Tessera Advanced Technologies, Inc. v. Samsung Electronics Co., Ltd. et al

RESPONSE to Motion re Opposed MOTION to Stay Pending Determination of Inter Partes Review of the Patents-In-Suit

E.D. Tex.July 13, 2018

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION TESSERA ADVANCED TECHNOLOGIES, INC., Plaintiff, v. SAMSUNG ELECTRONICS CO., LTD. and SAMSUNG ELECTRONICS AMERICA, INC., Defendants. Civil Action No. 2:17-cv-671-JRG JURY TRIAL DEMANDED TESSERA ADVANCED TECHNOLOGIES, INC.’S RESPONSE TO DEFENDANTS’ MOTION TO STAY PENDING DETERMINATION OF INTER PARTES REVIEW OF THE PATENTS-IN-SUIT Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 1 of 12 PageID #: 2405 ii TABLE OF CONTENTS Page I. FACTUAL BACKGROUND ..................................................................................1 A. Stage Of The Litigation ...............................................................................1 B. Samsung’s IPR Petitions ..............................................................................2 II. LEGAL STANDARD ..............................................................................................2 III. THE COURT SHOULD DENY SAMSUNG’S MOTION TO DELAY THIS LITIGATION ...........................................................................................................3 A. This Court’s Universal Practice Is To Deny Pre-Institution Stays Because Any Simplification Of The Issues Is Speculative At Best ...........................3 B. A Stay Would Be Prejudicial To Tessera ....................................................5 C. The Stage Of The Case Weighs Against Entering A Stay ...........................6 D. Samsung’s Request For Alternative Relief Is Premature And Should Be Denied ..........................................................................................................7 IV. CONCLUSION ........................................................................................................7 Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 2 of 12 PageID #: 2406 iii TABLE OF AUTHORITIES Page(s) CASES 3rd Eye Surveillance, LLC v. Stealth Monitoring, Inc., No. 6:14-CV-162-JDL, 2015 WL 179000 (E.D. Tex. Jan. 14, 2015) ...........2, 5 Allure Energy, Inc. v. Nest Labs, Inc., No. 9-13-CV-102, 2015 WL 11110606 (E.D. Tex. Apr. 2, 2015) ....................5 EchoStar Techs. Corp. v. TiVo, Inc., No. 5:05-CV-00081, 2006 WL 2501494 (E.D. Tex. July 14, 2006) .................3 Freeny v. Apple Inc., No. 2:13-cv-00361-WCB, 2014 WL 3611948 (E.D. Tex. July 22, 2014).........4 Landis v. N. Am. Co., 299 U.S. 248 (1936) ...........................................................................................2 Lennon Image Techs., LLC v. Macy’s Retail Holdings, Inc., No. 2:13-CV-00235-JRG, 2014 WL 4652117 (E.D. Tex. Sept. 18, 2014) ..3, 4, 5 Realtime Data LLC v. Actian Corp., No. 6:15-CV-463-RWS-JDL, 2016 WL 3277259 (E.D. Tex. June 14, 2016) .4, 5 Realtime Data LLC v. Actian Corp., No. 6:15-CV-463-RWS-JDL, 2016 WL 9340796 (E.D. Tex. Nov. 29, 2016) ..7 Trover Grp., Inc. v. Dedicated Micros USA, No. 2:13-CV-1047-WCB, 2015 WL 1069179 (E.D. Tex. Mar. 11, 2015) ........................................................................................................ passim STATUTES 35 U.S.C. § 141(c) ...................................................................................................5 35 U.S.C. § 316(a)(11) .............................................................................................5 Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 3 of 12 PageID #: 2407 1 This is another motion by Samsung to remove this case from Tessera’s chosen forum and delay Tessera’s litigation against Samsung. Samsung asks to stay these proceedings pending institution of Samsung’s belated inter partes review (“IPR”) petitions, filed nearly nine months after this litigation was filed. But putting aside Samsung’s delay, Samsung’s motion, without explanation, ignores the “universal practice” of this District of denying motions to stay pending institution of an IPR petition. Moreover, Samsung’s motion grossly overstates the balance of the factors this Court considers for stay motions. The factors here counsel against a stay, and the Court should deny Samsung’s motion. I. FACTUAL BACKGROUND A. Stage Of The Litigation On September 28, 2017, Plaintiff Tessera Advanced Technologies, Inc. (“Tessera”) filed this suit against Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. (collectively, “Samsung”). (Dkt. 1.) The Court entered a scheduling order on January 4, 2018. (Dkt. 26.) Tessera served its infringement contentions more than five months ago on January 29, 2018. Samsung’s invalidity contentions would have been due March 16, 2018 (Dkt. 26), but the Court extended that deadline per the parties’ agreement to April 26, 2018 (Dkt. 29), which is when Samsung served its invalidity contentions. Pursuant to the Court’s order, and before Samsung filed the instant motion, the parties engaged in claim construction activities and filed the P.R. 4-3 Joint Claim Construction Statement with the Court on June 22, 2018. By the time briefing closes on this motion, Tessera’s opening claim construction brief and the substantial completion of document production deadline will be only a week away. (Dkt. 46.) Indeed, as Samsung admits, the parties have expended tremendous resources in fact discovery already, and have produced hundreds of thousands of pages of documents. (See Mot. at 11.) Fact discovery closes in December and expert discovery closes in Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 4 of 12 PageID #: 2408 2 January 2019. Trial is scheduled for May 2019.1 B. Samsung’s IPR Petitions Samsung filed its IPRs on June 15, 2018, nearly nine months after the complaint in this case was filed. (See Mot. at 3.) Neither of Samsung’s petitions identify any terms to be construed by the PTAB. (See Gotts Decl., Exs. 1-2.) As Samsung acknowledges, the PTAB’s institution decisions on these IPRs are not due until January 2019. (See Mot. at 4.) By that time, the Court will have held the Markman hearing, fact discovery will be over, and opening expert reports will have already been served. (See Dkt. 46.) Samsung also acknowledges that the earliest the PTAB would issue a final written decision is January 2020-some eight months after trial in this action. (See Mot. at 4.) II. LEGAL STANDARD In this District, “the courts have uniformly denied motions for a stay” before the PTAB has acted on a petition for IPR. Trover Grp., Inc. v. Dedicated Micros USA, No. 2:13-CV-1047-WCB, 2015 WL 1069179, at *6 (E.D. Tex. Mar. 11, 2015). “[T]hat is not just the majority rule; it is the universal practice.” Id. A district court has “inherent discretion whether to grant a stay in patent litigation pending inter partes review.” 3rd Eye Surveillance, LLC v. Stealth Monitoring, Inc., No. 6:14-CV-162- JDL, 2015 WL 179000, at *2 (E.D. Tex. Jan. 14, 2015). When considering motions to stay, courts “must weigh competing interests and maintain an even balance.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). To strike the balance when a patent challenger moves to stay a litigation pending 1 Although irrelevant to the instant motion, Samsung takes the opportunity in its brief to reference its motion to stay pending arbitration, motion to dismiss for lack of standing, and issues related to those motions. (See Mot. at 1-2, 2 n.1, 3, 8.) Tessera incorporates by reference its responsive briefings to these motions, which explain why Samsung’s other motions should also be denied. (See Dkts. 63, 67, 77, 82, 88.) Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 5 of 12 PageID #: 2409 3 an IPR, courts in this district consider three factors: (1) whether a stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify issues in question and trial of the case, and; (3) whether discovery is complete and whether a trial date has been set. Lennon Image Techs., LLC v. Macy’s Retail Holdings, Inc., No. 2:13-CV-00235- JRG, 2014 WL 4652117, at *2 (E.D. Tex. Sept. 18, 2014). “Essentially, courts determine whether the benefits of a stay outweigh the inherent costs based on those factors.” EchoStar Techs. Corp. v. TiVo, Inc., No. 5:05-CV-00081, 2006 WL 2501494, at *1 (E.D. Tex. July 14, 2006). III. THE COURT SHOULD DENY SAMSUNG’S MOTION TO DELAY THIS LITIGATION Samsung’s motion to stay pending IPR institution should be denied because it is both too early and too late. It is too early because the PTAB has not even decided whether to institute the IPRs yet. And it is too late because Samsung took nine months to file its IPRs and even longer to file its motion, all the while litigating this case, such that it would be too prejudicial to stay the case at this point. Moreover, Samsung grossly overstates the weight of the stay factors in this case. A proper consideration of the factors shows that a stay is not warranted. A. This Court’s Universal Practice Is To Deny Pre-Institution Stays Because Any Simplification Of The Issues Is Speculative At Best It is “the universal practice” in this District to deny a motion to stay pending IPR proceedings before the PTAB has decided to institute the review. Trover, 2015 WL 1069179, at *6. And the statistics cited by Samsung explain why. According to those statistics, petitions are instituted in only 52% of all filed petitions. (See Mot. Ex. C at 11.) As this Court has previously recognized, “it would be speculative for the Court to extrapolate from the statistics and conclude that it is likely that the PTAB will institute inter partes review in this case and invalidate some or all of the claims” of the patents-in-suit. Trover, 2015 WL 1069179, at *4. “If the petition is denied, the stay would contribute not at all to simplifying the issues before the Court,” and would Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 6 of 12 PageID #: 2410 4 have only resulted in delay and prejudice to Tessera. Freeny v. Apple Inc., No. 2:13-cv-00361- WCB, 2014 WL 3611948, at *2 (E.D. Tex. July 22, 2014). Samsung’s motion fails even to make mention of the clear guidance of this District, let alone acknowledge this Court’s “universal practice” denying pre-institution stays, and instead relies on cases from outside the District to support its motion. (See Mot. at 5.) But none of these cases solve Samsung’s problem that the entirety of its argument is based on pure speculation. See Trover, 2015 WL 1069179, at *4. Moreover, as this Court has recognized, even if some claims are cancelled in the IPRs, “the interests of justice will be better served by dealing with that contingency when and if it occurs, rather than putting this case on hold for an indefinite and lengthy period of time.” Lennon Image Techs., 2014 WL 4652117, at *3. That is the better course here. This Court has repeatedly recognized that “[t]he largest consideration bearing on” a motion to stay pending IPR “is that the PTAB has not yet decided whether to grant the petition.” Freeny, 2014 WL 3611948, at *3; see also Trover, 2015 WL 1069179, at *4 (“It is for that reason this Court regards the most important factor in determining whether to stay litigation pending inter partes review to be whether the PTAB has acted on the defendants’ petition for review.”); Realtime Data LLC v. Actian Corp., No. 6:15-CV-463-RWS-JDL, 2016 WL 3277259, at *2 (E.D. Tex. June 14, 2016) (“Because the PTAB has not granted any of the petitions, Defendants’ assertion that the PTAB will invalidate the claims of the patent-and therefore simplify the issues-is purely speculative.”). That same consideration applies here. Thus, this factor weighs heavily against entering a stay.2 2 Samsung argues that there are “complex issues” involved in this litigation. (Mot. at 1-2; see also id. at 8.) But most patent cases involve “complex issues” and in any event this argument fails because those issues will remain unless every challenged claim of the patents-in-suit is found unpatentable in IPR. Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 7 of 12 PageID #: 2411 5 B. A Stay Would Be Prejudicial To Tessera This Court has also repeatedly recognized that “a patent holder has an interest in the timely enforcement of its patent rights.” Lennon Image Techs., 2014 WL 4652117, at *2 (quotation omitted); accord Trover, 2015 WL 1069179, at *2 (“[T]he plaintiffs’ claim of prejudice is entitled to consideration, as is the general right of patent owners to timely enforcement of their patent rights.”); 3rd Eye, 2015 WL 179000, at *2 (“[Plaintiff] has a well-established interest in the timely enforcement of its patent rights.”). Here, Samsung litigated this case for nine months before filing its IPRs, and Tessera invested significant amounts of time and money during this period. Samsung should not be rewarded for its inexplicable delay, especially after Tessera made such significant investments. Moreover, the length of the stay requested by Samsung weighs against Samsung’s motion. Samsung asks for a stay until the PTAB’s “determinations on Samsung’s IPR Petitions and any resulting proceedings.” (Mot. at 1.) But that would mean that the stay would be in place until at least January 2020 (when a decision on the IPRs is due), almost nine months after the trial date in this case.3 (Mot. at 4; Dkt. 46.) See Realtime Data, 2016 WL 3277259, at *2 (citing 35 U.S.C. § 316(a)(11)). And “[t]he delay could be further exacerbated if Defendants invoke their right to appeal the PTAB’s decision to the Federal Circuit. 35 U.S.C. § 141(c).” Id. There can be no question that “[s]uch a lengthy delay will result in significant prejudice to [Tessera] and, therefore, this factor weighs against a stay.” Id.4 3 By statute, the deadline for an IPR decision could be extended by six months for good cause, which could extend the delay to July 2020. 35 U.S.C. § 316(a)(11). 4 Moreover, Samsung’s inexplicable delay has allowed Samsung to fully discover Tessera’s infringement theories, Tessera’s claim construction positions, and obtain other discovery from Tessera. The delay from a stay presents a tactical disadvantage to Tessera by allowing Samsung more time to consider its claim construction arguments, other case analysis, and forcing Tessera to “expend considerable financial resources on IPR proceedings, prior to its day in court.” Allure Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 8 of 12 PageID #: 2412 6 C. The Stage Of The Case Weighs Against Entering A Stay Samsung grossly overstates that this factor “weighs strongly in favor of granting a stay.” (Mot. at 1.) As Samsung admits, the parties have expended tremendous resources in fact discovery already, and have produced hundreds of thousands of pages of documents. (See Mot. at 11.) And the parties are well into the claim construction process, having already filed the P.R. 4-3 Joint Claim Construction Statement on June 22, 2018. The Trover case is instructive. In Trover, the defendants filed an IPR nearly a year after the complaints were filed, having waited for months after filing their invalidity contentions before filing their IPR petitions. Trover, 2015 WL 1069179, at *3. In denying the defendants’ motion to stay, the court stated that “[b]y the time the stay motion was filed . . ., the parties had engaged in substantial discovery and had initiated the claim construction process[]” and that “[t]he pattern of delay on the defendants’ part cuts against granting a stay.” Id. Here, this case was filed over nine months ago. And even though Samsung got over a month extension to serve its invalidity contentions, it still waited for another month and a half to file its IPRs. And then Samsung waited another two weeks to file the instant motion. In short, just as in Trover, Samsung “could have filed [its] motion for a stay at a time when the case could truly be said to have been in its infancy.” Id. at *4. “But by delaying in filing [its] petition and then further delaying in filing [its] motion to stay, [Samsung has] allowed the case to progress to a point at which the proceedings have become more active, and thus more expensive, for the parties.” Id. As in Trover, “this factor cuts strongly against a stay.” Id. Given Samsung’s inexplicable nine-month delay in filing its IPRs and the facts that the infringement and invalidity contentions have been exchanged and fact discovery and the claim Energy, Inc. v. Nest Labs, Inc., No. 9-13-CV-102, 2015 WL 11110606, at *1 (E.D. Tex. Apr. 2, 2015). Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 9 of 12 PageID #: 2413 7 construction process are well underway, this factor weighs against granting a stay. D. Samsung’s Request For Alternative Relief Is Premature And Should Be Denied Recognizing that its motion is premature without an institution decision, Samsung asks for alternative relief in the form of an expedited briefing schedule should the PTAB institute Samsung’s IPRs. (See Mot. at 12.) First, even after institution, it is far from uniform practice to simply enter a stay. See, e.g., Realtime Data LLC v. Actian Corp., No. 6:15-CV-463-RWS-JDL, 2016 WL 9340796, at *5 (E.D. Tex. Nov. 29, 2016) (denying motion to stay post-institution and recognizing that “if the PTAB’s institution of IPRs created a per se rule obligating district courts to stay their proceedings, there would be no need for courts to consider a three-factor test or any other circumstances that might be relevant to a stay”). In fact, given that the proceedings in this Court will have advanced even further in the next six months, and gotten that much closer to trial, the factors then will balance even further against entering a stay. Second, Samsung presents no compelling reason for this Court to depart from the briefing schedule dictated by the Local Rules. The delay here is Samsung’s own making. There could be any number of developments over the next six months, and the Court very likely will benefit from full briefing on the issues should the PTAB institute Samsung’s IPRs. Deciding now whether to expedite briefing in six months is unnecessary and Samsung’s request for “alternative relief” should be denied. IV. CONCLUSION As the PTAB has yet to issue an institution decision, Samsung’s motion is premature and runs afoul of this Court’s universal practice of denying such pre-institution stays for IPRs. Moreover, Samsung’s motion overstates the balance of the stay factors. As set forth above, each factor weighs against a stay. Thus, Samsung’s latest attempt to have another forum decide this case fails like the others. The Court should deny Samsung’s motion and its request for alternative Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 10 of 12 PageID #: 2414 8 relief. Respectfully submitted, Dated: July 13, 2018 /s/ Lawrence J. Gotts w/permission Claire Henry Matthew J. Moore E-mail: Matthew.Moore@lw.com Lawrence J. Gotts E-mail: Lawrence.Gotts@lw.com LATHAM & WATKINS LLP 555 Eleventh Street, NW Suite 1000 Washington, DC 20004-1304 (202) 637-2200 Clement J. Naples E-mail: Clement.Naples@lw.com LATHAM & WATKINS LLP 885 Third Avenue New York, NY 10022-4834 (212) 906-1200 Amit Makker E-mail: Amit.Makker@lw.com Brian W. Lewis (pro hac vice) E-mail: Brian.W.Lewis@lw.com LATHAM & WATKINS LLP 505 Montgomery Street, Suite 2000 San Francisco, CA 94111 Tel: 415-391-0600 Fax: 415-395-8095 Joseph H. Lee E-mail: Joseph.Lee@lw.com LATHAM & WATKINS LLP 650 Town Center Drive, 20th Floor Costa Mesa, CA 92626 Tel: 714-540-1235 Fax: 714-755-8290 T. John Ward Texas State Bar No. 20848000 E-mail: tjw@wsfirm.com Claire Abernathy Henry Texas State Bar No. 24053063 E-mail: claire@wsfirm.com Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 11 of 12 PageID #: 2415 9 Andrea Fair Texas State Bar No. 24078488 E-mail: andrea@wsfirm.com WARD, SMITH & HILL, PLLC PO Box 1231 Longview, Texas 75606-1231 (903) 757-6400 (telephone) (903) 757-2323 (facsimile) Attorneys for Plaintiff Tessera Advanced Technologies, Inc. CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was filed electronically in compliance with Local Rule CV-5(a). Therefore, this document was served on all counsel who are deemed to have consented to electronic service. Local Rule CV-5(a)(3)(A). Pursuant to Fed. R. Civ. P. 5(d) and Local Rule CV-5(d) and (e), all other counsel of record not deemed to have consented to electronic service were served with a true and correct copy of the foregoing by email on this the 13th day of July, 2018. /s/ Claire A. Henry Claire A. Henry Case 2:17-cv-00671-JRG Document 93 Filed 07/13/18 Page 12 of 12 PageID #: 2416