Veraseal LLC v. Wal-Mart Stores, Inc. et al

REPLY to Response to Motion re MOTION to Consolidate Cases

E.D. Tex.December 4, 2018

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION VERASEAL LLC, Plaintiff, v. WAL-MART STORES, INC. and WAL-MART STORES TEXAS, LLC, Defendants. CASE NO. 2:17-CV-00527-JRG JURY TRIAL DEMANDED CLOSURE SYSTEMS INTERNATIONAL, INC.’S REPLY IN SUPPORT OF MOTION TO CONSOLIDATE Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 1 of 10 PageID #: 907 Page i TABLE OF CONTENTS Page I. INTRODUCTION .............................................................................................................. 1 II. ARGUMENT ...................................................................................................................... 2 A. Potential Delay Cannot Weigh Against Consolidation Because Veraseal’s Patent Is Expired. .................................................................................................... 2 B. The Potential Delay From Consolidation May Not Occur. .................................... 2 C. Consolidation Will Conserve Judicial Resources And Denying Consolidation Would Prejudice The Intervenors and Defendants. ......................... 3 D. CSI Has Not Improperly Sought To Delay This Case. ........................................... 4 III. CONCLUSION ................................................................................................................... 5 Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 2 of 10 PageID #: 908 Page ii TABLE OF AUTHORITIES Cases Heaton v. Monogram Credit Card Bank of Ga., 297 F.3d 416, 422 (5th Cir. 2002) .............................................................................................4 Micrografx, LLC v. Google, Inc., No. 3:13-cv-3595, (N.D. Tex. Jul. 9, 2014) ..............................................................................2 Nevada v. United States Dep’t of Labor, No. 4:16-CV-731, 2017 WL 3780085 (E.D. Tex. Aug. 31, 2017) ............................................4 Norman IP Holdings, LLC v. Lexmark Int'l, Inc., No. 6:11-CV-495 (E.D. Tex. Aug. 10, 2012) ...........................................................................3 Spa Syspatronic, AG v. VeriFone, Inc., No. 2:07-cv-416, (E.D. Tex. Apr. 24, 2008) .............................................................................2 VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1318 (Fed. Cir. 2014) .......................................................................................2 Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 3 of 10 PageID #: 909 Page 1 Closure Systems International, Inc. (“CSI”) respectfully files this Reply in further support of its Motion to Reassign and Consolidate. (Dkt. 94.) I. INTRODUCTION Veraseal does not dispute that it would be more efficient for both the parties and the Court to consolidate the cases and hold a single claim construction hearing. Instead, Veraseal makes two unsustainable arguments against consolidation. First, Veraseal argues that consolidation should be denied because it would result in delaying this case to allow the Costco and Walgreen cases to catch up. This argument ignores the fact that even if there would be some delay to this case resulting from consolidation, there will be no cognizable prejudice to Veraseal from that delay. Veraseal filed this case more than a year after the asserted patent expired, so the only relief available to Veraseal is monetary damages. As a result, Veraseal can be fully compensated for any delay in this case by prejudgment interest. Second, Veraseal argues that CSI did not identify any harm to denying consolidation. That is not correct. CSI pointed out the efficiencies to be gained for the Court and the parties by having a single schedule for the claim construction briefing and single claim construction hearing, rather than having multiple sets of briefing and multiple hearings on what is likely to be virtually identical subject matter. The harm from increased costs and expenses that results from inefficiency is well- established. Moreover, CSI cited precedent explaining that allowing multiple cases involving the same patent to proceed in parallel wastes judicial resources as well as the resources of the parties. In sum, CSI’s motion to consolidate should be granted because it will be more efficient to adjudicate these cases together, and because prejudgment interest can fully compensate Veraseal if any delay results (which is far from certain). Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 4 of 10 PageID #: 910 Page 2 II. ARGUMENT A. Potential Delay Cannot Weigh Against Consolidation Because Veraseal’s Patent Is Expired. Veraseal’s complaints about potential delay ring hollow because it did not file this lawsuit until July 7, 2017, which is more than a year after the sole asserted patent expired on April 4, 2016. (Dkt. 1.) Thus, as CSI explained in its motion, Veraseal cannot be prejudiced by any delay that may occur as a result of consolidating this case with the Costco and Walgreen cases. That is because only money damages are available to Veraseal, and as a result prejudgment interest can fully recompense Veraseal for any delay that occurs. See Spa Syspatronic, AG v. VeriFone, Inc., No. 2:07-cv-416, 2008 U.S. Dist. LEXIS 34223, at *14 (E.D. Tex. Apr. 24, 2008) (noting “greater capability of damages and prejudgment interest to provide an adequate measure of relief in the event of a favorable verdict to a plaintiff whose patent rights will expire prior to trial”); VirtualAgility Inc. v. Salesforce.com, 759 F.3d 1307, 1318 (Fed. Cir. 2014) (a stay does not limit monetary damages in event of a successful infringement suit, but only “delays realization of those damages and delays any potential injunctive remedy”); Micrografx, LLC v. Google, Inc., No. 3:13- cv-3595, 2014 U.S. Dist. LEXIS 182401, at *3-4 (N.D. Tex. Jul. 9, 2014) (finding no prejudice in delay due to patent expiration as patentee’s “right to monetary damages for the period will not be affected,” patentee had not sought injunctive relief, and did not practice the patent). Veraseal cannot—and does not—deny that prejudgment interest will fully compensate it for any delay that occurs as a result of consolidation. B. The Potential Delay From Consolidation May Not Occur. Veraseal’s delay argument also fails because Veraseal has not shown that there would necessarily be any delay resulting from consolidation of the cases at this point. As explained in CSI’s original motion, the Costco and Walgreen cases could be ready for a claim construction Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 5 of 10 PageID #: 911 Page 3 hearing by June 2019, so whether there would be any short-term delay from consolidation depends on whether the Court would otherwise plan to conduct a claim construction hearing in this case substantially earlier than that date. (Dkt. 94 at p.6.) Moreover, even if there were some short-term delay in conducting the claim construction hearing in this case, it is possible—or even likely—that other delays would result from the inefficiency of having multiple co-pending proceedings involving the same patent. For example, if a claim construction ruling issued in the Costco or Walgreen cases that was pertinent to the expert testimony in this case, that could lead to supplemental expert reports and expert depositions, or discovery disputes, or both. That could then potentially delay this case. As another example, if an expert in the Costco or Walgreen case issued a report that the opposing party believed was inconsistent with his or her earlier report in this case, that could again result in discovery disputes and/or supplemental expert reports and depositions, leading to delay in this case. Thus, consolidation may actually reduce delay overall. C. Consolidation Will Conserve Judicial Resources And Denying Consolidation Would Prejudice The Intervenors and Defendants. Veraseal incorrectly asserts that CSI did not identify any harm to denying consolidation. However, CSI specifically pointed out this Court’s precedent explaining that allowing multiple single-defendant cases involving the same patent to proceed in parallel “wastes judicial resources.” Norman IP Holdings, LLC v. Lexmark Int'l, Inc., 2012 WL 3307942, at *4 (E.D. Tex. Aug. 10, 2012). (Dkt. 94 at p.7.) Veraseal does not dispute that a single Markman hearing would be more efficient and avoid wasting judicial resources. Additionally, CSI stated that it would be “more efficient for the Court and for the parties to have a single claim construction hearing and a single schedule for the claim construction briefing than having multiple hearings and multiple sets of briefing on what is likely to be virtually identical subject matter.” (Dkt. 94 at p.7; see also id. at p. 1.) The harm to CSI from inefficient proceedings, Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 6 of 10 PageID #: 912 Page 4 in terms of expense, is so obvious and established in the law that there was no need for CSI to explicitly point it out. For example, 28 U.S.C. § 1927 states that someone who unreasonably “multiplies the proceedings in any case” may in appropriate circumstances be required to pay “the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” There is no question that CSI, which has intervened in all three actions, will incur substantially more expenses if it needs to submit three separate claim construction briefs and participate in three separate claim construction hearings. Similarly, there can be no doubt that the same is true for the other Defendants and Intervenors, who would be forced to deal with issues arising from multiple claim construction rulings and multiple sets of briefs on similar issues, as well as with the potential disputes and delays discussed above. Finally, because Veraseal has not yet served its infringement contentions in the Costco and Walgreen cases, CSI does not yet know: (1) which of its products are accused in those cases; (2) which claims Veraseal will be asserting against these products; or (3) Veraseal’s basis for its infringement allegations in those cases. Proceeding with claim construction without this information would also prejudice CSI. D. CSI Has Not Improperly Sought To Delay This Case. Veraseal wrongly suggests that CSI’s request for consolidation is a “strategic tactic” to “delay this case in contradiction to its representations to Veraseal and this Court that its intervention will not delay the case.” (Dkt 95 at p.6.) As stated in CSI’s motion to intervene and recognized by Veraseal, the standard for whether a potential intervenor may intervene is that the “intervention must not cause an undue delay or prejudice the adjudication of the rights of the original parties.” (Dkt. 27 at 11; Opp. at 4.) (emphasis added); Nevada v. United States Dep’t of Labor, 4:16-CV-731, 2017 WL 3780085, at *2 (E.D. Tex. Aug. 31, 2017) (citing Heaton v. Monogram Credit Card Bank of Ga., 297 F.3d 416, Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 7 of 10 PageID #: 913 Page 5 422 (5th Cir. 2002)). Veraseal ignores this standard, and seeks to transform CSI’s earlier statement that it complied with this standard into a permanent bar prohibiting CSI from making any requests as an intervenor that might result in delay. That does not make sense, and is not what the law requires of an intervenor. What CSI said in its motion to intervene was that its intervention would not delay this case—a statement that was and remains true. Moreover, CSI’s request for consolidation is wholly separate from its intervention request, and it is improper to suggest that the intervention standard should be used to evaluate CSI’s request for consolidation. But even if the intervention standard were to be applied, and even if a minor delay did result from consolidation (as explained above, CSI disagrees any delay will occur), it would not be the kind of “undue delay” prohibited by the intervention standard. Thus, Veraseal is wrong to assert that consolidation should be denied because of a statement CSI made in its motion to intervene. Finally, Veraseal’s suggestion that CSI is engaging in improper “tactics” by seeking consolidation is also wrong. Having a single set of claim construction proceedings just makes sense. As explained above, it will be more efficient for the Court, and for all of the parties. If there are any improper “tactics” here they are Veraseal’s: it was Veraseal that chose to file the Costco and Walgreen cases several months after this one, and it is Veraseal that has declined to serve infringement contentions in those case. III. CONCLUSION For the reasons set forth above, CSI respectfully requests that the Court consolidate this case with the Costco and Walgreen cases. Dated: December 4, 2018 Respectfully submitted, /s/ Nicholas Brown Scott J. Bornstein Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 8 of 10 PageID #: 914 Page 6 bornsteins@gtlaw.com Allan A. Kassenoff kassenoffa@gtlaw.com Julie P. Bookbinder bookbinderj@gtlaw.com Greenberg Traurig LLP MetLife Building 200 Park Avenue New York, New York 10166 Telephone: (212) 801-9200 Nicholas A. Brown brownn@gtlaw.com Greenberg Traurig LLP 4 Embarcadero Ctr, Ste. 3000 San Francisco, CA 94111 Telephone: (415) 655-1271 Aimee Housinger Texas State Bar No. 24083203 housingera@gtlaw.com Greenberg Traurig LLP 1000 Louisiana, Suite 1700 Houston, TX 77002 Telephone: (713) 374-3541 Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 9 of 10 PageID #: 915 Page 7 CERTIFICATE OF SERVICE I hereby certify that all counsel of record who 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 on December 4, 2018. /s/ Nicholas Brown Nicholas A. Brown Case 2:17-cv-00527-JRG Document 98 Filed 12/04/18 Page 10 of 10 PageID #: 916