Parkervision, Inc. v. Apple Inc. et al

MOTION for summary judgment precluding Parkervision from obtaining a double recovery, or in the alternative, motion to sever and stay

M.D. Fla.August 30, 2018

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION PARKERVISION, INC., Plaintiff, v. APPLE INC. and QUALCOMM INCORPORATED, Defendants. Case No. 3:15-cv-1477-BJD-JRK Case Dispositive Motion APPLE’S MOTION FOR SUMMARY JUDGMENT PRECLUDING PARKERVISION FROM OBTAINING A DOUBLE RECOVERY, OR IN THE ALTERNATIVE, MOTION TO SEVER AND STAY Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 1 of 28 PageID 4703 i TABLE OF CONTENTS I. Introduction ............................................................................................................. 1 II. Procedural History .................................................................................................. 4 III. Relevant Facts ......................................................................................................... 4 IV. Legal Standards ....................................................................................................... 5 A. Double Recovery of Damages Is Impermissible ........................................ 6 B. Claims Against Customer Defendants Should Be Severed and Stayed .......................................................................................................... 7 V. Argument ................................................................................................................ 8 A. Summary Judgment Should Be Granted, As ParkerVision Cannot Obtain Relief From Apple .......................................................................... 8 1. ParkerVision Cannot Obtain a Double Recovery ........................... 9 2. The Doctrine of Implied License Will Prohibit Liability as to Apple ......................................................................................... 11 3. The Doctrine of Exhaustion Will Prohibit Liability as to Apple ............................................................................................. 12 B. In the Alternative, the Court Should Sever and Stay the Claims Against Apple ........................................................................................... 13 1. The Claims Against Apple Should Be Severed and Stayed Under the Customer-Suit Exception ............................................. 13 2. The Traditional Factors Weigh In Favor of Severing and Staying ParkerVision’s Claims Against Apple ............................. 15 VI. CONCLUSION .......................................................................................................... 20 Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 2 of 28 PageID 4704 ii TABLE OF AUTHORITIES Page(s) Cases Aero Prod. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000 (Fed. Cir. 2006)..................................................................................6, 9 Ambrose v. Steelcase, Inc., Case No. 02-cv-2753, 2002 WL 1447871 (N.D. Ill., July 3, 2002).............................19 The Andersons, Inc. v. Enviro Granulation, LLC, Case No. 8:13-cv-3004, Dkt. 112 (M.D. Fla., July 21, 2014) .......................................8 Baxa Corp. v. Forhealth Techs., Inc. No. 6:06–CV–353, 2006 WL 4756455 (M.D. Fla. May 5, 2006) .................................7 Birdsell v. Shaliol, 112 U.S. 485 (1884) .....................................................................................................11 Bowers v. Baystate Techs., Inc., 320 F.3d 1317 (Fed. Cir. 2003)......................................................................................6 Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277 (Fed. Cir. 2002)......................................................................................6 Celeritas Techs., Ltd. v. Rockwell Int’l Corp., 150 F.3d 1354 (Fed. Cir. 1998)......................................................................................6 Cellular Commc’ns v. Apple Inc., 2016 WL 6884648 .................................................................................................15, 17 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) .......................................................................................................5 Clinton v. Jones, 520 U.S. 681 (1997) .......................................................................................................7 CPG Prods., Corp. v. Pegasus Luggage, Inc., 776 F.2d 1007 (Fed. Cir. 1985)......................................................................................6 CTI-Container Leasing Corp. v. Uiterwyk Corp., 685 F.2d 1284 (11th Cir. 1982) .....................................................................................7 Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 3 of 28 PageID 4705 iii Dzafic v. Geovera Specialty Ins. Co., No. 808-CV-0026-T-24EAJ, 2008 WL 3874602 (M.D. Fla. Aug. 15, 2008) .............16 Kesinger ex rel. Estate of Kesinger v. Herrington, 381 F.3d 1243 (11th Cir. 2004) .....................................................................................6 Glenayre Elecs., Inc. v. Jackson, 443 F.3d 851 (Fed. Cir. 2006)........................................................................6, 9, 11, 12 Global Commc’ns, Inc. v. PDI Commc’ns, No. 4:11cv541-RH/CAS, 2012 U.S. Dist. LEXIS 191402 (N.D. Fla. May 21, 2012) (N.D. Fla. May 21, 2012) ..................................................................................12 Harrington v. Cleburn County Bd. of Educ., 251 F.3d 935 (11th Cir.2001) ......................................................................................16 Johnson v. Bd. of Regents of Univ. of Ga., 263 F.3d 1234 (11th Cir. 2001) ...................................................................................15 Junker v. Eddings, 396 F.3d 1359 (Fed. Cir. 2005)......................................................................................6 Katz v. Lear Siegler, 909 F.2d 1459 (Fed. Cir. 1990)............................................................................7, 8, 13 Kessler v. Eldred, 206 U.S. 285 (1907) .......................................................................................................9 LG Elec., Inc. v. Asustek Computers, 126 F. Supp. 2d 414 (E.D. Va. 2000) ....................................................................10, 17 Lifewatch Servs., Inc. v. Medicomp, Inc., No. 6:09–cv–1909–Orl–31DAB, 2010 WL 963202 (M.D. Fla. Mar, 16, 2010) ...........7 Medtronic Xomed, Inc. v. Gyrus ENT LLC, 440 F. Supp. 2d 1333 (M.D. Fla. 2006) .......................................................................16 MGA, Inc. v. Gen. Motors Corp., 827 F.2d 729 (Fed. Cir. 1987)..............................................................................6, 9, 16 Minco, Inc. v. Combustion Engineering, Inc., 95 F.3d 1109(Fed. Cir. 1996).........................................................................................9 Mize v. Jefferson City Bd. of Educ., 93 F.3d 739 (11th Cir. 1996) .....................................................................................5, 6 Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 4 of 28 PageID 4706 iv In re Nintendo of Am., Inc., 756 F.3d 1363 (Fed. Cir. 2014)........................................................................10, 14, 19 Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008) .....................................................................................................12 Saint Lawrence Commc’ns v. Apple Inc., 2017 WL 3712912 .......................................................................................7, 14, 15, 19 Shifferaw v. Emson USA, Case No. 2:09-cv-54, 2010 WL 1064380 (E.D. Tex. Mar. 18, 2010) .....................9, 16 Shire Dev. LLC v. Mylan Pharm. Inc., No. 8:12-CV-1190-T-36AEP, 2014 WL 12621213 (M.D. Fla. July 25, 2014).......7, 16 Shockley v. Arcan, Inc., 248 F.3d 1349 (Fed. Cir. 2001)....................................................................................11 Spread Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349 (Fed. Cir. 2011)......................................................................................7 Thermolife Int’l, LLC v. Vitamin Shoppe, Inc., No. 0:16-CV-60693-UU, 2016 WL 6678525 (S.D. Fla. June 8, 2016) .............8, 14, 17 TransCore v. Electronic Transaction Consultants, Corp., 563 F.3d 1271 (Fed. Cir. 2009)....................................................................................12 Union Tool Co. v. Wilson, 259 U.S. 107 (1922) .....................................................................................................11 Werteks Closed Joint Stock Co. v. Vitamin Shoppe, Inc., No. 16-60691-CIV, 2016 WL 9488707 (S.D. Fla. Nov. 10, 2016) .............................15 Werteks Closed Joint Stock Company v. GNC Corp., Case No. 15-cv-60688, 2016 WL 8739846 (S.D. Fla. Aug. 4, 2016) .....................8, 14 Statutes 28 U.S.C. § 1659 ..................................................................................................................4 35 U.S.C. § 284 ....................................................................................................................9 Other Authorities Fed. R. Civ. P. 56(c) ............................................................................................................5 Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 5 of 28 PageID 4707 v Fed. R. Civ. P. 42(b) ..........................................................................................................16 Fed. R. Civ. P. 56 .................................................................................................................1 Local Rule 3.01(g) ...............................................................................................................1 Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 6 of 28 PageID 4708 Pursuant to Federal Rule of Civil Procedure 56, defendant Apple Inc. (“Apple”) files this motion for summary judgment of no damages. There is no dispute that Apple is Qualcomm’s customer for the sole products accused of infringement in this case. In fact, ParkerVision has no claims against Apple that ParkerVision does not also have against Qualcomm. As such, if ParkerVision’s claims against Qualcomm are successful, ParkerVision will recover from Qualcomm and will be legally barred from obtaining any relief from Qualcomm’s customers, including Apple. Because ParkerVision cannot recover damages from Apple as a matter of law, Apple’s motion fully resolves the dispute between the parties, and Apple should be dismissed from the case. Alternatively, should the Court be disinclined to dismiss Apple from this case at this time, Apple respectfully moves the Court to sever and stay all claims against Apple until ParkerVision’s dispute with Qualcomm is resolved.1 Apple has no unique information relevant to ParkerVision’s claims, and Apple’s continued presence in this case serves only to increase the burden on the Court and the parties. I. INTRODUCTION ParkerVision’s only surviving allegation2 is that two Qualcomm chips—the Qualcomm WTR1625L and the Qualcomm WTR3925 (the “Accused Qualcomm Chips”)—directly infringe U.S. Patent No. 9,118,528 (the “528 Patent”). See D.I. 3; D.I. 96. ParkerVision’s infringement theory, as expressed in its infringement contentions, is based solely on confidential Qualcomm technical specifications, testimony from Qualcomm employees, and source code maintained by 1 Pursuant to Local Rule 3.01(g), Apple has met and conferred with counsel for ParkerVision in a good faith effort to resolve the request to sever the case and stay the claims against Apple. Apple and ParkerVision were unable to agree on the resolution of this request. 2 The parties have agreed to withdraw all other claims. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 7 of 28 PageID 4709 2 Qualcomm. This is unsurprising, as all accused features are contained entirely within the Accused Qualcomm Chips. ParkerVision has accused Qualcomm of direct infringement based on its importation and sale of these chips in the United States, and seeks complete relief from Qualcomm in the form of monetary damages. D.I. 3. Despite this, ParkerVision improperly demands that Apple also pay damages for its use of those same chips that Qualcomm sells to Apple. Id. As a matter of law, ParkerVision is prohibited from recovering damages from both Qualcomm and Apple for the same sale or use of the exact same product. There are no disputed questions of material fact. Apple is a manufacturer of cellular devices that incorporate transceiver chips manufactured by Qualcomm. Declaration of William Noellert (“Noellert Decl.”) at ¶ 12. Apple has no control over the design or development of these chips—it is merely a downstream customer that purchases the chips from Qualcomm. Id. at ¶¶ 11-18. Apple includes the Qualcomm Accused Products in its products without any modification to the accused functionality. Id. at ¶ 13. Most importantly, Apple purchased all of these chips directly from Qualcomm. Id. at ¶ 11. Furthermore, there is no suggestion that Qualcomm would be unable to fully satisfy any judgment ParkerVision might obtain. Qualcomm describes itself as “a leading developer and supplier of integrated circuits and system software based on CDMA, OFDMA and other technologies for use in wireless voice and data communications, networking, application processing, multimedia and global positioning system products.” Declaration of Robert Vlasis (“Vlasis Decl.”), Exhibit B at 10 [QComm 2017 10-K]. In 2017, Qualcomm employed over 33,000 people, and reported revenues of $22.3B. Id. at 16, 39. Qualcomm also represented that as of the end of its 2017 fiscal year, it had cash and cash equivalents of $38.6B—more than enough to satisfy any possible judgment in this case. Id. at 39, 48-49. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 8 of 28 PageID 4710 3 Based on these undisputed facts, there is no possible scenario in which Apple would be liable for damages to ParkerVision. First and foremost, if the 528 Patent is held invalid or not infringed, then ParkerVision will be unable to recover against either Qualcomm or Apple. Second, if ParkerVision proves infringement, it will recover from Qualcomm no less than a reasonable royalty for its sale of these chips to Apple. Thus, the Accused Qualcomm Chips will be subject to an implied license, and ParkerVision will be foreclosed from obtaining a double recovery from Apple for Apple’s use of the same chips. In either circumstance, ParkerVision cannot obtain damages from Apple and has requested no other relief. Given ParkerVision’s inability to obtain relief from Apple, the Court should grant Apple’s motion for summary judgment precluding a double recovery. As this fully resolves the dispute between ParkerVision and Apple, Apple should be dismissed from this case. Alternatively, if the Court were to find a genuine dispute of material fact (there is not), then pursuant to the customer-suit exception, the Court should sever and stay the claims against Apple pending resolution of the claims against Qualcomm. All of the traditional factors considered in evaluating a stay weigh in favor of staying the claims against Apple. First, resolution of the claims against Qualcomm will eliminate all claims against Apple, as described above. Second, staying the claims against Apple will reduce the burden on the parties and the Court by eliminating discovery, briefing, and motion practice associated with a party that is unnecessary to the action. Indeed, Qualcomm possesses all relevant information related to the merits of the case. Apple possesses none. Finally, ParkerVision would suffer no prejudice from such a stay, as it can recover a full monetary remedy from Qualcomm should it prevail. Thus, if the Court does not grant summary judgment, the most logical course of action is to sever the claims against Apple and stay those claims pending resolution of the claims against Qualcomm. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 9 of 28 PageID 4711 4 II. PROCEDURAL HISTORY ParkerVision filed its amended complaint against Apple and Qualcomm on December 16, 2015. D.I. 3. Pursuant to 28 U.S.C. § 1659, on February 12, 2016, the Court stayed this action pending resolution of a parallel ITC proceeding involving the same patents and parties here. D.I. 41. On March 9, 2017, after ParkerVision withdrew three of the four asserted patents in the ITC action, the administrative law judge granted Defendants’ motions in limine, which precluded ParkerVision’s sole infringement theory. On the day before trial, ParkerVision thus withdrew its complaint in its entirety. Given the late stage of the ITC proceeding, all fact discovery, expert discovery, expert reports, witness statements, and motion practice was complete. This Court subsequently lifted the stay on May 26, 2017, following the ITC’s final termination of the investigation. D.I. 50. Discovery has not yet commenced in this case. The Markman hearing has been scheduled for August 31, 2018, but no other deadlines have been set. III. RELEVANT FACTS The relevant facts are not in dispute. The accused technology in this case resides entirely within two RF transceiver chips, supplied by defendant Qualcomm and integrated into certain of Apple’s iPhones and cellular-enabled iPads. Vlasis Decl., Exhibit A [Inf. Cont. Cover Doc] at 3. ParkerVision has accused six Apple iPhone and iPad models of infringing the 528 Patent based solely on the inclusion of the Qualcomm WTR1625L transceiver in those devices. Id. ParkerVision has also accused five iPhone and iPad models based solely on the inclusion of the Qualcomm WTR3925 transceiver in the devices. Id. ParkerVision’s infringement contentions state that ParkerVision is accusing Qualcomm of infringing the 528 Patent through its sale and importation of these exact same chips (among others). Id. at 5. ParkerVision’s entire infringement case is based on the internal layout and operation of the Accused Qualcomm Chips. See Vlasis Decl. at ¶ 4. ParkerVision does not identify any Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 10 of 28 PageID 4712 5 components of the Apple devices other than the Accused Qualcomm Chips as independently satisfying any claim limitations. Id. at ¶ 5. ParkerVision relies solely on its own documents and Qualcomm’s documents and witness testimony to show the layout and operation of the Accused Qualcomm Chips. Id. at ¶ 6. The operation of the chips is governed by highly proprietary source code, which is manufactured and supplied solely by Qualcomm. Noellert Decl. at ¶ 15. Apple does not modify this source code. Id. at ¶ 16. ParkerVision does not allege that Apple does anything more than purchase and use the Accused Qualcomm Chips unmodified by Apple. See Vlasis Decl. at ¶ 7. ParkerVision does not dispute that Apple plays no part in the layout, operation, or implementation of the Accused Qualcomm Chips. See Vlasis Decl. at ¶ 3. ParkerVision also cannot dispute that it is simultaneously seeking complete relief from Qualcomm for Qualcomm’s sale, offer for sale, and importation of the same Accused Qualcomm Chips that are incorporated into the accused Apple iPhones and iPads. Finally, there is no dispute that Qualcomm possesses sufficient resources to fully satisfy any judgment ParkerVision might obtain. Qualcomm is a massive multinational organization, with 99% of its revenues coming from “international customers and licensees.” Vlasis Decl., Ex. B at 14. Qualcomm employs over 33,000 employees, id. at 16, and earned $22.291B in revenue for the fiscal year ending in September 2017, id. at 39. At the end of fiscal year 2017, Qualcomm reported total assets of $65.5B and over $38.5B in cash and cash equivalents on hand. Id. at 39. IV. LEGAL STANDARDS “The district court must enter an order of summary judgment when, taking the facts in the light most favorable to the nonmoving party, there is ‘no genuine issue as to any material fact.’” Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir. 1996) (citation omitted); see also Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Where the Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 11 of 28 PageID 4713 6 nonmoving party has failed to make a sufficient showing “to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial,” there exist no genuine issues of material fact. Mize, 93 F.3d at 742 (internal citation omitted). Importantly, “a mere scintilla of evidence in support of the non-moving party’s position is insufficient to defeat a motion for summary judgment.” Kesinger ex rel. Estate of Kesinger v. Herrington, 381 F.3d 1243, 1247 (11th Cir. 2004). A. Double Recovery of Damages Is Impermissible “Generally, the double recovery of damages is impermissible.” Aero Prod. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1017 (Fed. Cir. 2006); see also Junker v. Eddings, 396 F.3d 1359, 1368 (Fed. Cir. 2005); Bowers v. Baystate Techs., Inc., 320 F.3d 1317, 1327-28 (Fed. Cir. 2003); Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277, 1289 (Fed. Cir. 2002); Celeritas Techs., Ltd. v. Rockwell Int’l Corp., 150 F.3d 1354, 1362 (Fed. Cir. 1998); CPG Prods., Corp. v. Pegasus Luggage, Inc., 776 F.2d 1007, 1014 n.4 (Fed. Cir. 1985). Even if “damages are claimed based upon separate statutes or causes of action, when the claims arise out of the same set of operative facts, as is the case here, there may be only one recovery.” Aero Prod. Int’l., 466 F.3d at 1020 (emphasis omitted). The Federal Circuit has applied this principle to preclude a patent owner from collecting damages from a buyer of a product when the damages have already been collected form the maker and seller of the product.3 Glenayre Elecs., Inc. v. Jackson, 443 F.3d 851, 864 (Fed. Cir. 2006) (“[A] party is precluded from suing to collect damages for direct infringement by a buyer 3 Conversely, if the maker and seller of a product is successful in defeating a claim of patent infringement, the Patent Owner is barred from suing any of that seller’s customers. MGA, Inc. v. Gen. Motors Corp., 827 F.2d 729, 734 (Fed. Cir. 1987) (“The Kessler doctrine bars a patent infringement action against a customer of a seller who has previously prevailed against the patentee because of invalidity or [non-infringement] of the patent.”). Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 12 of 28 PageID 4714 7 and user of a product when actual damages covering that very use have already been collected from the maker and seller of that product.”). B. Claims Against Customer Defendants Should Be Severed and Stayed A district court has inherent discretionary authority to stay proceedings to control its docket and further the interests of justice. See CTI-Container Leasing Corp. v. Uiterwyk Corp., 685 F.2d 1284, 1288 (11th Cir. 1982). Stays of proceedings can promote judicial economy, reduce confusion and prejudice, and prevent possibly inconsistent resolutions. See Clinton v. Jones, 520 U.S. 681, 706 (1997). In determining whether a stay is appropriate, courts in this District consider the following factors: “(1) whether a stay will simplify the issues and streamline the trial; (2) whether a stay will reduce the burden of litigation on the parties and the court; and (3) whether the stay will unduly prejudice the non-moving party.” Shire Dev. LLC v. Mylan Pharm. Inc., No. 8:12-CV-1190-T-36AEP, 2014 WL 12621213, at *1 (M.D. Fla. July 25, 2014); see also Lifewatch Servs., Inc. v. Medicomp, Inc., No. 6:09–cv–1909–Orl–31DAB, 2010 WL 963202, at *1 (M.D. Fla. Mar, 16, 2010) (same); Baxa Corp. v. Forhealth Techs., Inc. No. 6:06– CV–353, 2006 WL 4756455 (M.D. Fla. May 5, 2006) (same). Courts will sever and stay claims against downstream customers pending the resolution of a suit against the manufacturer. See e.g. Katz v. Lear Siegler, 909 F.2d 1459, 1464 (Fed. Cir. 1990); Saint Lawrence Commc’ns v. Apple Inc., 2017 WL 3712912, at *1 (explaining that the Federal Circuit has recognized that Rule 21 authorizes the severance of any claim “when a patent owner has sued both a manufacturer and its customers for infringement of the same patents based on the same accused products”). Known as the customer-suit exception, this practice “is based on the manufacturer’s presumed greater interest in defending its actions against charges of patent infringement; and to guard against possibility of abuse.” Spread Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349, 1357 (Fed. Cir. 2011) (internal citation omitted); see also Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 13 of 28 PageID 4715 8 Katz, 909 F.2d at 1464 (noting that “the manufacturer is the true defendant in the customer suit” and that it “must protect its customers, either as a matter of contract, or good business, in order to avoid the damaging impact of an adverse ruling against its products” (internal citations omitted)). Courts in the Eleventh Circuit have applied the customer-suit exception to cases where the manufacturer and customer were named as co-defendants in the same litigation. See Werteks Closed Joint Stock Company v. GNC Corp., Case No. 15-cv-60688, 2016 WL 8739846 (“Werteks I”) (S.D. Fla. Aug. 4, 2016) (applying customer-suit exception to stay case against downstream customer where customer and manufacturer were both co-defendants ); Thermolife Int’l, LLC v. Vitamin Shoppe, Inc., No. 0:16-CV-60693-UU, 2016 WL 6678525, at *5 (S.D. Fla. June 8, 2016) (“[E]ven though Plaintiffs purport to state claims against the Supplier Defendants as direct infringers, its theory of liability against the Supplier Defendants is wholly dependent upon a resolution of the infringement and validity of the Patent at issue in this litigation.”) (internal quotations omitted); see also The Andersons, Inc. v. Enviro Granulation, LLC, Case No. 8:13-cv-3004, Dkt. 112 at 1-2 (M.D. Fla., July 21, 2014) (acknowledging that district courts frequently stay claims against downstream customers while the suit against the manufacturer proceeds, but denying stay motion for unrelated reasons). V. ARGUMENT A. Summary Judgment Should Be Granted, As ParkerVision Cannot Obtain Relief From Apple There is no realistic scenario in which ParkerVision can obtain relief from Apple in this case. If ParkerVision is ultimately successful in its claims against Qualcomm, then Qualcomm as the maker of the infringing chips will be responsible for paying any damages, which will fully compensate ParkerVision for any infringement. Summary judgment is therefore appropriate at Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 14 of 28 PageID 4716 9 this juncture because there are no relevant disputed material facts, and Apple is entitled to relief as a matter of law. 1. ParkerVision Cannot Obtain a Double Recovery First, if ParkerVision fails to establish that the 528 Patent is valid and infringed by the Accused Qualcomm Products, then ParkerVision will have no basis for damages against Apple. See 35 U.S.C. § 284 (a “finding for the claimant” is a prerequisite to damages). This is true regardless of Apple’s status as a party. See MGA, Inc., 827 F.2d at 734 (“The Kessler doctrine bars a patent infringement action against a customer of a seller who has previously prevailed against the patentee because of invalidity or [non-infringement] of the patent”); see also Kessler v. Eldred, 206 U.S. 285, 290 (1907). Second, even if ParkerVision establishes that the 528 Patent is valid and infringed by the Accused Qualcomm Products, ParkerVision’s full recovery from Qualcomm will bar ParkerVision from obtaining any relief from Apple. This is because a plaintiff cannot recover damages from both a manufacturer and its customer for infringement of the same patent by the same product. See Aero Prod., 466 F.3d at 1020 (holding that “even though damages are claimed based upon separate statutes or causes of action, when the claims arise out of the same set of operative facts, as is the case here, there may be only one recovery” (internal emphasis omitted)); Minco, Inc. v. Combustion Engineering, Inc., 95 F.3d 1109, 1121(Fed. Cir. 1996) (declining to award damages where such award would be an impermissible double recovery); see also Glenayre Elecs., 443 F.3d at 864 (“[A] party is precluded from suing to collect damages for direct infringement by a buyer and user of a product when actual damages covering that very use have already been collected from the maker and seller of that product”); Shifferaw v. Emson USA, Case No. 2:09-cv-54, 2010 WL 1064380, at *3 (E.D. Tex. Mar. 18, 2010) (explaining that if a manufacturer “is found liable and [the patentee] collects damages from [the manufacturer], Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 15 of 28 PageID 4717 10 then the plaintiff cannot then in turn collect damages from the Retailer Defendants, because [plaintiff] cannot receive a double recovery for the same sales.”); see also LG Elec., Inc. v. Asustek Computers, 126 F. Supp. 2d 414, 422 (E.D. Va. 2000) (“If the court does find [the manufacturer] liable and allows [the patent owner] to collect royalties, [the patent owner] cannot then in turn collect royalties from the entity to whom the infringer sells the product.”). In short, ParkerVision may only recover once for any infringing sales or uses of the Accused Qualcomm Chips. Id. Here, any recovery from Apple would fall squarely within the prohibition on double recovery because ParkerVision’s claims against Apple and Qualcomm arise from the same set of operative facts—the allegedly infringing operation of the Accused Qualcomm Chips. ParkerVision’s infringement claims against Apple will ultimately depend on Qualcomm documents and testimony. Indeed, other than an interrogatory response, ParkerVision does not identify any Apple evidence as part of its infringement claims. Vlasis Decl. at ¶¶ 4-7. Rather, its infringement contentions rely entirely on documents produced by Qualcomm in prior litigation, testimony from Qualcomm engineers, and highly confidential proprietary source code related to the Accused Qualcomm Chips. Vlasis Decl. at ¶ 6. In fact, as ParkerVision’s contentions confirm, Apple’s products play no role in the alleged infringement, other than simply housing the allegedly infringing Accused Qualcomm Chips. Id. at ¶¶ 4-6. But ParkerVision has no claims directed to housing the accused functionality, so there is no independent ground for relief against Apple. This simple fact bars recovery from both Qualcomm and Apple. See In re Nintendo of Am., Inc., 756 F.3d 1363, 1366 (Fed. Cir. 2014) (“the issues of infringement and validity are common to Nintendo and the Retailer Defendants and that if Secure Axcess were to collect Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 16 of 28 PageID 4718 11 royalties from Nintendo, this would preclude suit against the Retailers.”) (internal quotations omitted). Simply put, if ParkerVision is entitled to a judgment and recovery for infringement by the Accused Qualcomm Chips, it will receive that full recovery from Qualcomm. Qualcomm’s reported revenues and assets—$22B and $65B respectively—demonstrate Qualcomm’s ability to satisfy such a recovery. Vlasis Decl., Ex. B at 39. There is no reasonable argument that Apple is a necessary party to achieve a full recovery, as Qualcomm has more than sufficient resources. While ParkerVision might allege that Qualcomm and Apple are joint tortfeasors, it cannot recover more than the full recovery from Qualcomm. See Shockley v. Arcan, Inc., 248 F.3d 1349, 1364 (Fed. Cir. 2001) (“Each joint tort-feasor is liable for the full amount of damages (up to a full single recovery) suffered by the patentee.” (emphasis added) (citing Birdsell v. Shaliol, 112 U.S. 485, 488–89 (1884))). ParkerVision is not entitled to any additional recovery from Qualcomm’s customers, including Apple. 2. The Doctrine of Implied License Will Prohibit Liability as to Apple ParkerVision will further be barred from pursuing claims against Apple under the doctrine of implied license. In particular, when a patentee receives full compensation for infringement, it has provided an implied license for the sales of the infringing products. Glenayre Elecs., 443 F.3d at 865 (“When a patentee receives full compensation for the wrongful use of an invention in devices made and sold by a manufacturer, the patentee effectively adopts the sales by the manufacturer such that purchasers and users of the devices receive implied licenses that free them from liability for infringement of the patent.”) (analyzing Supreme Court decisions in Birdsell v. Shaliol, 112 U.S. 485 (1884) and Union Tool Co. v. Wilson, 259 U.S. 107 (1922)). Here, if ParkerVision is ultimately successful in its infringement claims against Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 17 of 28 PageID 4719 12 Qualcomm, ParkerVision will receive a reasonable royalty from Qualcomm, and Apple will receive an implied license and be free from liability. See Glenayre Elecs., 443 F.3d at 864. 3. The Doctrine of Exhaustion Will Prohibit Liability as to Apple Finally, should ParkerVision settle its claims against Qualcomm, Apple will be released from liability under the doctrine of exhaustion. See Global Commc’ns, Inc. v. PDI Commc’ns, No. 4:11cv541-RH/CAS, 2012 U.S. Dist. LEXIS 191402, at *5-*9 (N.D. Fla. May 21, 2012) (N.D. Fla. May 21, 2012) (finding that sales pursuant to a covenant not to sue settling an infringement action are authorized, triggering patent exhaustion (citing TransCore v. Electronic Transaction Consultants, Corp., 563 F.3d 1271, 1274 (Fed. Cir. 2009))). “The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item.” Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 625 (2008). “The only issue relevant to patent exhaustion is whether … sales were authorized.” TransCore, 563 F.3d at 1277. The parties’ intent with respect to downstream customers is of no moment in a patent exhaustion analysis. See Quanta, 553 U.S. at 637 (“[E]xhaustion turns only on [licensee’s] own license to sell products practicing the [licensor’s] Patents.”). A finding of patent exhaustion is appropriate at the summary judgment stage if there are no disputed questions of material fact. Global Commc’ns, Inc., 2012 U.S. Dist. LEXIS 191402, at *9 (granting summary judgement motion establishing that relief was barred as to certain claims due to patent exhaustion). The fact that Qualcomm’s sales would be authorized in the event of a settlement terminates all of ParkerVision’s patent rights, precluding suit against Apple. Id. (quoting Quanta Computer, 553 U.S. at 625). In summary, whether or not ParkerVision is ultimately successful in its campaign against Qualcomm, ParkerVision cannot obtain relief from Apple under any viable scenario. Either ParkerVision will recover from Qualcomm, precluding a recovery against Apple for the same Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 18 of 28 PageID 4720 13 chip, or ParkerVision will fail to establish that the Accused Qualcomm Chips infringe a valid claim of the 528 patent, precluding any judgment against Apple. None of this can be reasonably disputed, so summary judgment of no damages should be granted. Moreover, granting summary judgment will fully resolve ParkerVision’s claims against Apple; thus, if Apple’s motion is granted, Apple should be dismissed from the case. B. In the Alternative, the Court Should Sever and Stay the Claims Against Apple In the alternative, the claims against Apple should be sever and stayed pending resolution of ParkerVision’s claims against Qualcomm. ParkerVision’s dispute is with Qualcomm. The claims against Apple should be severed and stayed under both the customer-suit exception established by the Federal Circuit and adopted by lower courts, as well as this Court’s inherent authority to control and manage its docket. As Apple is merely a peripheral defendant, adjudication of the claims against Qualcomm will resolve all of the issues related to ParkerVision’s claims against Apple. Moreover, all of the traditional stay factors weigh in favor of staying ParkerVision’s claims against Apple until the claims against Qualcomm have been resolved. 1. The Claims Against Apple Should Be Severed and Stayed Under the Customer-Suit Exception As stated above, ParkerVision’s infringement claims against Apple are directed to the Accused Qualcomm Products, and thus Qualcomm, as the manufacturer of those products, is the sole relevant defendant. Indeed, Apple is merely Qualcomm’s customer with no control over the design, manufacture, implementation, or operation Accused Qualcomm Products. Moreover, Apple is not a competitor of ParkerVision requiring its presence in this suit. The customer-suit exception was adopted to address this specific situation and holds that the claims against Apple should be severed and stayed. See Katz, 909 F.2d at 1464 (“[L]itigation against or brought by the Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 19 of 28 PageID 4721 14 manufacturer of infringing goods takes precedence over a suit by the patent owner against customers of the manufacturer.”). In particular, the Federal Circuit has held that, when a patent owner has sued both a manufacturer and its customers for infringement of the same patents by the same accused products, the claims against the customers should be severed and stayed. See In re Nintendo, 756 F.3d at 1366; see also Saint Lawrence Commc’ns, 2017 WL 3712912, at *1. “In such instances, the manufacturer is frequently considered to be the ‘true defendant,’ and the burdens of litigation should not be imposed on the customer.” Saint Lawrence Commc’ns, 2017 WL 3712912, at *1 (citing In re Nintendo, 756 F.3d at 1365). In Nintendo of America, for example, the Federal Circuit reversed the district court’s failure to sever and stay claims against customer defendants on a writ of mandamus. In re Nintendo, 756 F.3d at 1366. There, the downstream customers were accused of infringement based solely on the sale of the manufacturer’s components. Id. at 1364. The Federal Circuit held that the customer claims must be severed and stayed because this “would resolve these claims more efficiently and conveniently,” as a successful recovery from the manufacturer “would preclude suit” against the customers. Id. at 1366. Lower courts have consistently applied this reasoning to sever or bifurcate4 and stay claims against customer defendants. See, e.g., Werteks I, 2016 WL 8739846, at *6 (“Judicial economy and the avoidance of imposing the burdens of litigation and trial on the Customer Defendants where liability hinges on the alleged infringement by [the Manufacturer] are both served by staying the instant case as to the Customer Defendants.”); Thermolife Int’l, 2016 WL 6678525, at *5 (severing and staying customer claims where “the Court must find [the Manufacturer] liable before Plaintiffs can recover from the Supplier Defendants “even though Plaintiffs purport to state claims against the 4 Some courts have bifurcated rather than stayed claims. While Apple requests severance, Apple does not oppose bifurcation as an alternative form of relief. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 20 of 28 PageID 4722 15 [customers] as ‘direct infringers’”); Werteks Closed Joint Stock Co. v. Vitamin Shoppe, Inc., No. 16-60691-CIV, 2016 WL 9488707, at *2 (S.D. Fla. Nov. 10, 2016) (“Werteks II”) (citing In re Dell, 600 Fed. Appx. 728, 730 (Fed. Cir. 2015)) (bifurcating and staying customer claims); Cellular Commc’ns v. Apple Inc., 2016 WL 6884648, at *2 (severing and staying customer claims where “[Plaintiff had] proffered no evidence suggesting that the Carrier Defendants had any meaningful role in the design or manufacture of the component that implements the patented [accused] functionality, namely, the Qualcomm baseband chip”); Saint Lawrence Commc’ns, 2017 WL 3712912, at *2 (severing and staying customer claims where the customers had no role in the “design, or implementation of the relevant software code” implemented on the Qualcomm baseband chips). Here, ParkerVision’s claims against Apple fall squarely within the customer-suit exception. There is no dispute that Apple is nothing more than Qualcomm’s customer, or that any infringement claim against Apple is predicated solely on Apple’s purchase and use of the Accused Qualcomm Products without modification to the accused functionality. There is likewise no dispute that Apple had no role in the design or implementation of the relevant Qualcomm source code or the manufacture of the Accused Qualcomm Products. Moreover, ParkerVision will have no claim against Apple once it recovers from Qualcomm, should it ultimately be successful in its claims of infringement. There is no meaningful dispute here that Qualcomm is the true defendant, and that the claims against Apple should be severed and stayed. 2. The Traditional Factors Weigh In Favor of Severing and Staying ParkerVision’s Claims Against Apple Even if the customer-suit exception did not apply, this Court has the inherent power to manage its docket by severing and staying the claims against Apple pending resolution of the claims against Qualcomm. See Johnson v. Bd. of Regents of Univ. of Ga., 263 F.3d 1234, 1269 Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 21 of 28 PageID 4723 16 (11th Cir. 2001) (District courts are accorded “broad discretion over the management of pre-trial activities, including discovery and scheduling.”). Federal Rule of Civil Procedure 42(b) “confers broad discretion on the district court” and permits bifurcating under many circumstances, even “merely in furtherance of convenience.” Dzafic v. Geovera Specialty Ins. Co., No. 808-CV-0026- T-24EAJ, 2008 WL 3874602, at *1 (M.D. Fla. Aug. 15, 2008); see also Medtronic Xomed, Inc. v. Gyrus ENT LLC, 440 F. Supp. 2d 1333, 1335 (M.D. Fla. 2006) (granting-in-part bifurcation motion). “That is not a high standard, and the district court’s concern for clarifying the issues to be tried suffices to permit the court to separate the trials.” Harrington v. Cleburn County Bd. of Educ., 251 F.3d 935, 938 (11th Cir.2001). In determining whether a stay is appropriate, “the following factors are taken into consideration: (1) whether a stay will simplify the issues and streamline the trial; (2) whether a stay will reduce the burden of litigation on the parties and the court; and (3) whether the stay will unduly prejudice the non-moving party.” Shire Dev., 2014 WL 12621213, at *1. Here, all of the factors weigh in favor of severing and staying the claims against Apple. a) A Stay Will Simplify the Issues for Trial First, a stay pending resolution of the claims against Qualcomm will simplify the issues as to Apple and eliminate the need for any trial as to Apple. Indeed, if Qualcomm prevails on either invalidity or noninfringement, ParkerVision will be precluded from pursuing its claims against Apple. MGA, 827 F.2d at 734 (“The Kessler doctrine bars a patent infringement action against a customer of a seller who has previously prevailed against the patentee because of invalidity or [non-infringement] of the patent.”). Conversely, if ParkerVision prevails on infringement and recovers from Qualcomm, ParkerVision will be barred from obtaining further relief from Apple based on sales of the same Accused Qualcomm Chips. See Shifferaw, 2010 WL 1064380 at *3 (if a manufacturer “is found liable and [the patentee] collects damages from Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 22 of 28 PageID 4724 17 [the manufacturer], then the plaintiff cannot then in turn collect damages from the Retailer Defendants, because [plaintiff] cannot receive a double recovery for the same sales.”); see also LG Elec., Inc., 126 F. Supp. 2d at 422 (“If the court does find [the manufacturer] liable and allows [the patent owner] to collect royalties, [the patent owner] cannot then in turn collect royalties from the entity to whom the infringer sells the product”). In either instance, a stay would eliminate the issues related to Apple. Following the resolution of ParkerVision’s claims against Qualcomm, there will be nothing left to determine with respect to Apple. Thus, the first factor weighs strongly in favor of severing and staying the claims against Apple. b) A Stay Will Reduce the Burden on the Court and the Parties Second, a stay will substantially reduce the burden of litigation on the parties and on the Court. In evaluating this factor, courts have analyzed which party possesses or controls relevant information to determine whether a stay would permit the Court to “more efficiently resolve the issues.” Thermolife Int’l, 2016 WL 6678525, at *4. Applicable here, courts have found that a stay is appropriate when the customer defendant “[did] not have, and never have had, documents or information relating to the products that will be necessary and essential to defendant against Plaintiffs’ claims.” Id.; see also Cellular Commc’ns Equip., 2016 WL 6884648, at *2 (granting stay because the downstream customers “produced evidence that they do not have access to the highly proprietary source code,” and Qualcomm had “only agreed to produce the source code for its baseband chipsets on an outside attorneys’ eyes only basis … with strict requirements that prohibit any of [the downstream customers’] employees or in-house counsel from accessing the code”). Here, Qualcomm alone possesses the documents and information relevant to the design and operation of the Accused Qualcomm Chips, and Apple does not have and never has had Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 23 of 28 PageID 4725 18 relevant documents or information. Apple had no role in the design or manufacture of these chips. Noellert Decl. at ¶¶ 16-18. Apple does not modify the accused functionality of the Accused Qualcomm Chips in any way—it merely incorporates them in certain cellular products as those products are sold. Id. at ¶ 13. As discussed above, ParkerVision’s infringement contentions are based on Qualcomm’s documents and testimony, not Apple’s. See Vlasis Decl. at ¶ 6. ParkerVision has never requested substantive evidence from Apple on the operation of the Accused Qualcomm Products, and Apple has never possessed any relevant information.5 Id. at ¶¶ 9-10. Simply put, Apple’s continued presence in the litigation does not serve any purpose. In contrast, Apple’s continued participation in this litigation wastes the resources of the Court and the parties. If the Apple claims are not stayed, both Apple and ParkerVision will potentially be subject to discovery that is unrelated to the true dispute—whether the Accused Qualcomm Products infringe the 528 Patent. Moreover, a stay with respect to Apple will reduce the total filings with the Court at every stage of the proceeding, substantially decreasing the burden on the Court. These are meaningful improvements to efficiency, as discovery has not yet commenced and there has been no substantive motion practice. Thus, a stay at this juncture represents significant future savings for the Court and the parties. The second factor thus weighs strongly in favor of a stay. c) ParkerVision Will Suffer No Prejudice From a Stay Finally, a stay will not prejudice ParkerVision. First, ParkerVision does not need any discovery from Apple to develop its case against either Defendant. ParkerVision will therefore suffer no prejudice from Apple’s lack of participation in the case. 5 Apple produced schematics and a witness in the ITC action to confirm that the Accused Qualcomm Products are indeed incorporated into Apple’s devices. None of the Apple evidence was relevant to how the Qualcomm chips function or how the 528 Patent is allegedly infringed. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 24 of 28 PageID 4726 19 Second, ParkerVision only seeks monetary damages (see D.I. 3), and a stay with respect to Apple will not impact ParkerVision’s ability to recover damages from Qualcomm, if any are due. If the claims against Apple are stayed, ParkerVision’s claims against Qualcomm can continue apace. If ParkerVision is ultimately successful, it can recover its full damages from Qualcomm without delay or harm. As ParkerVision’s ability to recover damages will be unimpeded by a stay of the claims against Apple, a stay is appropriate. See In re Nintendo of America Inc., 756 F.3d at 1366 (“[Plaintiff] nonetheless contends that severance should be denied so that it may pursue, and have its choice of, the highest royalty rate among the defendants. This argument is outweighed … [because Plaintiff] has no claim against the Retailers unless the infringement claims against [Manufacturer] are resolved in favor of [Plaintiff].”); Saint Lawrence Commc’ns, 2017 WL 3712912, at *2 (staying claims with respect to customer defendants, notwithstanding different damage models for the manufacturer and the customer defendants). Conversely, Apple will suffer prejudice if a stay is not entered. Qualcomm, not Apple, is in the best position to defend against the infringement claims at the core of this case. See, e.g., Ambrose v. Steelcase, Inc., Case No. 02-cv-2753, 2002 WL 1447871, at *6-*7 (N.D. Ill., July 3, 2002) (“[The downstream customer] is not in a position to defend the infringement claims.”). By remaining in the litigation, Apple will thus bear substantial costs associated with unnecessary discovery, motion practice, claim construction, and trial. Apple will incur these substantial costs despite the fact that resolution of ParkerVision’s claims against Qualcomm will fully resolve the claims against Apple, regardless of the outcome. Thus, the third factor weighs in favor of staying the claims against Apple. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 25 of 28 PageID 4727 20 All of the factors weigh strongly in favor of staying ParkerVision’s claims against Apple pending resolution of the claims against Qualcomm. Thus, if the Court does not grant summary judgment in favor of Apple, it should sever and stay the claims against Apple pending resolution of the claims against Qualcomm. VI. CONCLUSION ParkerVision’s claims against Apple are entirely derivative of its co-pending claims against Qualcomm. The undisputed facts establish that the claims against Apple will be resolved by the outcome of ParkerVision’s claims against Qualcomm. Regardless of the outcome of ParkerVision’s dispute with Qualcomm, ParkerVision cannot obtain relief from Apple. Summary judgment precluding ParkerVision from making a double recovery against Apple is appropriate and should be granted. Moreover, as all issues as to Apple would be resolved by this motion, Apple should be dismissed from the case. Alternatively, should the Court deny Apple’s request for summary judgment, the Court should sever and stay the claims against Apple pending resolution of the claims against the true defendant, Qualcomm. Both the customer-suit exception and the traditional factors weigh in favor of severing and staying the claims against Apple. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 26 of 28 PageID 4728 21 Dated: August 30, 2018 WEIL, GOTSHAL & MANGES LLP By: /s/ Brian E. Ferguson 1 Brian E. Ferguson (pro hac vice) – Trial Counsel brian.ferguson@weil.com Robert T. Vlasis III (pro hac vice) robert.vlasis@weil.com 2001 M Street, N.W., Suite 600 Washington, D.C. 20036 Phone: (202) 682-7000 Fax: (202) 857-0940 Edward Soto Florida Bar Number: 265144 edward.soto@weil.com 1395 Brickell Ave, Suite 1200 Miami, FL 33131 Phone: (305) 577-3177 Fax: (305) 374-7159 Counsel for Defendant Apple Inc. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 27 of 28 PageID 4729 CERTIFICATE OF SERVICE I certify that on August 30, 2018, I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system. I further certify that I mailed the foregoing document and the notice of electronic filing by first-class mail to the following non-CM/ECF participants: None. By: /s/ Brian E. Ferguson 1 Brian E. Ferguson (admitted Pro Hac Vice) brian.ferguson@weil.com Weil, Gotshal & Manges LLP 2001 M Street, N.W., Suite 600 Washington, D.C. 20036 Phone: (202) 682-7000 Fax: (202) 857-0940 Counsel for Defendant Apple Inc. Case 3:15-cv-01477-BJD-JRK Document 109 Filed 08/30/18 Page 28 of 28 PageID 4730