxell believed
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`. Opp. at
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`. Indeed, Maxell’s corporate witness, Kenji Nakamura, testified that
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`. See, e.g., Ex. KK (Nakamura Dep. Tr.) at 136:12-20. That Apple now asserts Maxell
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`drew the wrong conclusion
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`such actions to argue that Maxell is not entitled to timely enforcement of its patent rights. Apple
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`. Apple strung along Maxell for years and now attempts to use
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`should not be rewarded for such games.
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`Apple also attempts to muddle the issue by introducing facts regarding
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`. Ex. M at 3-4. In fact, Apple was reminded
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`Case 5:19-cv-00036-RWS Document 530 Filed 09/04/20 Page 4 of 9 PageID #: 27995
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`.
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`Id. The simple fact, as Maxell has shown, is that granting Apple’s motion will delay this case for
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`years—likely as much as two full years. The prejudice to Maxell from such significantly delayed
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`resolution of its patent rights cannot be ignored.
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`II.
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`The Late Stage of the Proceedings Weighs Strongly Against Stay
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`In its Opposition, Maxell addressed why the fact that trial, and a portion of the pre-trial
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`preparations that remain, should not change the Court’s prior ruling that this factor weighs against
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`a stay. See D.I. 298 at 4. Specifically, Maxell pointed out that the precedent on which Apple relies
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`(in both its Motion and Reply) relates to a factor directed to the burden of litigation that is
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`considered in connection with stays pending CBM reviews and is separate and distinct from the
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`factor related to the stage of the litigation that the Court is directed to consider here.1 Opp. at 8-9.
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`Maxell further demonstrated why this case is further along than Apple asserts, and the remaining
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`burden of litigation is less than Apple asserts.2
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`Instead of directly addressing Maxell’s Opposition, Apple simply repeats the argument that
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`the fact trial remains favors stay, citing NFC Tech. LLC v. HTC Am., Inc., No. 2:13-cv-1058, 2015
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`WL 1069111, at *3 (E.D. Tex. Mar. 11, 2015) in support of the proposition notwithstanding that
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`the Court in NFC found that the state of the litigation (there, a month remaining in fact discovery
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`1 Despite Apple’s continued promotion of the factor of burden of litigation, Apple also chastises Maxell’s recitation
`of the work performed to date discussed in connection therewith. As Maxell showed, the Federal Circuit found that
`work already done can be informative to provide context on how much burden remains. Opp. at 9 (citing Smartflash
`LLC v. Apple Inc., 621 F. App’x 995, 1004 (Fed. Cir. 2015)). Maxell further notes that its discussion is not a
`“complaint” about expense, but an acknowledgement that expenses are outlaid throughout the case, not just at trial.
`2 Though it bears noting that Virtual Agility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1316-17 (Fed. Cir. 2014) does
`not address, let alone resolve, the issue of whether this factor should be analyzed as of the date when Apple first moved
`to stay (as opposed to when it filed its renewed motion), Maxell has not actually taken any stance on this issue because
`the timing does not impact the analysis here. In denying Apple’s initial motion, this Court held the factor already
`weighed against a stay. Maxell provided a discussion about the progression of the case since “courts are not obligated
`to ignore advances in the litigation that occur as of the date that the PTAB granted CBM review.” Versata Software,
`Inc. v. Callidus Software, Inc., 771 F.3d 1368, 1373 (Fed. Cir. 2014); see also Solas, 2020 WL 4040716, *2 (taking
`into account progression of case in determining that extremely advanced stage of case weighed against stay).
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`Case 5:19-cv-00036-RWS Document 530 Filed 09/04/20 Page 5 of 9 PageID #: 27996
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`and pre-Markman hearing) was “neutral, or, at most, cuts slightly against the issuance of a stay.”
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`D.I. 267 at 6 (citing NFC, 2015 WL 1069111, at *4 (emphasis added)). If Apple’s position is right,
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`that a stay is favored because trial has not yet taken place, then every motion to stay that is filed
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`before trial would be granted. That is clearly not the case and it is clearly not the law.
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`Apple also introduces a new argument that denying a stay could result in requiring a second
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`trial. Apple points to no case that has granted a stay based on such an argument. Indeed, the only
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`case Apple cites on this issue relates to bifurcation, not stays. This case should not be subject to a
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`years-long stay, particularly this close to trial, based on such a longshot possibility, which requires
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`both that asserted claims be cancelled or amended during the IPR and that this case still be ongoing.
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`Finally, despite the fact the Court already held otherwise, Apple continues to assert that it
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`was diligent in timely preparing and filing its IPRs. In doing so, Apple does not even attempt to
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`address Maxell’s arguments for why additional time to prepare the IPRs was not required or
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`warranted in view of Maxell’s narrowing of claims or third-party discovery, including the fact that
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`Apple’s IPR on the ’493 Patent relied on a public user manual that Apple had in hand as early as
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`November 2019. Opp. at 10-11. The Court’s initial inclination regarding Apple’s diligence was
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`correct and need not be revisited. D.I. 298 at 4-5.
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`III. Apple Cannot Guarantee Simplification Sufficient to Override the Other Factors
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`Apple cannot guarantee any simplification of this case, and certainly not any simplification
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`that outweighs the advanced stage of the case. Indeed, with respect to at least half of the Asserted
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`Patents, no simplification whatsoever is possible and trial will proceed regardless of what happens
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`with the four instituted IPRs. Apple’s speculation about what may come to pass with respect to the
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`IPRs on just four of the patents does not override this consideration.3
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`3 As Maxell previously noted, Courts in this District have granted a stay despite an advanced stage where PTAB
`review was granted on a majority of asserted claims. Opp. at 11-12. Apple cannot argue that is the case here. The
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`Case 5:19-cv-00036-RWS Document 530 Filed 09/04/20 Page 6 of 9 PageID #: 27997
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`In order to make its “guarantee,” Apple asserts that even if validity is affirmed, the case
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`will be simplified because Apple would be statutorily estopped from presenting nearly 40% of its
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`elected prior art. But even if it loses the IPRs, Apple still intends to challenge the validity of those
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`patents. As Maxell previously noted (and Apple did not address), Apple raised 35 U.S.C. § 112
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`issues and invalidity arguments under § 101 with respect to the patents subject to IPRs. See Opp.
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`at 12. Moreover, Apple argued to the PTAB that the issues and prior art between the IPRs and
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`litigation do not overlap. Id. at 13. Given that time during trial is not unbounded, Apple will have
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`to pick and choose the validity arguments it presents regardless of estoppel. There is no reason to
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`believe it would not fill its time regardless of stay or IPR result. Rather, Apple wants to present
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`more arguments before multiple adjudicators, actually decreasing efficiency.
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`At the outset of this case, Maxell asserted 90 claims against Apple. D.I. 481 at 2. Maxell
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`has since narrowed this assertion to 20 claims—a significant narrowing of nearly 80% of the
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`asserted claims. Apple’s argument that a potential simplification of issues on less than 40% of the
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`remaining claims justifies staying the entire case for years should be rejected. Apple attempts to
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`show the complexity of this case through citation of the number of experts, expert reports, trial
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`witnesses, and dispositive motions. But Apple fails to show how IPRs on only four patents impacts
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`these figures. For example, Apple cites to the number of witnesses identified for trial, but neglects
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`to mention that the “Will Call” witnesses identified by the parties are all experts, with the exception
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`of four who are general corporate witnesses for the parties and/or witnesses regarding the issue of
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`willfulness, and thus will appear regardless of the IPR proceeding results. Exs. J-L.
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`IV. Conclusion
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`Given the foregoing, as well as Maxell’s Opposition, Apple’s motion should be denied.
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`PTAB denied institution on half of the Asserted Patents already. Moreover, Judge Gilstrap denied stay based on
`prejudice and the advanced stage even where IPRs instituted on all asserted patents. Solas, 2020 WL 4040716, *3.
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`Case 5:19-cv-00036-RWS Document 530 Filed 09/04/20 Page 7 of 9 PageID #: 27998
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`Dated: September 2, 2020
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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
`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 530 Filed 09/04/20 Page 8 of 9 PageID #: 27999
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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 530 Filed 09/04/20 Page 9 of 9 PageID #: 28000
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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 2nd day of September 2020, with a copy of this document
`via electronic mail.
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`/s/ Jamie B. Beaber
`Jamie B. Beaber
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