Fundamental Innovation Systems International LLC v. LG Electronics, Inc. et al

REPLY to Response to Motion re Opposed MOTION to Stay Pending Resolution of Defendants' Objections to the Court's January 3, 2018 Memorandum and Opinion Regarding Defendants' Motion to Transfer Venue

E.D. Tex.February 7, 2018

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION FUNDAMENTAL INNOVATION SYSTEMS INTERNATIONAL LLC, Plaintiff, vs. LG ELECTRONICS, INC., et al. Defendants. Case No. 2:16-CV-01425-JRG-RSP LEAD CASE JURY TRIAL DEMANDED FUNDAMENTAL INNOVATION SYSTEMS INTERNATIONAL LLC, Plaintiff, vs. HUAWEI DEVICE USA, INC. and HUAWEI DEVICE CO., LTD., Defendants. Case No. 2:16-CV-01424-JRG-RSP DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO STAY PENDING RESOLUTION OF DEFENDANTS’ OBJECTIONS TO THE COURT’S JANUARY 3, 2018 MEMORANDUM AND OPINION REGARDING DEFENDANTS’ MOTION TO TRANSFER VENUE (DKT. 104) Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 1 of 8 PageID #: 3174 1 Defendants LG Electronics Inc., LG Electronics U.S.A., Inc., LG Electronics MobileComm U.S.A., Inc., LG Electronics Mobile Research U.S.A., LLC, and LG Electronics Alabama, Inc. (collectively, “LG”) hereby submit their Reply in further support of LG’s Motion to Stay. I. LG Timely Moved to Transfer this Case and Timely Requested a Stay Pending Resolution of Its Objections to the Court’s Transfer Order Contrary to FISI’s assertion, LG timely moved to transfer this case while it was in its infancy. LG filed its transfer motion only one month after FISI filed its Amended Complaint in May 2017, and on the same day LG filed its Amended Answer to this Amended Complaint. Dkts. 33, 47-48. The fact that LG carefully considered the Amended Complaint and then determined that the location of the relevant evidence and witnesses, including FISI’s disclosure of relevant witnesses and evidence, before seeking transfer favors transferring this case and does not weigh against staying this case now.1 As discussed at the December 18, 2017 hearing on LG’s transfer motion, LG carefully considered the facts in this case, the accused products, the location of LG’s witnesses, the location of FISI’s witnesses, the location of TnT’s witnesses, the location of third parties, and the location of sources of proof. 12/18/2017 Motion Hearing Tr., 19:8-22; 22:13-23:10; 45:9-46:22; 48:16-49:5. Upon careful consideration of these factors, LG properly determined that the District of New Jersey is clearly a more convenient venue than this District, and promptly moved to transfer the case. Id. FISI’s attempt to characterize LG’s stay motion as untimely because it was filed after the Court’s Transfer Order issued is meritless. Rather than file a motion to stay concurrently with its transfer motion, LG trusted that the Court would promptly decide its transfer motion and gave 1 The Amended Complaint asserted three additional patents, which required LG to further investigate whether this case should be transferred. Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 2 of 8 PageID #: 3175 2 the Court time to do so. Only after the Court committed clear error in denying LG’s transfer motion did it become necessary for LG to move to stay this case. II. LG Will Suffer Undue Hardship Absent a Stay Now that the Court has wrongly denied transfer based on a lack of personal jurisdiction rule raised sua sponte, LG will suffer undue hardship absent a stay. For example, the parties are now preparing for a Markman hearing on March 21, 2018. The Court should grant a brief stay of this case to resolve LG’s Objections to avoid potentially duplicative Markman efforts. See, e.g., Boehringer Ingelheim Pharms. v. HEC Pharm. Co., No. 15-cv-5982, 2017 U.S. Dist. LEXIS 2543, at *11 (D.N.J. Jan. 4, 2017) (“While rulings of the Federal Circuit on issues of claim construction for a given patent are binding on later district courts analyzing the same patent, interpretations of the same or other district courts of the same terms in the patent or patent family are generally not binding.”) (citations omitted). The parties are also engaged in extensive discussions regarding discovery, including depositions in New Jersey and in Seoul, South Korea. FISI’s argument that this case should not be stayed because Judge Gilstrap will consider LG’s Objections while Magistrate Judge Payne presides over the Markman hearing lacks merit. Regardless of which judge rules on LG’s Objections, this Court will be burdened if Markman proceedings continue. Although some of the claim terms at issue in the Samsung and Huawei cases may be at issue here, many claim terms do not overlap with Samsung or Huawei, and each of these cases involves a different set of patents and a different set of asserted claims. Accordingly, this Court should focus on resolving LG’s Objections, rather than the unique Markman issues between FISI and LG, and potential discovery disputes or other matters requiring Court resolution. Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 3 of 8 PageID #: 3176 3 III. LG Seeks to Briefly Stay the Entire Case Pending Resolution of Its Objections to the Transfer Order LG’s motion to stay does not request a stay of just discovery; it requests a brief stay of the entire case, including claim construction, mediation, and potential discovery disputes as all of these impact the merits of the case and consume both judicial resources and the resources of the parties. Dkt. 114. As set forth in LG’s motion to stay, the Federal Circuit has consistently held that a stay pending disposition of a transfer motion is appropriate because the district court should act on those motions before proceeding to any motion on the merits of the case. Dkt. 114, p. 3 (citing In re Fusion-IO, Inc., 489 Fed. App’x 465, 466 (Fed. Cir. 2012); In re Google Inc., 2015 WL 5294800, at *1-2 (Fed. Cir. 2015)). IV. All Three Factors Considered by the Court in Deciding a Motion to Stay Weigh in Favor of Granting a Brief Stay in this Case A. A Stay Will Not Unduly Prejudice or Present a Clear Tactical Advantage to FISI FISI will not be unduly prejudiced because the stay sought by LG should be brief. LG’s motion to stay is very different than the stays sought in FISI’s cited authorities. Ambato Media, LLC v. Clarion Co., Ltd., No. 2:09-cv-242, 2012 WL 194172, at *1 (E.D. Tex. Jan 23, 2012) (stay requested three months after Markman order issued); Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005) (stay requested after Markman hearing); SSL Servs., LLC v. Citrix Sys., Inc., No. 2:08-cv-158, 2012 WL 909318, at *2 (E.D. Tex. Mar. 16, 2012) (stay requested nearly four years after plaintiff filed suit, after the Court issued its Markman order, after fact discovery closed, and after expert reports and rebuttal expert reports were served). Because LG has promptly moved on transfer and this stay, the present case has yet to proceed past material deadlines like the ones found in the cases cited by FISI. Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 4 of 8 PageID #: 3177 4 Further, the fact that this case has been consolidated with the co-pending Huawei case with a consolidated Markman hearing is of no importance because there are two additional patents asserted in this case and numerous additional claim terms. FISI and Huawei would have to proceed with claim construction and the Court would have to construe the terms in dispute between those parties regardless of whether the case against LG is stayed. Indeed, FISI has made clear that the cases against LG, Huawei, and Samsung are separate and distinct from one another.2 FISI cannot now run away from those statements because they undermine FISI’s claims to the contrary. B. A Stay Will Simplify the Issues If this case is ultimately transferred to the District of New Jersey, it makes little sense to further burden this Court (and the parties) with additional Markman proceedings and potential discovery disputes, among other substantive matters.3 This Court will avoid wasting resources presiding over this case, particularly Markman proceedings next month involving many non- overlapping patents and claims, while LG’s Objections to the Transfer Order remain unresolved. It is an appropriate time to grant a brief stay, before Markman proceedings, before expert discovery commences, and while fact discovery is ongoing. 2 For example, FISI engaged separate counsel (Irell & Manella LLP) for its case against Samsung and FISI has refused to allow LG to review discovery or disclosures in each of its respective cases. 3 Contrary to FISI’s assertion that it is “without relevant documents,” LG has diligently complied with its discovery obligations and cooperatively worked with FISI, having produced over 70,000 documents and made six hard drives worth of source code available for inspection. LG also has identified several deficiencies in FISI’s infringement contentions and discovery to date. Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 5 of 8 PageID #: 3178 5 C. The Substantive Merits of this Case Have Yet to Commence Contrary to FISI’s argument, this case is still at an early stage as the merits have yet to be decided.4 Although some fact discovery has been taken, expert discovery has not yet begun, no expert reports or rebuttal expert reports have been exchanged, no depositions regarding the merits of this case have been taken, the parties have not participated in mediation, and the Markman hearing will not be held for another six weeks. This case should be stayed now. V. Conclusion For the foregoing reasons, LG respectfully requests that this Court stay this case pending resolution of LG’s Objections to the Court’s January 3, 2018 Memorandum Opinion and Order (Dkt. 104). Dated: February 7, 2018 RESPECTFULLY SUBMITTED, KASOWITZ BENSON TORRES LLP By: /s/ Jonathan K. Waldrop Jonathan K. Waldrop California Bar No. 297903 jwaldrop@kasowitz.com Darcy L. Jones California Bar No. 309474 djones@kasowitz.com Marcus A. Barber California Bar No. 307361 mbarber@kasowitz.com 4 In fact, this case is still at an early enough stage that just last week, FISI served a supplemental response to LG’s interrogatory identifying 13 new accused products and 33 new corresponding models. Accordingly, LG is in the process of conducting further investigation in light of the numerous newly accused products FISI identified on January 29, 2018. Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 6 of 8 PageID #: 3179 6 Heather S. Kim California Bar No. 277686 hkim@kasowitz.com John W. Downing California Bar No. 252850 jdowning@kasowitz.com Jack Shaw California Bar No. 309382 jshaw@kasowitz.com KASOWITZ BENSON TORRES LLP 333 Twin Dolphin Drive Suite 200 Redwood Shores, CA 94065 Tel: (650) 453-5170 Fax: (650) 453-5171 Hershy Stern (pro hac vice) New York Bar No. 4631024 hstern@kasowitz.com KASOWITZ BENSON TORRES LLP 1633 Broadway New York, NY 10019 Tel: (212) 506-1700 Fax: (212) 506-1800 Allen Gardner Texas Bar No. 24043679 ALLEN GARDNER LAW, PLLC 609 S. Fannin Tyler, Texas 75701 Tel: (903) 944-7537 Fax: (903) 944-7856 Allen@allengardnerlaw.com Attorneys for Defendants LG ELECTRONICS, INC., LG ELECTRONICS U.S.A., INC., LG ELECTRONICS MOBILECOMM U.S.A., INC., LG ELECTRONICS MOBILE RESEARCH U.S.A., LLC, AND LG ELECTRONICS ALABAMA, INC. Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 7 of 8 PageID #: 3180 7 CERTIFICATE OF SERVICE The undersigned hereby certifies that all counsel of record who are deemed to have consented to electronic service are being served with a copy of this document via the Court’s CM/ECF system per Local Rule CV-5(a)(3) on February 7, 2018. Any other counsel of record will be served by First Class U.S. Mail on this same date. /s/ Jonathan K. Waldrop Jonathan K. Waldrop Case 2:16-cv-01425-JRG-RSP Document 121 Filed 02/07/18 Page 8 of 8 PageID #: 3181