Case 1:20-cv-00393-LMB-TCB Document 1389 Filed 07/18/22 Page 1 of 11 PageID# 34671
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
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`PHILIP MORRIS PRODUCTS S.A.,
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`Plaintiff,
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`v.
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`R.J. REYNOLDS VAPOR COMPANY,
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`Defendant.
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`Civil Action No. 1:20-cv-00393-LMB-TCB
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`REPLY IN SUPPORT OF PHILIP MORRIS’ UNOPPOSED
`MOTION TO LIFT THE PARTIAL STAY ON PHILIP MORRIS’ CLAIM FOR
`PERMANENT INJUNCTIVE RELIEF
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`Case 1:20-cv-00393-LMB-TCB Document 1389 Filed 07/18/22 Page 2 of 11 PageID# 34672
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`I.
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`II.
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ...............................................................................................................1
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`ARGUMENT .......................................................................................................................2
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`A.
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`B.
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`The Court Should Lift The Partial Stay And Enter The Agreed Briefing
`Schedule On Injunctive Relief .................................................................................2
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`The Court Should Reject Reynolds’ Unnecessary Requests ...................................2
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`III.
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`CONCLUSION ....................................................................................................................6
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`TABLE OF AUTHORITIES
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`CASES
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`Apple, Inc. v. Samsung Elecs. Co.,
`No. 12-cv-630, 2014 WL 6687122 (N.D. Cal. Nov. 25, 2014) ............................................... 4, 5
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`Bright Data Ltd. v. Teso LT, UAB,
`No. 19-cv-395, 2022 WL 488064 (E.D. Tex. Feb. 10, 2022) ..................................................... 5
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`Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd.,
`No. 09-cv-290, 2014 WL 1320154 (W.D. Pa., Mar. 31, 2014) ................................................... 5
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`Paice LLC v. Toyota Motor Corp.,
`504 F.3d 1293 (Fed. Cir. 2007) ........................................................................................... 1, 4, 5
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`Telcordia Techs., Inc. v. Cisco Sys., Inc.,
`612 F.3d 1365 (Fed. Cir. 2010) ............................................................................................... 1, 4
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`Warsaw Orthopedic, Inc. v. NuVasive, Inc.,
`No. 08-cv-1512, 2013 WL 12485194 (S.D. Cal. June 10, 2013) ................................................ 4
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`STATUTES
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`35 U.S.C. § 154(a)(1) ...................................................................................................................... 6
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`CONSTITUTIONAL PROVISIONS
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`U.S. Const., art. I § 8, cl. 8 .............................................................................................................. 6
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`Case 1:20-cv-00393-LMB-TCB Document 1389 Filed 07/18/22 Page 4 of 11 PageID# 34674
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`I.
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`INTRODUCTION
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` Reynolds “does not object” to lifting the stay on injunctive relief and “agrees” with the
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`briefing schedule for injunctive relief. Opp. at 1, 5 n.2. That should be dispositive. But Reynolds
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`seeks to impose two unnecessary requirements. The Court should reject both.
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`First, the Court should not reopen fact discovery on injunctive relief. Reynolds provides
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`no reason to “reserve” ruling on whether additional discovery should be allowed. Opp. at 3. Judge
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`O’Grady determined that the parties completed fact discovery on injunctive relief in 2021, after
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`having a full and fair opportunity to take discovery on that issue. Reynolds claims that additional
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`discovery “might be required” because it “does not know what supposed facts” Philip Morris will
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`rely on. Id. That is not credible. Reynolds took extensive discovery after receiving Philip Morris’
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`44-page interrogatory response on injunctive relief. No additional discovery is warranted.
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`Second, Reynolds provides no basis for deviating from the normal practice of separately
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`briefing injunctive relief and an ongoing royalty. None exists. The latter is “alternative relief”
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`that is moot if the Court grants a permanent injunction.1 Opp. at 1. Briefing an ongoing royalty
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`in the first instance would be inefficient and waste judicial and party resources. It would also strip
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`Philip Morris of the “opportunity to negotiate the terms of the royalty,” which is the “minimal
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`protection” afforded to the patentee in “most cases” and expressly “encouraged” by the Federal
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`Circuit. Telcordia Techs., Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1367, 1379 (Fed. Cir. 2010);
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`Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007). This approach should
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`be followed here if the Court declines to impose permanent injunctive relief.
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`Accordingly, the should Court (i) lift the stay on injunctive relief, (ii) enter the agreed
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`briefing schedule on injunctive relief, (iii) provide guidance on the Court’s preference regarding
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`1 All emphasis added unless otherwise noted.
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`1
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`declarations for injunctive relief, and (iv) reject Reynolds’ requests to reopen fact discovery and
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`concurrently brief the issues of injunctive relief and an ongoing royalty.
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`II.
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`ARGUMENT
`A.
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`The Court Should Lift The Partial Stay And Enter The Agreed Briefing
`Schedule On Injunctive Relief
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`The Court should lift the stay and enter the agreed briefing schedule on injunctive relief
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`(Dkt. 1372 at 5). First, Reynolds “does not object to lifting the stay” on injunctive relief. Opp. at
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`1. Second, Reynolds “agrees to the briefing schedule and page limits” that Philip Morris proposed
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`on injunctive relief.2 Opp. at 5 n.2 (agreeing with schedule on page 5 of Dkt. 1372). Because the
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`relief sought is unopposed, the Court should lift the stay and enter the agreed briefing schedule.
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`B.
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`The Court Should Reject Reynolds’ Unnecessary Requests
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`While Reynolds does not dispute the relief that Philip Morris seeks, Reynolds argues that
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`unidentified fact discovery “may be required” and the parties should brief injunctive relief and an
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`ongoing royalty together. Opp. at 1-2. Both requests are unnecessary and should be rejected.
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`1.
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`Fact Discovery On Injunctive Relief Should Not Be Reopened
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`The Court should reject Reynolds’ request to “reserve any ruling about whether further
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`discovery is necessary” on injunctive relief until “after [Philip Morris’] injunction motion is filed.”
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`Opp. at 4. No ruling is necessary because fact discovery on injunctive relief is complete. Dkts.
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`534-35; Dkt. 1372-1 (6/8 a.m. Tr.) at 43:13-44:25, 47:21-48:12 (“[The Court] would be surprised
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`if more [discovery] is needed.”). Both parties served discovery requests and took depositions on
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`injunctive relief, and completed fact discovery in 2021. Mot. at 2. Reynolds does not (i) ask the
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`Court to re-open discovery, (ii) apply the legal standard for doing so, or (iii) identify any discovery
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`2 Philip Morris will follow the Court’s guidance on whether to include declarations. (Mot. at 5-6).
`But the parties should be permitted to depose any declarants before filing response/reply briefs.
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`2
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`it may need. Instead, Reynolds admits it “has no intention of launching new discovery requests.”
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`Opp. at 3. That is dispositive. Neither of Reynolds’ arguments warrant a different result.
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`First, Reynolds argues it “does not know what supposed facts” Philip Morris will rely on
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`in its motion for injunctive relief. Opp. at 3. That is untrue. Philip Morris served a 44-page
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`interrogatory response (see Dkt. 971-3) disclosing “the complete factual and legal basis” for its
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`contentions on injunctive relief. Dkt. 971-3 at 2. Reynolds never objected to that response as
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`deficient (it is not), much less moved to compel. And Reynolds had a full and fair opportunity to
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`explore any “facts” relating to injunctive relief during the discovery period.
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`Second, Reynolds asserts that Philip Morris “may rely on facts … that are not yet public,
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`but may become public at some future date, presumably of PMP’s own choosing.” Opp. at 3.
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`That makes no sense.3 Philip Morris told Reynolds “neither party will rely on internal company
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`[i.e., non-public] documents” not produced in this case. Mot., Ex. B at 1. And, although not
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`required, Philip Morris told Reynolds the categories of evidence on which it intends to rely. Id.
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`That this evidence includes information “available in the public record (regardless of date)” does
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`not suggest that Philip Morris will strategically make information “public at some future date,” as
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`Reynolds asserts. Opp. at 3. Regardless, that is no basis for further discovery on injunctive relief.4
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`2.
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`An Ongoing Royalty Should Be Briefed Separately
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`The Court should reject Reynolds’ request to deviate from the norm by briefing injunctive
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`relief and an ongoing royalty together. Opp. at 5. It is common practice, and common sense, to
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`3 This is not the first time that Reynolds has (grossly) overstated the injunction-related discovery.
`Magistrate Judge Buchanan rejected Reynolds’ characterization of the required injunction-related
`discovery when granting Philip Morris leave to add this claim. See Dkt. 532 (3/12/21 Hr’g Tr.) at
`11:9-18 (“I just don’t think it’s necessary to have that much discovery on [injunctive relief].”).
`4 If Reynolds believes “targeted discovery” is necessary after reviewing Philip Morris’ motion, it
`concedes the proper mechanism is to seek leave from the Court and establish that good cause
`supports allowing such discovery. Opp. at 3-4.
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`3
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`brief injunctive relief first and then, only if necessary, brief an ongoing royalty. See, e.g., Warsaw
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`Orthopedic, Inc. v. NuVasive, Inc., No. 08-cv-1512, 2013 WL 12485194, at *1 (S.D. Cal. June 10,
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`2013) (“[T]he Court denied Warsaw’s motion for a permanent injunction and ordered the parties
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`to brief the matter of ongoing royalties.”); Apple, Inc. v. Samsung Elecs. Co., No. 12-cv-630, 2014
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`WL 6687122, at *1, *5 (N.D. Cal. Nov. 25, 2014) (awarding ongoing royalty where “Apple filed
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`its motion for ongoing royalties only one week after the Court denied a permanent injunction” and,
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`after the denial, “the Court set schedules for briefing [an ongoing royalty]”). That is because, as
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`Reynolds admits, an ongoing royalty is “alternative relief” that would become moot if the Court
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`grants a permanent injunction. Opp. at 4.
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`Reynolds does not dispute that its proposal would require at least: (i) briefing an ongoing
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`royalty, (ii) serving declarations establishing the appropriate royalty rate, and (iii) deposing any
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`witness providing a declaration. Undertaking that effort before it becomes necessary is an
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`unnecessarily inefficient waste of resources.
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`Reynolds’ proposal also unfairly strips Philip Morris of the “opportunity to negotiate its
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`own ongoing royalty,” a “minimal protection for its rights extending for the remainder of the patent
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`term.” Paice, 504 F.3d at 1317 (Rader, J. Concurrence). This process, which the Federal Circuit
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`encourages, is followed “[i]n most cases[] where the district court determines that a permanent
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`injunction is not warranted” (including the Carnegie Mellon case on which Reynolds relies, infra
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`at 5). Paice, 504 F.3d at 1315; Telecordia, 612 F.3d at 1379 (affirming denial of permanent
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`injunction, “direct[ing] the parties to negotiate [an ongoing] royalty,” and remanding to “complete
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`the royalty negotiation process”). This approach should be followed here. If the Court denies a
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`permanent injunction, the Court should order the parties to negotiate an ongoing royalty.5 “Should
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`5 This is an issue on which an outside mediator could be useful.
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`4
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`the parties fail to come to an agreement,” the parties can then brief the issue so the Court can “step
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`in to assess a reasonable royalty in light of the ongoing infringement.” Paice, 504 F.3d at 1315.
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`Reynolds provides no reason to combine injunctive relief—an admittedly “important” and
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`“highly fact-bound issue”—with the separate and equally complex issue of an ongoing royalty.
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`Opp. at 3. None exists. Nor does Reynolds identify any legitimate efficiencies gained under its
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`proposal. None exist. Neither of Reynolds’ arguments support concurrently briefing these issues.
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`First, Reynolds argues that an ongoing royalty “bears directly on the adequacy of legal
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`remedy prong of the eBay test.” Opp. at 1. Courts have held the opposite. In Apple, the court
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`found Samsung’s argument that “ongoing royalties involve several issues common to a permanent
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`injunction, such as the adequacy of monetary relief” to be “unpersuasive” because “determining
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`Apple’s entitlement to ongoing royalties was not necessary for resolving [its] permanent injunction
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`motion.” 2014 WL 6687122, at *5. Moreover, while the general availability of monetary damages
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`may be relevant to injunctive relief, Reynolds cites no case (and Philip Morris is not aware of any)
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`holding that the specific ongoing royalty is relevant to the eBay test. It is not. Even if Reynolds
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`were correct, this minimal overlap does not justify, much less require, briefing the issues together.
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`Reynolds’ two cited cases are inapt because, contrary to Reynolds’ argument (Opp. at 4),
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`neither court referenced or relied on either the availability or amount of an ongoing royalty to
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`assess injunctive relief. Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd., No. 09-cv-290, 2014
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`WL 1320154, at *29 (W.D. Pa., Mar. 31, 2014) (rejecting collection risk theory, that the defendant
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`could not pay damages, as “the sole basis for the permanent injunction”). In Bright Data Ltd. v.
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`Teso LT, UAB, an ongoing royalty was not even at issue. No. 19-cv-395, 2022 WL 488064, at *2
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`(E.D. Tex. Feb. 10, 2022). And, unlike here, the Carnegie Mellon court adopted a joint request to
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`brief injunctive relief and an ongoing royalty together. See No. 09-cv-290, Dkt. 766 at 1.
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`5
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`Second, Reynolds speculates without citation that Philip Morris’ “motivation” is to avoid
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`showing its calculation of an ongoing royalty in its injunctive relief motion. Opp. at 4. Not so.
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`As Philip Morris explained but Reynolds ignored (see Mot. at 4-5), briefing these issues together
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`would unnecessarily waste judicial and party resources. That Philip Morris can proffer an ongoing
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`royalty rate as “alternative relief” does not bear on its injunctive relief claim, as Reynolds’ failure
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`to cite any case suggesting otherwise confirms. Opp. at 1. If this dispute reveals any “motivation,”
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`it shows that Reynolds wants to leverage the availability of alternative relief to bolster its
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`injunction opposition. Opp. at 4. That is improper. It would be unfair to deny a patentee’s right
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`to exclude—the very definition of the patent right set forth in the Constitution—merely because it
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`can seek different, alternative relief. If Reynolds were correct, any patentee seeking an ongoing
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`royalty as alternative relief could not prove that it has no adequate remedy of law. That is not the
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`law. U.S. Const., art. I § 8, cl. 8 (“To promote the progress of science and useful arts, by securing
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`for limited times to authors and inventors the exclusive right to their respective writings and
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`discoveries.”); 35 U.S.C. § 154(a)(1) (“the right to exclude others from making, using, offering
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`for sale, or selling the invention throughout the United States”). The Court should reject Reynolds’
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`proposal and order that the initial briefing is limited to injunctive relief.
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`III. CONCLUSION
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`Philip Morris requests the Court: (i) lift the partial stay on injunctive relief, (ii) enter the
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`agreed briefing schedule on injunctive relief only, (iii) provide guidance on the Court’s preference
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`regarding fact/expert declarations for injunctive relief, and (iv) reject Reynolds’ requests to reopen
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`fact discovery and brief the issues of injunctive relief and an ongoing royalty together.
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`6
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`Case 1:20-cv-00393-LMB-TCB Document 1389 Filed 07/18/22 Page 10 of 11 PageID# 34680
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`Dated: July 18, 2022
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` Respectfully submitted,
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`By: /s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`max.grant@lw.com
`Lawrence J. Gotts (VSB No. 25337)
`lawrence.gotts@lw.com
`Matthew J. Moore (pro hac vice)
`matthew.moore@lw.com
`Jamie Underwood (pro hac vice)
`jamie.underwood@lw.com
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`
`Clement J. Naples (pro hac vice)
`clement.naples@lw.com
`LATHAM & WATKINS LLP
`885 Third Avenue
`New York, NY 10022-4834
`Tel: (212) 906-1200; Fax: (212) 751-4864
`
`Gregory J. Sobolski (pro hac vice)
`greg.sobolski@lw.com
`LATHAM & WATKINS LLP
`505 Montgomery Street, Suite 2000
`San Francisco, CA 94111
`Telephone: (415) 391-0600
`Facsimile: (415) 395-8095
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`Counsel for Plaintiff Philip Morris Products S.A.
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`Case 1:20-cv-00393-LMB-TCB Document 1389 Filed 07/18/22 Page 11 of 11 PageID# 34681
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 18th day of July, 2022, a true and correct copy of the foregoing
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`was served using the Court’s CM/ECF system, with electronic notification of such filing to all
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`counsel of record.
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`/s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`max.grant@lw.com
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Ste. 1000
`Washington, DC 20004
`Tel: (202) 637-2200; Fax: (202) 637-2201
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`Counsel for Plaintiff Philip Morris Products S.A.
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