Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 1 of 13 PageID# 15246
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
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`Plaintiffs and Counterclaim Defendants,
`
`v.
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.,
`
`Defendants and Counterclaim Plaintiffs.
`
`Case No. 1:20-cv-00393-LO-TCB
`
`CONFIDENTIAL
`FILED UNDER SEAL
`
`REPLY TO RESPONDENTS’ OPPOSITION TO PLAINTIFFS’ PARTIAL MOTION TO
`STAY FURTHER PROCEEDINGS ON THE CLAIM OF PHILIP MORRIS
`PRODUCTS S.A. SEEKING INJUNCTIVE RELIEF
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`

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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 2 of 13 PageID# 15247
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`I.
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`INTRODUCTION
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`After Reynolds filed this Motion to Stay, the parties learned that trial in this matter will not
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`take place until April 2022 (Dkt. No. 657), roughly seven months after the International Trade
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`Commission (“ITC”) is due to issue its Final Determination on whether to uphold Judge Cheney’s
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`Initial Determination (“ID”), set the ruling aside, or modify it in some fashion. This timeline
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`further underscores the wisdom of a brief stay of proceedings on PMP’s claim for injunctive relief
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`in this case pending the Commission’s decision,
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`If the Commission upholds Judge Cheney’s ID, as it should,
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`. Despite the
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`protestations in its Opposition, PMP has not articulated any colorable theory of irreparable harm
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`, which PMP attributes to the
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`infringement of its patents by Reynolds’s VUSE products.
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`Even if PMP could articulate a colorable theory of irreparable harm
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`, there can be no doubt that the Commission’s Final Determination
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`will significantly impact the playing field around PMP’s claim for injunctive relief. If the ID is
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`upheld,
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`In the unlikely event that the ID is set aside or modified in some way
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`.
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`
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`injunctive relief claims as currently articulated, or else it can amend them, if possible, to address
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`whatever modified order the Commission may issue. In any event, given that Judge Cheney’s ID
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` then PMP can either move forward on its
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`2
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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 3 of 13 PageID# 15248
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`finds that the IQOS products infringe
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`, the parties and their respective experts cannot properly join
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`issue on the eBay factors relevant to injunctive relief without a final resolution from the
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`Commission.
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`Moving forward to complete injunction-related discovery now is just shadow boxing, and
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`raises the clear possibility that the tremendous resources expended on these issues will either be
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`for naught, or will at least have to be revisited and revised after the Commission’s decision, thus
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`duplicating work. Even PMP appears to concede that at least expert discovery on injunction issues
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`should be delayed until after the ITC Final Determination—indeed, it suggests that this work need
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`not even take place until after trial. (See Opp. at 5.) There is no sensible reason why fact discovery
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`on the very same injunctive relief issues must be completed now, while the experts (even according
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`to PMP) can wait; the identical uncertainties around the ITC outcome apply equally to both.
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`A brief stay pending the Commission’s decision in September 2021 is warranted.
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`Depending on the Commission’s Final Determination, the parties will have ample time (roughly
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`seven months) to complete the remaining discovery on injunction issues. Or, as PMP suggests,
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`those issues can be taken up after trial, and only if PMP prevails on the merits of its infringement
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`claims.
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`II.
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`ARGUMENT
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`A.
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`The Final Decision Of The ITC Will Significantly Impact,
` PMP’s Claim For Injunctive Relief In This Case.
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`
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`As detailed in Reynolds’s opening brief, PMP’s claim for injunctive relief—as articulated
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`in its response to Interrogatory 23 (see Ex. B to Motion)—
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`. (Mot. at
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`2-4.) In his 132-page ID, however, Judge Cheney finds that the IQOS products infringe
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`3
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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 4 of 13 PageID# 15249
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` two patents owned by Reynolds,
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` (See Mot., Ex. A, at 25-64, 92-97, 99-100, 125-26, 131.) If the ID is upheld,
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`PMP’s stated grounds for injunctive relief in this case will be eliminated. If PMP proves that the
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`VUSE products infringe its asserted counterclaim patents, then PMP may be able to collect money
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`damages,
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`. There can be no doubt that the ITC Final Determination will
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`have a significant,
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`, impact on PMP’s claims, and thus it makes sense to
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`give the Commission time to rule. PMP disagrees, but none of the arguments it offers to oppose a
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`brief stay holds up.
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`Significant Fact And Expert Discovery On Injunction Issues Remains.
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`1.
`First, PMP suggests that very little discovery remains on the injunctive relief issues, and
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`thus it would be “inefficient” and “unproductive” to delay its completion. (See Opp. at 5.) Yet
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`PMP’s own arguments are inconsistent. PMP acknowledges that the parties have completed no
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`expert discovery on injunction issues whatsoever, but there is (in PMP’s view) no problem with
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`delaying that work until after the ITC Final Determination, or even after the trial.1 (Id.) It is only
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`fact discovery that PMP insists on completing now, and for no reason other than its own say-so.
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`And notwithstanding PMP’s characterization, the parties are nowhere near “the tail-end of their
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`injunction-related discovery.” (Id.) For example, the parties have not yet completed their
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`1 PMP equivocates in its Opposition about the need for experts on injunctive relief issues
`(id.), but just last week stated it did intend to offer “expert testimony, analysis, and opinions” on
`these matters (see Dkt. No. 624 at 7). Regardless of PMP’s intentions, Reynolds does believe that
`expert reports and depositions are essential to its defense against PMP’s claim for equitable relief,
`and does intend to offer them. At this point, however, neither side’s experts could properly join
`issue on the central dispute
`. Doing so would require guesswork,
`which neither side wants, and which would be obviated by a brief stay to get final guidance from
`the Commission.
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`4
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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 5 of 13 PageID# 15250
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`respective productions of documents in response to injunction-specific requests, and it appears that
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`additional motion practice on that issue will be necessary because Defendants have either refused
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`to produce numerous categories of documents requested by Reynolds (PMP), or else refused to
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`produce any documents at all (Altria and PM USA). (See May 24, 2021 letter from J. Michalik to
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`J. Koh regarding outstanding document requests, attached as Ex. C.) It is hardly appropriate for
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`Defendants to oppose a stay on the ground that discovery is near complete, while at the same time
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`imposing a de facto stay of their own by refusing to produce relevant documents. If necessary, the
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`Court will address Defendants’ intransigence in due course, but the fact remains that much remains
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`to be done on this issue, and the need for it may be eliminated (or at least reduced) depending on
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`the ITC Final Determination.
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`Similarly, the parties have not yet deposed a single fact witness on injunction issues. It is
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`true that both sides have identified their respective corporate designees (two of whom live abroad)
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`and have identified dates when they are available for deposition, but—for all of the reasons
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`discussed above—it makes no sense to proceed with those depositions at this time. Just as the
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`experts could not properly join issue on factors like irreparable harm at this time, PMP’s designees
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`cannot be expected to credibly articulate the factual support for PMP’s theories on eBay factors
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` Nor
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`can Reynolds’s designee possibly respond to those contentions in a comprehensive way.
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`Moreover, depending on the ITC’s Final Determination, PMP may well amend its contentions,
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`putting the parties back to square one.
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`PMP argues that two of the witnesses designated under Rule 30(b)(6) on injunction issues
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`will also have to testify in their individual capacities on liability and damages issues. (Opp. at 5.)
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`5
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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 6 of 13 PageID# 15251
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`Dates have been set for those depositions, and they will proceed on the limited scope of topics
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`within the personal knowledge of those witnesses. That is not, however, a reason why those
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`witnesses should also be forced to testify at this stage—either as individuals or on behalf of their
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`respective companies—on injunction issues, which are separate and are subject to significant
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`change based on the ITC Final Determination in a few short months. PMP suggests that going
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`forward on all issues now will prevent the witnesses from being deposed again later (id.), but that
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`is not the case. If, for example, PMP’s witness
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` testifies as scheduled on June 18 and
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`offers testimony on behalf of PMP regarding irreparable harm
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`
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` (as she unquestionably would do, since that is the focus of PMP’s contentions), then
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`Reynolds would absolutely seek to depose her again if the Commission agrees with Judge Cheney
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`2.
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`PMP’s Attacks On The Merits Of Judge Cheney’s Decision Are Both
`Groundless And Irrelevant To The Propriety Of A Brief Stay.
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`Second, PMP argues that Judge Cheney’s findings are wrong and that the ITC proceedings
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`remain ongoing. (Opp. at 6-7.) That PMP is displeased with the ID and will challenge it before
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`the Commission is understandable, but also irrelevant to the propriety of a stay. Of course there
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`is no guarantee what the Commission will do—any more than there is a guarantee what the PTAB
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`will do with respect to Reynolds’s ’268 and ’542 patents, which have been stayed (at Defendants’
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`urging) for months. Reynolds never claimed otherwise.2 But this Court did not stay the
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`proceedings on Reynolds’s patents because it knew what the PTAB would ultimately decide; it did
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`so because the PTAB’s decision, if it were adverse to Reynolds, could have a significant, and
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`
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`2 Reynolds’s grounds in favor of a stay are in no way dependent on the actual outcome of
`the ITC Final Determination, so PMP’s straw man argument on this point (and the cases it offers
`to rebut that argument) are inapposite. (Opp. at 4.)
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`6
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`

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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 7 of 13 PageID# 15252
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`perhaps dispositive, impact on the fate of those patents in this case. (Dkt. Nos. 426, 432, 456.)
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`The same is true with respect to the impact the Commission’s determination may have on PMP’s
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`claim for injunctive relief.
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`The actual merits of Judge Cheney’s ID, and how the Commission will ultimately rule, are
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`issues that this Court need not and should not address, but it is worth noting that PMP’s efforts to
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`cast aspersions on the ID and its likely fate are groundless. Judge Cheney held a lengthy
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`evidentiary hearing, took testimony from fact witnesses and a dozen experts, and wrote a 132-page
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`opinion exhaustively laying out his findings and analyses. (See Mot., Ex. A.) He found that the
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`IQOS products infringe
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` two patents owned by Reynolds
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` (Id. at 25-64, 92-97, 99-100, 125-26, 131.)
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`
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` (Id.) To prevail, PMP will have to
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`convince the Commission that Judge Cheney was wrong
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`. Those are the facts.
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`And they leave no room for PMP’s suggestion that the ID is so likely to be overturned that this
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`Court ought just ignore it and force injunction-related discovery in this case to continue.
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`PMP’s references to the public interest considerations before the ITC are similarly
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`unavailing. (Opp. at 8-9.) As recounted in Reynolds’s opening brief (Mot. at 6-7),
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` (Mot., Ex. A, at 103.)
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` (Id. at 104-105.)
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`7
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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 8 of 13 PageID# 15253
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` (Id. at 110.) Defendants are
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`sure to challenge these findings, as is their right. But Judge Cheney’s findings are clear and well-
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`reasoned, and they should not be ignored.
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`Just as the Court recognized the wisdom in staying all proceedings on Reynolds’s asserted
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`’268 and ’542 patents in view of parallel proceedings before the PTAB that might someday impact
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`the viability of those patents (Dkt. Nos. 426, 432, 456), the Court should apply the same judgment
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`and stay further proceedings on PMP’s claim for injunctive relief. There can be no doubt that the
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`decision of the Commission will, at a minimum, significantly impact the landscape on the
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`injunction issues. And, unlike the situation with Reynolds’s patents—which PMP acknowledges
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`could be stayed for “three years or more” (Opp. at 2)—the Commission is set to issue its Final
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`Determination in a few months, at which time the parties will have the necessary guidance to move
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`forward and complete discovery on any injunction issues that remain.
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`3.
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`PMP Cannot Dispute That Its Contentions On Critical Issues Like
`Irreparable Harm Would Change Dramatically If The ID Is Upheld.
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`Finally, PMP claims that it would still have some viable claim of irreparable harm even if
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`the ID is upheld
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`argues, for example,
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`. (See Opp. at 10-12.) It
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`, and would provide a separate basis for injunctive relief
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`. (Id. at 11-12.) On this point, Reynolds respectfully refers
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`the Court to PMP’s response to Interrogatory 23 (attached as Ex. B to Reynolds’s opening brief),
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`wherein PMP sets forth in full its contentions regarding why an injunction should issue in this case.
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`PMP did not mention
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` even once, much less articulate any theory (or supporting
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`evidence) that would link Reynolds’s alleged infringement of the counterclaim patents
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`8
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`Case 1:20-cv-OO393-LO-TCB Document 677 Filed 05/27/21 Page 9 of 13 Page|D# 15254
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`_. PMP is making things up on the fly, developing new theories ofirreparable harm
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`that are mentioned nowhere in its actual contentions.
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`There is good reason why PMP never mentioned - in its contentions regarding
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`- excerpts attached as Ex. D, at 40-43.) If PMP nevertheless actually intends to make-
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`_ a factor in its case for irreparable harm, then Reynolds would need to conduct
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`significant discovery— which has not happened to date because there was
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`no reason to do so. This is yet more discovery that apparently may be necessary on the injunction
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`issues, but that has not been done.
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`Reynolds disagrees that any “harm” PMP has articulated—
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`— could ever rise to the level of irreparable harm sufficient to
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`justify an injrmction, but the Court need not decide, or even consider, that issue now.3 For purposes
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` See Cannarella v. Volvo Car USA LLC, No. CV l6—6195—RSWL—JEMX, 2016 WL
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`
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`10 (C .D. Cal. Dec. 12, 2016) (“Even if the parties are direct competitors, Plairrtifl‘s
`9450451, at
`argument that he will suffer loss of profits, market share, and goodwill is weak. The evidence
`presented suggests that Plaintiff is an NPE.”); Uniloc USA Inc. v. LG Elecs. USA. Inc, No. 18—
`CV-06737-JST, 2019 WL 1905161, at *6 (ND. Cal. Apr. 29, 2019) (citing VirtualAgiIity Inc. v.
`Salesforcerom, Inc, 759 F.3d 1307, 1317 & n.6 (Fed. Cir. 2014) (internal citations omitted)
`(“Finally. LGE and Uniloc are not competitors. Therefore, Uniloc will not suffer ‘irreparable
`harm’ from LGE’s continued use of the accused technology. .
`.
`. In other words, “[a] stay will not
`diminish the monetary damages to which [Uniloc] will be entitled if it succeeds in its infringement
`suit—it only delays realization of those damages and delays any potential injunctive remedy”);
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`

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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 10 of 13 PageID# 15255
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`of this Motion, even if PMP were correct that it has articulated at least some ghost of a theory of
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`harm
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` that does nothing to negate the propriety of a brief stay to
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`give the Commission an opportunity to rule.
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`The operative point, which PMP does not and cannot refute, is that the final decision of the
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`Commission will provide important guidance about the facts relevant to PMP’s injunctive relief
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`claim. Depending on the nature of the ruling, PMP may have to amend its contentions
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` or to address whatever modified order the Commission may issue. At that time, the
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`parties and their respective experts can take informed positions on the eBay issues (if any) that
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`remain. For example, as indicated for the first time in its Opposition to this motion,
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`. If the parties move forward to complete
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`fact discovery on the injunction issues now, however, they will by necessity be taking positions
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`on issues that may be changed or eliminated completely in a few short months, forcing work to be
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`redone or lost. PMP offers no reason to do this, other than its own desire to press forward as
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`though the ID never happened. But it did, and it has an unavoidable impact on this case.
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`A Brief Stay To Allow The ITC To Rule Will Not Prejudice PMP.
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`B.
`PMP does not identify any prejudice that it would suffer if this Motion is granted. Nor
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`could it. Since the Motion was filed, the parties learned that trial in this matter will not take place
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`until April 2022. There is no urgency to rush forward and expend resources on further injunction
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`discovery before the final ITC decision, which is expected in September 2021.4 Once the
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`
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`Rite–Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1548 (Fed Cir. 1995) (“[I]f the patentee is not
`selling a product, by definition there can be no lost profits.”).
`4 PMP notes that any decision of the Commission is subject to Presidential review before
`it becomes final. (Opp. at 9.) True enough, but that only adds 60 days at most, and can be
`terminated early if the President notifies the Commission of his decision not to disapprove of the
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`10
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`

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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 11 of 13 PageID# 15256
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`Commission rules, the parties will have nearly seven months to complete injunction-related
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`discovery in this case, assuming that PMP’s injunction claim even remains viable. Finally, and
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`perhaps most importantly, in September 2021, unlike now, the parties will be able to complete
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`discovery based on a record that is settled
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`.
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`III. CONCLUSION
`For these reasons, and those set forth in their opening brief, Plaintiffs respectfully request
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`that the Court enter an Order staying all further proceedings on PMP’s request for injunctive relief.
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`
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`Commission’s opinion. Moreover, the Presidential review provision does not actually require
`the President (or his designee) to consider the merits of the Commission’s opinion. Finally, it is
`very rare for the President to actually disagree with a final determination from the Commission.
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`11
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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 12 of 13 PageID# 15257
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`Dated: May 27, 2021
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`
`
`Stephanie E. Parker
`JONES DAY
`1221 Peachtree Street, N.E.,
`Suite 400
`Atlanta, Georgia 30361
`Telephone: (404) 521-3939
`Facsimile: (404) 581-8330
`Email: separker@jonesday.com
`
`
`Anthony M. Insogna
`JONES DAY
`4655 Executive Drive
`Suite 1500
`San Diego, CA 92121
`Telephone: (858) 314-1200
`Facsimile: (844) 345-3178
`Email: aminsogna@jonesday.com
`
`William E. Devitt
`JONES DAY
`77 West Wacker
`Suite 3500
`Chicago, IL 60601
`Telephone: (312) 269-4240
`Facsimile: (312) 782-8585
`Email: wdevitt@jonesday.com
`
`Sanjiv P. Laud
`JONES DAY
`90 South Seventh Street
`Suite 4950
`Minneapolis, MN 55402
`Telephone: (612) 217-8800
`Facsimile: (844) 345-3178
`Email: slaud@jonesday.com
`
`
`
`
`Respectfully submitted,
`
`
`
`
` /s/ David M. Maiorana
`David M. Maiorana (VA Bar No. 42334)
`Ryan B. McCrum
`JONES DAY
`901 Lakeside Ave.
`Cleveland, OH 44114
`Telephone: (216) 586-3939
`Facsimile: (216) 579-0212
`Email: dmaiorana@jonesday.com
`Email: rbmccrum@jonesday.com
`
`John J. Normile
`JONES DAY
`250 Vesey Street
`New York, NY 10281
`Telephone: (212) 326-3939
`Facsimile: (212) 755-7306
`Email: jjnormile@jonesday.com
`
`
`Alexis A. Smith
`JONES DAY
`555 South Flower Street
`Fiftieth Floor
`Los Angeles, CA 90071
`Telephone: (213) 243-2653
`Facsimile: (213) 243-2539
`Email: asmith@jonesday.com
`
`Charles B. Molster, III Va. Bar No. 23613
`THE LAW OFFICES OF
`CHARLES B. MOLSTER, III PLLC
`2141 Wisconsin Avenue, N.W. Suite M
`Washington, DC 20007
`Telephone: (703) 346-1505
`Email: cmolster@molsterlaw.com
`
`Counsel for Plaintiffs RAI Strategic Holdings,
`Inc. and R.J. Reynolds Vapor Company
`
`
`

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`Case 1:20-cv-00393-LO-TCB Document 677 Filed 05/27/21 Page 13 of 13 PageID# 15258
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`CERTIFICATE OF SERVICE
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`
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`I hereby certify that on this 27th day of May, 2021, 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/ David M. Maiorana
`David M. Maiorana (VA Bar No. 42334)
`JONES DAY
`901 Lakeside Ave.
`Cleveland, OH 44114
`Telephone: (216) 586-3939
`Facsimile: (216) 579-0212
`Email: dmaiorana@jonesday.com
`
`Counsel for Plaintiffs RAI Strategic Holdings,
`Inc. and R.J. Reynolds Vapor Company
`
`
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`
`
`