Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 1 of 11 PageID #: 1778
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`REALTIME ADAPTIVE STREAMING LLC,
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`NETFLIX, INC. AND NETFLIX
`STREAMING SERVICES, INC.,
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`Plaintiff,
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`v.
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`Defendants.
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`C.A. No. 17-1692 (CFC) (SRF)
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`PLAINTIFF REALTIME ADAPTIVE STREAMING LLC’S REPLY BRIEF IN
`SUPPORT OF ITS MOTION FOR LEAVE TO FILE AMENDED COMPLAINT
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`BAYARD, P.A.
`
`Stephen B. Brauerman (4952)
`600 North King Street, Suite 400
`Wilmington, DE 19801
`(302) 655-5000
`sbrauerman@bayardlaw.com
`
`Attorneys for Plaintiff Realtime Adaptive
`Streaming LLC
`
`July 17, 2019
`
`OF COUNSEL:
`
`Marc A. Fenster
`Brian D. Ledahl
`Reza Mirzaie
`C. Jay Chung
`RUSS, AUGUST & KABAT
`12424 Wilshire Boulevard, 12th Floor
`(310) 826-7474
`Los Angeles, CA 90025-1031
`mfenster@raklaw.com
`bledahl@raklaw.com
`rmirzaie@raklaw.com
`jchung@raklaw.com
`
`
`
`
`
`
` i
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`

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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 2 of 11 PageID #: 1779
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`TABLE OF CONTENTS
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`Page(s)
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`I.
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`REALTIME’S MOTION TO AMEND—ITS FIRST ADDRESSING PATENT
`ELIGIBILITY—IS BOTH PROCEDURALLY AND SUBSTANTIVELY PROPER ........ 1
`A. There Is No Procedural Basis to Ignore or Discount Realtime’s Amended Complaint 1
`B. Realtime’s Amendments Are Not Futile. ..................................................................... 3
`II. CONCLUSION ...................................................................................................................... 8
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`
`ii
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 3 of 11 PageID #: 1780
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`
`
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`Cases
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`TABLE OF AUTHORITIES
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`Page(s)
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`Aatrix Software v. Green Shades Software,
`882 F.3d 1121 (Fed. Cir. 2018)..............................................................................................1, 5
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`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`134 S. Ct. 2347 (2014) ...............................................................................................................3
`
`Bechtel v. Robinson,
`886 F.2d 644 (3rd Cir. 1989) .....................................................................................................2
`
`Berkheimer v. HP Inc.,
`881 F.3d 1360 (Fed. Cir. 2018)..............................................................................................5, 7
`
`Berkheimer v. HP Inc.,
`890 F.3d 1369 (Fed. Cir. 2018) (per curiam) .........................................................................6, 7
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`Cellspin Soft, Inc. v. Fitbit, Inc.,
`--- F.3d ---, 2019 WL 2588278 ..............................................................................................3, 5
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`Mullin v. Balicki,
`875 F.3d 140 (3rd Cir. 2017) .....................................................................................................1
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`Realtime Adaptive Streaming LLC v. Google LLC,
`Case No. 2:18-cv-032629-GW-JC, D.I. 36 (D.C. Cal. Oct. 25, 2018) ..................................3, 7
`
`Realtime Data LLC v. Actian Corp.,
`2016 WL 259581 (E.D. Tex. Jan. 21, 2016) ..............................................................................4
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`Other Authorities
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`second amendment ...........................................................................................................................1
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`Rule 12(b)(6) ................................................................................................................................6, 7
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`Rule 15’s ..........................................................................................................................................2
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` i
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 4 of 11 PageID #: 1781
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`I.
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`REALTIME’S MOTION TO AMEND—ITS FIRST ADDRESSING PATENT
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`ELIGIBILITY—IS BOTH PROCEDURALLY AND SUBSTANTIVELY PROPER
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`A.
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`There Is No Procedural Basis to Ignore or Discount Realtime’s Amended
`Complaint
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`In their effort to have this Court avoid or ignore the substance of Realtime’s factual
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`allegations in its Amended Complaint. Defendant presents three arguments for why Realtime’s
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`Amendment is procedurally improper. None have merit.
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`Defendant’s contention of supposed “undue delay” suffers fatal flaws. While conceding
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`that “delay alone” is insufficient under the law, Defendant points to virtually nothing else and
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`boldly asks this Court to find “undue delay” D.I. 53 at 4-5. But the Third Circuit has made clear
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`that the “undue delay” exception to the liberal amendment rule applies when the delay is
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`inexplicable and so excessive that it resulted in a motion to amend being filed after a “final or
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`appealable order.” Mullin v. Balicki, 875 F.3d 140, 150, n. 17 (3rd Cir. 2017). The R&R is not
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`final nor appealable. Therefore, Defendant’s legal argument for “undue delay” has no merit.
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`Finding zero support in the law, Defendant casts aspersions, suggesting that Realtime
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`strategically chose to withhold it factual allegations. D.I. 53 at 4-5. But Defendant provides no
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`real factual support for this baseless accusation. And none can exist here. Defendants cannot
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`point to any meaningful change in circumstances or leverage of any sort between some “delay”
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`and “undue delay”—particularly where not even a single meaningful event has taken place in
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`this case since the R&R was issued. And in any event, Defendant has no answer for the fact that
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`the Federal Circuit has even reversed a district court opinion denying a motion for leave to file “a
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`second amendment” on the patent eligibility issue. Aatrix Software v. Green Shades Software,
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`882 F.3d 1121, 1125 (Fed. Cir. 2018).
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` 1
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 5 of 11 PageID #: 1782
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`Moreover, any contention of “undue prejudice” also fails, in light of the law and facts.
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`The Third Circuit is clear that “[i]n order to show undue prejudice, the party opposing a motion
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`to amend bears the burden of showing that it will be ‘unfairly disadvantaged or deprived of the
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`opportunity to present facts of evidence’ unless leave to amend is denied.” E.g., Bechtel v.
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`Robinson, 886 F.2d 644, 652 (3rd Cir. 1989). In deciding the issue, district courts should focus
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`on whether allowing an amendment would result in additional discovery, cost, and preparation in
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`order to defend against new facts or new legal theories. Id. Defendant’s meritless position does
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`not even try to address this standard, let alone meet its burden on it. Indeed, Defendant’s own
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`cases are consistent on this point and work against Defendant’s position. In Delaware Display
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`Grp LLC v. Lenovo Grp., Ltd., he court held that Rule 15’s liberal amendment standard provides
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`that a court should “freely give leave [to amend] when justice so requires.” No. 13-2108-RG,
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`2016 WL 720977 at *7-9 (D. Del. Feb. 23, 2016) When deciding whether there has been undue
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`prejudice or delay, that issue, courts look to factors including “whether allowing an amendment
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`would result in additional discovery, costs, and preparation to defend against new facts or new
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`theories.” Id. And when applying this test to the facts at issue in that case, which were far more
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`favorable to the defendant opposing the motion to amend, the court in Delaware Display rejected
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`the same arguments made by Defendant here.
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`Beyond the law, Defendant’s argument here is circular is wholly unsupported by the
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`factual record. Defendant claims it has suffered undue prejudice merely because Realtime is
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`asking for a “do-over.” D.I. 53 at 5. But there is no plausible support for this contention.
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`Moreover, the legal standard for “undue prejudice” must only focus on actual “prejudice” after
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`the original motion to dismiss. This case has only thus far dealt with Defendant’s own pleading
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`2
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 6 of 11 PageID #: 1783
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`motions. Not one other substantive event has occurred in this case—not even a scheduling order.
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`Thus, there can be no prejudice here, let alone undue prejudice.
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`Defendant’s argument is also nonsensical. Because no events have taken place since its
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`original motion, Defendant now resorts to claiming that it suffers undue prejudice from having to
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`even respond to a motion to amend. D.I. 46 at 5. But that would be true in every case, which
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`obviously would result in the narrow “undue prejudice” exception completely swallowing the
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`liberal amendment rule. Moreover, Defendant’s suggestion that Realtime’s patents are facially
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`invalid are belied by the facts and the law. Under recent Federal Circuit law, those claims are
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`presumptively valid. Cellspin Soft, Inc. v. Fitbit, Inc., --- F.3d ---, 2019 WL 2588278, at *8-23.
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`And here, Defendant’s claim is even more implausible, as the very patent claims at issue also
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`were already found not ineligible by another district court judge. In short, Defendant’s meritless
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`argument should be rejected.
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`B.
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`Realtime’s Amendments Are Not Futile.
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`Defendant’s “futility” arguments are wholly meritless. First, allegations regarding the
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`third-party patents of Western Digital and Altera are not “futile.” On the contrary, they show that
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`the problems that Realtime’s Fallon patents solved were technological, computer-specific
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`problems (as opposed to human problems)—i.e., the technological, computer-specific problems
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`regarding computer capacity and a need for a more efficient compression system. This shows
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`that the Fallon patents are eligible under §101. See Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134
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`S. Ct. 2347, 2358 (2014) (claims that “improve[] an existing technological process” or “solve a
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`technological problem in ‘conventional industry practice’” are patent-eligible). The third-party
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`patents are also directly relevant to the Fallon patents. Not only do these third-party patents
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`involve compression—“an area firmly rooted in computer technology” (Realtime Adaptive
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`Streaming LLC v. Google LLC, Case No. 2:18-cv-032629-GW-JC, D.I. 36 (D.C. Cal. Oct. 25,
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`3
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 7 of 11 PageID #: 1784
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`2018))—but they also cite to other Realtime patents, including those that are related and share
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`the same specification as the Fallon patents asserted here. For instance, U.S. Pat. No. 9,448,738
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`of Western Digital, quoted in Realtime’s amended complaint, cites to multiple Realtime patents
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`and patent applications by inventor James Fallon, including Pat. No. 8,054,879 and Pat. App.
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`Pub. No. 2011/0235697, which are both related to (and share the same specification as) the
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`Fallon patents asserted here. Similarly, U.S. Pat. No. 9,026,568 of Altera, quoted in Realtime’s
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`amended complaint, also cites to multiple Realtime patents and patent application by inventor
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`James Fallon, including Pat. Nos. 6,195,024 and 6,309,424, which are both incorporated by
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`reference into the Fallon patents asserted here. See ‘535 patent at 5:32-37. In short, the
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`statements from these third-party patents are relevant and probative of §101 eligibility.
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`Second, the allegations regarding claim construction proposals are not futile because they
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`confirm that the Fallon patents are directed to technological, computer-specific solutions arising
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`specifically in the realm of computer technology. For example, each of the proposed
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`constructions confirm that the claims are computer-specific: “access profile” is a computer
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`specific digital information that enables a computer controller to perform computer specific
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`operations; “data profile” is also a computer specific digital information that associates other
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`computer specific operations; “asymmetric” compression is a specific subset of computer
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`compression algorithm; “data block” is a digital computer data (i.e., “bits”); and “compress” is a
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`computer-specific operation that results in fewer “bits.” Indeed, a Texas court has held that
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`computer-specific nature of the claims were important considerations in ruling that other
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`Realtime patents (specifications of which are incorporated by reference into the asserted Fallon
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`patents) are patent eligible. See Realtime Data LLC v. Actian Corp., 2016 WL 259581, *1 (E.D.
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`Tex. Jan. 21, 2016) (“under Plaintiff’s construction [that data at issue is digital and ‘not easily
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`4
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 8 of 11 PageID #: 1785
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`recognizable to humans’], Defendants’ argument that patents are directed to an abstract idea
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`would fail.”); see also Aatrix Software v. Green Shades Software, 882 F.3d 1121, 1125 (Fed. Cir.
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`2018) (District court “did err when it denied leave to amend without claim construction and in
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`the face of factual allegations, spelled out in the proposed second amended complaint, that, if
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`accepted as true, establish that the claimed combination contains inventive components and
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`improves the workings of the computer.”).
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`Third, Realtime’s allegations regarding “unconventional and novel limitations” are are
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`not futile. Indeed, the Federal Circuit made clear that “[t]he question of whether a claim element
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`or combination of elements is well-understood, routine and conventional to a skilled artisan in
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`the relevant field is a question of fact.” Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir.
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`2018). Moreover, while “the specification need not expressly list all the reasons why this claimed
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`structure is unconventional” (Cellspin Soft, Inc. v. Fitbit, Inc., --- F.3d ---, 2019 WL 2588278, at
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`*8 (Fed. Cir. June 25, 2019), Realtime’s allegations actually cites and quotes the specifications
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`supporting the unconventional and novel nature of the claim limitations. For instance, Realtime’s
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`allegations provide detailed factual support for the unconventional nature of using “throughput
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`(bandwidth)” in selecting compression techniques and the fact that the inventors recognized the
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`novelty of “utiliz[ing] an asymmetrical algorithm” with “throughput (bandwidth),” as such a use
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`may “provide an increase in the overall system performance as compared the performance that
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`would be obtained using a symmetrical algorithm.” E.g., FAC at ¶¶ 23, 62, 99, 136. As another
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`example, Realtime’s allegations further show that using multiple compression compression
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`algorithms in a single system is unconventional. E.g., FAC at ¶¶ 24, 63, 100, 137. And as yet
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`another example, Realtime’s allegations also show that the inventors of the Fallon patents
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`recognized the unconventional effect of using asymmetrical compression in specific situations.
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`5
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 9 of 11 PageID #: 1786
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`E.g., FAC at ¶¶ 25, 64, 101, 138; see also Berkheimer v. HP Inc., 890 F.3d 1369, 1373 (Fed.
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`Cir. 2018) (per curiam) (“We cannot adopt a result-oriented approach to end patent litigation at
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`the Rule 12(b)(6) stage that would fail to accept as true the complaint's factual allegations and
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`construe them in the light most favorable to the plaintiff, as settled law requires.”).
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`Defendant argues that all of these factual allegations—supported by the intrinsic
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`evidence, with quotes and cites to the specifications—should be disregarded because they were
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`purportedly admitted in the specification to be well-known. That is false. Neither the Report and
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`Recommendation nor Defendant’s opposition cites to any specification that support the assertion
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`that the claimed combinations (involving, e.g., “asymmetric compressors,” “plurality of
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`compressors,” “compression routing … depend[] on the throughput,” and/or “access profile”)
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`were well known. In fact, the Report and Recommendation’s sole support for the assertion that
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`the patents purportedly “admit” the claims are conventional is the following sentence from the
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`Fallon patents: “It is to be understood that the systems and method described herein may be
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`implemented in various forms of hardware, software, firmware, special purpose processors, or a
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`combination thereof.” ‘535 patent at 20:1-4; see also D.I. 48 (R&R) at 25-27. That sentence does
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`not even mention any of the claim limitations, nor does it say anything about them being
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`conventional. Indeed, virtually any computer-based inventions can be “implemented in various
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`forms of hardware, software, firmware, special purpose processors, or a combination thereof.”
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`Following such a logic, any computer-based inventions would be ineligible. That certainly is not
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`the law.1
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`1 Haivision also cites to various other parts of the Fallon patent specifications to argue that the
`claim limitations were “admittedly known in the prior art.” See Opp. at 13, fn.15. That is false.
`As an initial matter, the Report and Recommendation does not cite to any of these portions of the
`specification. Moreover, these portions merely state that multiple compression algorithms
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`6
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 10 of 11 PageID #: 1787
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`Fourth, Realtime’s allegations regarding non-representative nature of various claims is
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`not futile, as they provide meaningful arguments regarding limitations found only in certain
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`claims and not others. See Berkheimer, 881 F.3d at 1365 (“A claim is not representative simply
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`because it is an independent claim. Indeed, Mr. Berkheimer advanced meaningful arguments
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`regarding limitations found only in the dependent claims.”). Defendant’s argument regarding
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`these allegations is not even about futility, but rather that they are legal arguments that Realtime
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`has purportedly “waived” by not including in the §101 briefing. That is false. Realtime included
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`arguments that Defendant failed to show that all claim should be treated the same. E.g., D.I. 14
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`(Realtime’s Opp. to Mot. to Dismiss) at 15-16. The amended allegations provide additional
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`meaningful arguments that various claims have limitations found only in certain claims. They are
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`not futile.
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`Fifth, the allegations quoting the California court’s order holding that some of the same
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`Fallon patents at issue in this case are “tied to specific computer systems that ‘improve[]
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`computer functionality in some way’ rather than being drawn to purely abstract concepts”
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`(Realtime Adaptive Streaming LLC v. Google LLC, Case No. 2:18-cv-032629-GW-JC, D.I. 36
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`(D.C. Cal. Oct. 25, 2018)) are not futile. On the contrary, they are factual allegations that are
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`necessarily plausible—indeed, a federal District Court found those allegations to be true. They
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`are entitled to be viewed in the light most favorable to Realtime. See Berkheimer, 890 F.3d at
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`1373 (per curiam) (“We cannot adopt a result-oriented approach to end patent litigation at the
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`Rule 12(b)(6) stage that would fail to accept as true the complaint's factual allegations and
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`construe them in the light most favorable to the plaintiff, as settled law requires.”).
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`(including Lempel-Ziv) were known before the Fallon patents. They do not say that anyone
`before the inventors of the Fallon patents recognized the significance and benefits of using
`multiple asymmetric compression techniques in certain circumstances and using throughput
`(bandwidth) as a parameter to compress digital data.
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`7
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`Case 1:17-cv-01692-CFC-SRF Document 54 Filed 07/17/19 Page 11 of 11 PageID #: 1788
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`.
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`II.
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`CONCLUSION
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`For the foregoing reasons, Realtime respectfully requests that the Court grant leave for
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`Realtime to file Third Amended Complaint, set forth in Exhibit 1.
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`July 17, 2019
`
`OF COUNSEL:
`
`Marc A. Fenster
`Brian D. Ledahl
`Reza Mirzaie
`C. Jay Chung
`RUSS, AUGUST & KABAT
`12424 Wilshire Boulevard, 12th Floor
`(310) 826-7474
`Los Angeles, CA 90025-1031
`mfenster@raklaw.com
`bledahl@raklaw.com
`rmirzaie@raklaw.com
`jchung@raklaw.com
`
`
`BAYARD, P.A.
`
` /s/ Stephen B. Brauerman
`Stephen B. Brauerman (No. 4952)
`600 North King Street, Suite 400
`Wilmington, DE 19801
`(302) 655-5000
`sbrauerman@bayardlaw.com
`
`Attorneys for Plaintiff Realtime Adaptive
`Streaming LLC
`
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`8
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