Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 1 of 16 PageID# 10108
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
`
`
`Plaintiffs-Counterclaim
`Defendants,
`
`v.
`
`
`
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.
`
`Defendants-Counterclaim
`Plaintiffs.
`
`Case No. 1:20-cv-00393-LO-TCB
`
`
`
`DEFENDANTS’ REPLY IN SUPPORT OF
`MOTION TO LIFT STAY ON COUNTERCLAIM PATENTS
`
`
`
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 2 of 16 PageID# 10109
`
`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`INTRODUCTION ...............................................................................................................1
`
`ARGUMENT .......................................................................................................................4
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`Defendants’ Motion To Lift The Stay Is Not A Motion For
`Reconsideration ........................................................................................................4
`
`A Total Stay Will Not Simplify The Issues For Trial ..............................................6
`
`The Risk Of Any Overlap In Subject Matter Is Far Outweighed By The
`Multi-Year Delay Of Defendants’ Near Trial-Ready Counterclaims ......................7
`
`Plaintiffs Fail To Show That They Will Be Prejudiced By Lifting The Stay
`On The Counterclaim Patents ..................................................................................8
`
`Lifting The Stay Will Not Waste Judicial Resources ..............................................9
`
`III.
`
`CONCLUSION ..................................................................................................................11
`
`
`
`
`
`i
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 3 of 16 PageID# 10110
`
`
`
`
`
`TABLE OF AUTHORITIES
`
`CASES
`
`Page(s)
`
`Blast Motion, Inc. v. Zepp Labs, Inc.,
`No. 15-cv-700-JLS-NLS, slip op. (S.D. Cal. Sept. 9, 2016) ............................................... 6, 7, 9
`
`Centripetal Networks, Inc. v. Cisco Systems, Inc.,
`No. 2:18cv94, 2019 WL 8888195 (E.D. Va. Sept. 18, 2019) ............................................ passim
`
`Hewlett-Packard Co. v. ServiceNow, Inc.,
`No. 14-cv-570-BLF, 2015 WL 5935368 (N.D. Cal. Oct. 13, 2015) ................................. 6, 9, 11
`
`Life Techs. Corp. v. Illumina, Inc.,
`No. 09-706-RK, 2010 WL 2348737 (D. Del. June 7, 2010) ....................................................... 9
`
`Minnieland Private Day Sch., Inc. v. Applied Underwriters Captive Risk Assurance Co.,
`867 F.3d 449 (4th Cir. 2017) ....................................................................................................... 7
`
`Novartis AG v. HEC Pharm Co.,
`183 F. Supp. 3d 560 (D. Del. 2016) ............................................................................................ 9
`
`Parity Networks, LLC v. Juniper Networks, Inc.,
`No. 18-cv-06452-JSW, 2019 WL 8810383 (N.D. Cal. Jul. 3, 2019) .......................................... 6
`
`Pentair Water Pool & Spa, Inc. v. Hayward Indus., Inc.,
`No. 5:11-cv-459-D, 2014 WL 351865 (E.D.N.C. Jan. 31, 2014) ............................................... 9
`
`
`
`ii
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 4 of 16 PageID# 10111
`
`
`
`I.
`
`INTRODUCTION
`
`The Court’s December 2020 ruling on Defendants’ motion to stay expressly ordered the
`
`parties to report back after the PTAB ruled on Defendants’ IPR and Post-Grant Review (“PGR”)
`
`petitions, so that the Court and the parties could best proceed in this case. Dkts. 426, 432. The
`
`parties did just that in their January 19, 2021 Joint Status Report (Dkt. 446), and Defendants’
`
`motion to lift the stay is foursquare consistent with the Court’s direction that the parties and the
`
`Court revisit the posture of the case after any PTAB rulings.1 What’s more, in the interim, the
`
`Court set a pretrial conference in this case for April 16, 2021. Dkt. 445. Defendants’ motion is
`
`thus timely, consistent with the Court’s December 2020 ruling, and warranted in light of the
`
`Court’s scheduled April 16, 2021 Pretrial Conference.
`
`Although Defendants sought a stay as to only Plaintiffs’ ’542 and ’268 patent claims
`
`(which are immersed in PTAB proceedings), the Court sua sponte stayed the entire case, including
`
`as to Defendants’ Counterclaim Patents, until the parties reported back on the PTAB’s decision on
`
`Reynolds’ ’542 patent. The Court reasoned that the stay of all claims and counterclaims pending
`
`the PTAB’s January 2021 ruling would have no impact on the current trial track for Defendants’
`
`Patent Counterclaims in light of the delays already necessitated by the pandemic.
`
`However, now that the Court and the parties have visibility that the PTAB will proceed to
`
`review the invalidity of the ’542 patent, circumstances no longer support staying the case as to
`
`Defendants’ Counterclaim Patents. As Plaintiffs acknowledge, the PTAB will not rule on the ’542
`
`patent until early next year. Following the almost inevitable PTAB request for reconsideration
`
`and Federal Circuit appeal, the ’542 patent PGR proceedings will not be concluded before late
`
`
`1 Defendants proposed to Plaintiffs that the parties address the issue of maintaining the stay in the
`Joint Status Report, filed January 19th. Plaintiffs refused to address this issue in the joint report,
`thus necessitating this motion.
`
`
`
`1
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 5 of 16 PageID# 10112
`
`
`
`2023 or early 2024.2 If the PTAB reconsiders its preliminary decision denying institution of the
`
`’268 patent’s IPR, the ’268 patent’s IPR will not be finally resolved until even later.
`
`Fact and expert discovery are within weeks of completion on Defendants’ Counterclaim
`
`Patents, and a pretrial conference is set for April 2021. Although the Court expressed a preference
`
`for avoiding piecemeal trials if feasible, Defendants respectfully submit that such concern is more
`
`than offset by the delay of up to another three years before the trial of Defendants’ Counterclaim
`
`Patents. This is particularly so because the counterclaims are a few months away from being ready
`
`for pretrial and trial now.
`
`This Court’s December stay ruling was prudent given the possibility that the ’542 PGR
`
`might be denied, particularly since the case is already on a delayed schedule due to the pandemic.
`
`The total stay kept Plaintiffs’ and Defendants’ cases on the same track pending the PTAB’s
`
`January ruling on the ’542 patent PGR. However, now that the ’542 patent PGR is instituted (and
`
`will likely extend nearly three additional years through appeal), a stay of Defendants’ nearly trial-
`
`ready patent counterclaims is no longer warranted or fair. The pandemic does not compel a
`
`different result, as this Court has not routinely stayed cases for the pandemic.
`
`None of Plaintiffs’ arguments against partially lifting the stay warrant maintaining the stay
`
`against Defendants’ Counterclaim Patents.
`
`First, Defendants’ motion is not a veiled request for reconsideration—nor should it be
`
`subject to the standard for reconsideration. The Court-ordered stay has been in place and
`
`
`2 Resolution in the PTAB, including any consideration of rehearing, may take until mid-2022.
`Assuming briefing and argument to the Federal Circuit, a decision is unlikely before the end of
`2023 or Spring 2024. Trial of Defendants’ Counterclaim Patents in this Court would thus likely
`not occur until early to mid-2024, or after, if stayed for the duration of the ’542 PTAB proceedings.
`That trial delay could extend even further if the PTAB ultimately institutes post-grant review as to
`the ’268 patent, currently under reconsideration, and a stay is granted with regard to that patent as
`well.
`
`2
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 6 of 16 PageID# 10113
`
`
`
`Defendants never challenged it. The Court’s stay order, from the outset, expressly contemplated
`
`that the Court and the parties would revisit the stay based on developments in the PTAB.
`
`Defendants are not seeking reconsideration of the Court’s stay order, but rather are proceeding in
`
`accordance with it. And regardless, under any standard, with the recent institution of the ’542
`
`patent PGR, the resultant delay under the current stay of three years or more to trial of Defendants’
`
`nearly trial-ready patent counterclaims is a new development warranting the Court’s lifting of the
`
`stay as to Defendants’ Counterclaim Patents.
`
`Second, Plaintiffs’ assertion that Defendants’ prior arguments regarding overlap preclude
`
`its arguments here for lifting the stay are misplaced. Plaintiffs’ assertions again ignore the
`
`circumstances as they exist now based on developments over the past weeks. Although the
`
`potential for overlap, if any, was one of a host of considerations in connection with Plaintiffs’ prior
`
`motion to sever, that consideration is now more than outweighed by the threat of a multi-year delay
`
`resulting from a continued stay of Defendants’ near trial-ready patent counterclaims. Most
`
`importantly, there is no relationship or overlapping subject matter before the PTAB on Plaintiffs’
`
`’542 and ’268 patents and Defendants’ Counterclaim Patents—and Reynolds identifies none. Nor
`
`has Reynolds indicated that a PTAB decision on the ’542 patent or ’268 patent will simplify the
`
`issues in this Court with respect to the Counterclaim Patents.
`
`Third, judicial economy does not warrant requiring Defendants’ nearly trial-ready patent
`
`counterclaims to lay dormant for three years or more while the PTAB proceedings and appeals are
`
`ongoing. It is not cognizable prejudice to require Plaintiffs to proceed to trial on Defendants’ near
`
`trial-ready counterclaims (which have already been delayed by the pandemic). Moreover, based
`
`on current statistics, there is a nearly two-thirds chance that Plaintiffs’ patents will be invalidated
`
`3
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 7 of 16 PageID# 10114
`
`
`
`in the PTAB.3 It is hardly efficient to delay adjudication of Defendants’ near trial-ready patent
`
`counterclaims for up to three years on the “one in three” (1:3) chance that Plaintiffs’ patents survive
`
`PTAB review. In any event, Defendants are unaware of any decision where arguments of judicial
`
`economy supported a nearly three-year delay of an otherwise near trial-ready claim.
`
`II.
`
`ARGUMENT
`A.
`
`Defendants’ Motion To Lift The Stay Is Not A Motion For Reconsideration
`
`For Plaintiffs to erroneously argue that Defendants’ motion to lift the stay is a “thinly-
`
`veiled motion for reconsideration” because it “merely reiterates arguments the Court already
`
`considered” (Dkt. 450 at 1, 5), they must ignore the plain words of the Court’s direction. Plaintiffs’
`
`arguments disregard that Defendants’ motion follows the Court’s stay order, which required the
`
`parties to report back so that the Court could revisit the propriety of continuing the stay (in whole
`
`or in part). Defendants complied with the Court’s stay order and jointly reported back to the Court
`
`as ordered following the PTAB’s ruling. And now, consistent with the Court’s ruling, Defendants
`
`are revisiting whether a continued stay is warranted in light of the PTAB’s institution of the ’542
`
`PGR.
`
`Back in December, Defendants proposed that the Court and the parties “revisit the
`
`appropriateness of a continued stay” following each decision by the PTAB regarding the ’268 or
`
`’542 patents. Dkt. 422 at 15. The Court agreed, “that’s the appropriate thing to do.” Dkt. 449-1
`
`(12/4/2020 Hearing Tr.) at 8:23-9:8. Plaintiffs themselves represented to the PTAB that the
`
`Court’s stay is “temporary” and of “uncertain scope and length,” and acknowledged that the Court
`
`would re-evaluate it following a PTAB decision. Ex. 3 (12/11/2020 Patent Owner Supp. Br.) at 2
`
`
`3 PTAB Trial Statistics, End of Year Outcome Roundup, page 13, available at
`https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2020_roundup.pdf.
`
`4
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 8 of 16 PageID# 10115
`
`
`
`(“The case is stayed only until ‘a decision by the PTAB on whether to institute post-grant petitions
`
`on [the ’542 and ’268] patents’”); id. (“Any suggestion as to what the EDVA will do upon hearing
`
`from the parties is pure speculation”). Defendants have proceeded exactly as the Court and the
`
`parties contemplated all along.
`
`The standard for reconsideration under Rule 54(b) thus does not apply here because
`
`Defendants are not asking the Court to reconsider its stay. Rather, Defendants are following the
`
`Court’s direction to “revisit the appropriateness of a continued stay” after receiving a PTAB
`
`decision to institute PGR proceedings against Reynolds’ ’542 patent. Dkt. 449-1 at 9:4-8. The
`
`Court has the inherent power to stay proceedings, and may exercise its discretion to lift the stay
`
`based on the totality of the circumstances. See Centripetal Networks, Inc. v. Cisco Systems, Inc.,
`
`No. 2:18cv94, 2019 WL 8888195, at *2 (E.D. Va. Sept. 18, 2019).
`
`Regardless, under any standard, consideration of the propriety of a continued stay as to
`
`Defendants’ Counterclaim Patents is warranted. Plaintiffs fail to take into account the totality of
`
`the circumstances since the stay was imposed. When the stay was entered in December 2020, the
`
`PTAB had not yet instituted on the ’542 patent. The Court and the parties expected to revisit the
`
`appropriateness of the stay after the PTAB decision in January 2021. See Dkt. 375 at 12
`
`(recognizing that a pre-institution stay would be less than two months in duration); Dkt. 449-1 at
`
`12:1-17 (Court agreeing that parties should approach the Court upon receipt of the IPR decision in
`
`January 2021 to evaluate whether to lift stay). Because the possibility existed at that time that the
`
`stay could be lifted in January 2021 if the PTAB denied institution, it made little sense to proceed
`
`on only the Counterclaim Patents at that time. Now that there is certainty regarding the institution
`
`of the ’542 patent PGR, there is no persuasive reason to delay the trial of Defendants’ near trial-
`
`ready counterclaims three years or more. See Centripetal Networks, 2019 WL 8888195, at *3
`
`5
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 9 of 16 PageID# 10116
`
`
`
`(partially lifting stay because “there does not appear to be a persuasive reason to continue to delay
`
`in litigation on the Asserted Patents and claims which are not subject to IPR”). Plaintiffs cite no
`
`authority otherwise.
`
`B.
`
`A Total Stay Will Not Simplify The Issues For Trial
`
`Plaintiffs have failed to file any PTAB petitions on any Counterclaim Patent since they
`
`were asserted in June 2020. Plaintiffs do not dispute that the Counterclaim Patents are unrelated
`
`to the ’542 or ’268 patents, and unrelated to any of Reynolds’ patents asserted in the ITC action.
`
`Because there is no PTAB petition pending on the Counterclaim Patents, a continued stay will not
`
`simplify the issues. Reynolds identifies no overlap between the issues before the PTAB on the
`
`’542 or ’268 patent and the Counterclaim Patents. Nor has Reynolds indicated that a PTAB
`
`decision on the ’542 or ’268 patent will streamline the issues in this Court regarding the
`
`Counterclaim Patents. Consequently, the stay should be partially lifted as to the Counterclaim
`
`Patents. See, e.g., Centripetal Networks, 2019 WL 8888195, at *2-3 (partially lifting stay and re-
`
`opening case as to patents and claims not subject to IPR because IPR would not simplify the
`
`issues); Parity Networks, LLC v. Juniper Networks, Inc., No. 18-cv-06452-JSW, 2019 WL
`
`8810383, at *3 (N.D. Cal. Jul. 3, 2019) (granting partial stay to “permit the parties to focus their
`
`litigation efforts on the non-IPR Patents”); Hewlett-Packard Co. v. ServiceNow, Inc., No. 14-cv-
`
`570-BLF, 2015 WL 5935368, at *3 (N.D. Cal. Oct. 13, 2015) (denying motion to stay non-
`
`instituted patents because “[i]t does not appear that granting a stay as to the [non-instituted] ’981
`
`and ’860 patents would simplify the present litigation”); Blast Motion, Inc. v. Zepp Labs, Inc., No.
`
`15-cv-700-JLS-NLS, slip op. at 2 (S.D. Cal. Sept. 9, 2016) (lifting stay on non-instituted patents)
`
`(Ex. 4).
`
`Blast Motion, which Plaintiffs cite, is instructive. Initially, the court stayed all claims—
`
`including defendant Zepp Labs’ counterclaims on which no IPRs were filed—pending the PTAB’s
`
`6
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 10 of 16 PageID# 10117
`
`
`
`institution decisions on Blast Motion’s asserted patents. After the PTAB instituted a subset of
`
`Blast Motion’s asserted claims, the Court lifted the stay on the non-instituted claims, including
`
`Zepp Labs’ counterclaims. Id. Similarly, here, the PTAB has instituted a proceeding on all claims
`
`of Reynolds’ ’542 patent, and the Court should lift the stay on the Counterclaim Patents, which
`
`have no pending IPRs, much less instituted IPRs. And because the Counterclaim Patents will be
`
`litigated regardless of the outcome of the PTAB (and ITC) proceedings, this weighs “heavily” in
`
`favor of partially lifting the stay. Centripetal Networks, 2019 WL 8888195, at *3.
`
`C.
`
`The Risk Of Any Overlap In Subject Matter Is Far Outweighed By The
`Multi-Year Delay Of Defendants’ Near Trial-Ready Counterclaims
`
`Plaintiffs argue that the stay should not be lifted because Defendants previously argued
`
`that there is “overlapping subject matter between the parties’ claims and counterclaims,” relying
`
`primarily on statements Defendants made at the outset of the case opposing Plaintiffs’ motion to
`
`sever. Dkt. 450 at 6-7. Although the potential for overlap was properly considered on the motion
`
`to sever, the new reality is that a total stay will delay trial of Defendants’ near trial-ready
`
`counterclaims three years or more, which far outweighs the risk of potential overlap. Moreover,
`
`now that both parties’ cases have developed through discovery, the potential overlap appears to be
`
`minor, if any. Plaintiffs identify none. Perhaps most importantly, there is no overlap between the
`
`issues in the ’542 and ’268 PTAB petitions and Defendants’ patent counterclaims—and again
`
`Plaintiffs have identified none.4
`
`
`4 Plaintiffs fail to provide even threadbare support for its assertion of judicial estoppel. Minnieland
`Private Day Sch., Inc. v. Applied Underwriters Captive Risk Assurance Co., 867 F.3d 449, 458
`(4th Cir. 2017). Plaintiffs do not even attempt to allege that the requirements for judicial estoppel
`have been met, such as the position sought to be estopped is one of fact rather than law or legal
`theory, the Court accepted the alleged prior inconsistent position, or the “determinative”
`requirement that Defendants intentionally misled the Court. See id. at 459.
`
`7
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 11 of 16 PageID# 10118
`
`
`
`D.
`
`Plaintiffs Fail To Show That They Will Be Prejudiced By Lifting The Stay
`On The Counterclaim Patents
`
`Although Plaintiffs contend they will be “inexorably prejudice[d]” by partially lifting the
`
`stay (Dkt. 450 at 8), they provide no explanation or evidence for any such prejudice. But
`
`proceeding contrary to Plaintiffs’ tactical litigation preferences does not constitute “prejudice.”
`
`There is no prejudice to Reynolds for its having to defend itself from infringement claims now, on
`
`patents in which no PTAB petitions have been instituted.
`
`Plaintiffs’ allegations that Defendants merely seek “tactical advantage” ring hollow. First,
`
`Plaintiffs erroneously argue that Defendants should not “have their cake and eat it too” because
`
`Defendants allegedly represented to the PTAB that the entire case would remain stayed if the
`
`PTAB instituted review on the ’542 patent. Dkt. 450 at 9. Defendants did no such thing.
`
`Defendants represented to PTAB that the stay would remain in place on the ’542 and ’268 patents,
`
`which were the subject of Defendants’ motion to stay. See Dkt. 450-1 at 1 (stating that the Court
`
`“grant[ed] Petitioner’s motion” to stay the ’542 and ’268 patents); Dkt. 450-2 at 4-5 (same).
`
`Plaintiffs next assert that lifting the stay would “turn the case on its head” by allowing only
`
`Defendants’ counterclaims to proceed. Dkt. 450 at 9. But Plaintiffs effectively seek a stay on the
`
`Counterclaim Patents based on nonexistent PTAB petitions. Those nonexistent petitions have not
`
`been filed in the seven-plus months since the Counterclaim Patents were asserted and would not
`
`have an institution decision for another six months after filing (if ever). The Court recognized that
`
`a “potential” future filing of a PTAB petition is not “a good reason to stay.” Dkt. 449-1 at 7:14-
`
`19. It is Plaintiffs—not Defendants—who seek to “have their cake and eat it too” by piggybacking
`
`on Defendants’ PTAB petitions and asking for a stay on the unrelated Counterclaim Patents, when
`
`the PTAB has not considered any petitions, much less instituted review, on those patents. Courts
`
`routinely allow claims on non-instituted patents to proceed while staying claims on instituted
`
`8
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 12 of 16 PageID# 10119
`
`
`
`patents. See, e.g., Centripetal Networks, 2019 WL 8888195, at *3 (partially lifting stay because
`
`there was no “persuasive reason to continue to delay in litigation on the Asserted Patents and
`
`claims which are not subject to IPR”); Novartis AG v. HEC Pharm Co., 183 F. Supp. 3d 560, 563
`
`(D. Del. 2016) (staying counterclaim patent pending IPR appeal, while allowing plaintiff’s patent
`
`infringement claim to move forward); Blast Motion, slip op. at 2 (lifting stay on plaintiffs’ non-
`
`instituted patents and defendants’ counterclaim patents); Hewlett-Packard, 2015 WL 5935368, at
`
`*3 (granting partial stay on instituted patents, and allowing case on non-instituted patents to
`
`proceed); Pentair Water Pool & Spa, Inc. v. Hayward Indus., Inc., No. 5:11-cv-459-D, 2014 WL
`
`351865, at *3 (E.D.N.C. Jan. 31, 2014) (denying renewed motion to stay on patent not subject to
`
`inter partes reexamination or review, but staying litigation on four patents under PTAB review).
`
`This is because in a highly competitive and innovative industry, such as the potentially reduced
`
`risk smoking-products implicated here, “delay causes particular problems, because by the time
`
`protracted proceedings come to a close the value of the invention may not justify the costs of the
`
`litigation.” Centripetal Networks, 2019 WL 8888195, at *3. Plaintiffs present the Court with no
`
`persuasive reason to continue to delay litigation on the Counterclaim Patents.
`
`Plaintiffs’ citation to Life Technologies (Dkt. 450 at 9) is inapposite. In that case, the court
`
`denied a motion to stay counterclaims pending PTO reexamination on those counterclaims because
`
`of overlap with non-instituted patents. Life Techs. Corp. v. Illumina, Inc., No. 09-706-RK, 2010
`
`WL 2348737, at *3 (D. Del. June 7, 2010). In contrast, here, there is no overlap between the
`
`instituted patents and the non-instituted Counterclaim Patents.
`
`There is no prejudice to Plaintiffs in partially lifting the stay.
`
`E.
`
`Lifting The Stay Will Not Waste Judicial Resources
`
`Plaintiffs’ assertion that lifting the stay now will waste judicial resources is misplaced.
`
`Plaintiffs contend that the Court has already concluded that proceeding on the Counterclaim
`
`9
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 13 of 16 PageID# 10120
`
`
`
`Patents is “a waste of judicial resources.” Dkt. 450 at 9 (quoting 12/4/2020 Hearing Tr. at 6:9-24).
`
`But Plaintiffs’ argument is premised on stripping the context from the Court’s words. The Court
`
`neither said nor implied that proceeding on Defendants’ counterclaims would be a “waste of
`
`judicial resources.” Instead, the Court stated that it would be a waste of judicial resources to
`
`litigate Reynolds’ patents if the PTAB instituted the petitions on those patents. Dkt. 449-1 at 6:9-
`
`14. In context, the Court’s conclusion supports Defendants’ position. Because no PTAB petition
`
`has been instituted on the Counterclaim Patents, there is no risk of “waste of judicial resources.”
`
`Instead, placing Defendants’ near trial-ready patent counterclaims on hold for three years
`
`or more cannot be reconciled with any notion of judicial efficiency. Such lengthy delay is fraught
`
`with problems and inefficiencies, including potential future unavailability of witnesses, avoidable
`
`increased expense, and clogging dockets. Perhaps most importantly, statistically there is just a
`
`one-third probability that Plaintiffs’ claims survive. It is hardly efficient to impose all the delay
`
`and inefficiencies stemming from a multi-year freeze of the Defendants’ counterclaims based on
`
`a one in three (1:3) chance that Plaintiffs’ patents survive PTAB scrutiny.5 See Centripetal
`
`Networks, 2019 WL 8888195, at *3 (“IPR should not be used as a tool for delaying litigation”).
`
`Partially lifting the stay with respect to the Counterclaim Patents “will conserve the
`
`resources of the Court and parties pending final decisions on the IPRs but at the same time will
`
`permit [the parties] to continue with the immediate litigation of the majority of the asserted claims
`
`
`5 In the unlikely event that the PTAB proceeding on the ’542 patent somehow concludes with
`surviving asserted claims before a trial in this case is set, the Court could reintegrate Plaintiffs’
`claims and try them together with Defendants’ counterclaims. Or, to the extent judicial economy
`is a genuine concern of Plaintiffs, in the event Plaintiffs’ claims survive, Plaintiffs could try them
`along with Plaintiffs’ three stayed ITC patents once the stay pursuant to 28 U.S.C. § 1659 is lifted.
`Dkt. 27.
`
`10
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 14 of 16 PageID# 10121
`
`
`
`and ultimately to litigate all of the asserted claims in the action.” See Hewlett-Packard, 2015 WL
`
`5935368, at *3.
`
`III. CONCLUSION
`
`Defendants respectfully request that the Court lift the stay with respect to the Counterclaim
`
`Patents only. Should the Court lift the stay, the parties should be directed to file within five
`
`business days a proposed schedule that resumes the remaining scheduling deadlines with respect
`
`to the Counterclaim Patents.
`
`
`
`Dated: February 1, 2021
`
`
`
`
`
`
`
`Respectfully submitted,
`
`
`
`
`
`/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
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Ste. 1000
`Washington, DC 20004
`Tel: (202) 637-2200; Fax: (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 K. Sobolski (pro hac vice)
`Greg.sobolski@lw.com
`LATHAM & WATKINS LLP
`505 Montgomery Street, Suite 2000
`San Francisco, CA 94111
`Tel: (415) 391-0600; Fax: (415) 395-8095
`
`Brenda L. Danek (pro hac vice)
`brenda.danek@lw.com
`LATHAM & WATKINS LLP
`
`11
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 15 of 16 PageID# 10122
`
`
`
`330 North Wabash Avenue, Suite 2800
`Chicago, IL 60611
`Tel: (312) 876-7700; Fax: (312) 993-9767
`
`Counsel for Defendants Altria Client
`Services LLC, Philip Morris USA Inc., and
`Philip Morris Products S.A.
`
`12
`
`

`

`Case 1:20-cv-00393-LMB-WEF Document 451 Filed 02/01/21 Page 16 of 16 PageID# 10123
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on this 1st day of February, 2021, a true and correct copy of the
`
`foregoing was served using the Court’s CM/ECF system, with electronic notification of such
`filing to all counsel of record:
`
`
`
`
`
`
`
`
`
`/s/ Maximilian A. Grant
`
`
`
`
`
`Maximilian A. Grant (VSB No. 91792)
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`Email: max.grant@lw.com
`
`
`Counsel for Defendants Altria Client
`Services LLC, Philip Morris USA Inc., and
`Philip Morris Products S.A.
`
`13
`
`