Dynamic Applet Technologies, LLC v. MATTRESS FIRM, INC. et al

REPLY to Response to Motion re SEALED MOTION DEFENDANTS' MOTION FOR SANCTIONS PURSUANT TO FED. R. CIV. P. 11

E.D. Tex.February 19, 2019

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION DYNAMIC APPLET TECHNOLOGIES, LLC, Plaintiff, v. MATTRESS FIRM, INC. and SLEEPY’S, LLC, Defendants. Civil Action No. 4:17-cv-860-ALM-KPJ JURY TRIAL DEMANDED DYNAMIC APPLET TECHNOLOGIES, LLC, Plaintiff, v. URBAN OUTFITTERS, INC., Defendant. Civil Action No. 4:17-cv-862-ALM-KPJ JURY TRIAL DEMANDED DYNAMIC APPLET TECHNOLOGIES, LLC, Plaintiff, v. HOLLISTER CO., Defendant. Civil Action No. 4:17-cv-878-ALM-KPJ JURY TRIAL DEMANDED Case 4:17-cv-00860-ALM-KPJ Document 102 Filed 02/19/19 Page 1 of 7 PageID #: 20944 1 DEFENDANTS’ REPLY IN SUPPORT OF THEIR MOTION FOR SANCTIONS1 “That which infringes if later, anticipates if earlier.” Peters v. Active Mfg. Co., 129 U.S. 530, 538 (1889). Dynamic alleges the prior art infringes; its patent is therefore invalid. Its counsel refuse to acknowledge this, so sanctions are warranted. The alleged invention of the ’111 Patent is the “unique construction of the applet” dynamically generated. ’111 Patent 11:7-12. But the “applets” Dynamic alleges infringe, however, were simply a fundamental feature of the JavaScript programming language (called an object literal) that predates the patent. Defendants presented conclusive prior art evidence of this. A striking example of the identical construction of the allegedly “unique” applet (left) is shown in the following comparison to prior art (right): (Mot. for Sanctions at 13.)2 “[W]hen an accused product and the prior art are closely aligned, it takes exceptional linguistic dexterity to simultaneously establish infringement and evade invalidity.” 01 Communique Lab., Inc. v. Citrix Sys., Inc., 889 F.3d 735, 742 (Fed. Cir. 2018). Dynamic’s counsel has tried all sorts of linguistic dexterity and litigation gamesmanship to avoid these facts, but cannot. 1 As of the filing date of this Reply, Plaintiff Dynamic Applet Technologies, LLC and Defendant PetSmart, Inc. have reached a settlement in principle. Accordingly, PetSmart does not join this Reply. 2 As similarly produced in Defendants’ Motion for Sanctions, this comparison compares the pertinent section of PetSmart’s source code identified by Plaintiff as the accused instrumentality with the example source code in the JavaScript 1.2 Netscape reference. Case 4:17-cv-00860-ALM-KPJ Document 102 Filed 02/19/19 Page 2 of 7 PageID #: 20945 2 Plaintiff has made no meaningful effort to demonstrate that the dynamic generation and JavaScript techniques taught in the Netscape references are not identical to the alleged infringing instrumentalities. Instead, Plaintiff’s Response demonstrates that Plaintiff has (1) conducted an infringement analysis while turning a blind eye to the prior art; (2) conducted an invalidity analysis while turning a blind eye to the accused instrumentalities; and (3) resorted to “litigation by ambush” by improperly seeking to amend its infringement contentions in an effort to circumvent the arguments raised in the instant Motion. Describing its “good faith” infringement case, Plaintiff has focused on its “significantly more detailed infringement analysis,” which has been premised on “a thorough review and analysis of public information” and “detailed claim charts” that show on an element-by-element basis how Plaintiff believes Defendants’ accused instrumentalities infringe the asserted claims of the ’111 Patent. (See Resp. at 5–7.) While Defendants disagree with Plaintiff’s infringement allegations, the instant Motion is not about the sufficiency of Plaintiff’s infringement contentions. It is about Plaintiff ignoring the prior art that it alleges infringes. On the other hand, describing its “good faith” validity case, Plaintiff has detailed its supplemental interrogatory response as well as three separate declarations filed by its expert, Mr. Jawadi. (See id. at 8–10.) Again, Plaintiff’s invalidity analysis has consistently suffered from one major flaw: ignoring the accused instrumentalities. As the Federal Circuit has cautioned on numerous occasions, however, “[a] patent may not, like a nose of wax, be twisted one way to avoid anticipation and another to find infringement.” 01 Communique Lab., 889 F.3d at 743 (quoting Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001)). Plaintiff’s Response makes only one attempt to distinguish the accused instrumentalities from the techniques recited in the Netscape references. (See Resp. at 10.) Specifically, Plaintiff Case 4:17-cv-00860-ALM-KPJ Document 102 Filed 02/19/19 Page 3 of 7 PageID #: 20946 3 argues that the accused instrumentalities “use . . . several kinds of value operations, such as Boolean values, which operate as state-indicators and provide different functionality.” (Id.) Setting aside whether or not this makes sense, this argument relies upon newly identified source code in Plaintiff’s improperly served Amended Infringement Contentions—something Dynamic never mentioned before.3 (See id.) Plaintiff’s sole reliance on its improper Amended Infringement Contentions to distinguish the accused instrumentalities from the prior art highlights Plaintiff’s knowledge that its claim have been baseless since Defendants identified the Netscape references in their Answers. Realizing that its claims have been meritless all along in light of the Netscape prior art, Plaintiff now seeks to improperly shift its infringement theories days before expert reports are served. See Sycamore IP Holdings LLC v. AT&T Corp., 2:16-cv- 588-WCB, 2018 WL 1695231, at *10 (E.D. Tex. Apr. 6, 2018). Plaintiff’s Response makes much of the declarations submitted by its expert, Mr. Zaydoon Jawadi. Indeed, Plaintiff goes so far to accuse Defendants’ counsel of “ignor[ing] the actual evidence, hoping to override the opinion of an independent technical expert with attorney argument.” (Response at 1.) Reliance upon objectively flawed expert testimony, however, does not render an infringement claim objectively reasonable. MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 920 (Fed. Cir. 2012); Judin v. U.S., 110 F.3d 780, 785 (Fed. Cir. 1997) (holding that a “violation of Rule 11 was not cured by the fact that, after filing the complaint, the [plaintiff] consulted with an expert and was able to make ‘colorable’ arguments in response to a motion for summary judgment of noninfringement.”). Mr. Jawadi has provided no testimony to meaningfully demonstrate that alleged “applet” identified for infringement is not the same as 3 Plaintiff’s Amended Infringement Contentions are improper because they do not comply with the Local Rules. See Local P.R. 3-6(a)(1). (See Defs.’ Resp. to Pl.’s Mot. for Leave to Serve Am. Infringement Contentions, Dkt. No. 101.) Case 4:17-cv-00860-ALM-KPJ Document 102 Filed 02/19/19 Page 4 of 7 PageID #: 20947 4 those demonstrated by the Netscape references. On the other hand, Defendants’ expert, Mr. Tittel, provided extensive testimony on how “the Netscape references teach to the same topics, methods, and activities that Plaintiff identifies as infringing for each claim element in its infringement contentions.” (See Tittel Decl., Ex. A to Defs.’ Mot. for Sanctions, at ¶¶ 24–56.) Plaintiff also argues that this case is still at an early stage of litigation. (See Resp. at 3.) This is plainly false. The parties must serve opening expert reports on infringement and invalidity today. This Court and Defendants have spent significant resources litigating this case, including the issuance of the Court’s Claim Construction Order. (See Dkt. No. 79). Even if this case were at an early stage, this has no bearing on the instant Rule 11 Motion as Plaintiff has an obligation to “continually assess the soundness of pending infringement claims.” Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 1328 (Fed. Cir. 2013). Plaintiff has also criticized Defendants for resorting to Rule 11 “as a ‘first option.’” (See Response at 14 (quoting Syneron Med. Ltd. v. Viora Ltd., No. 2:14-cv-639, 2014 WL 7140643, at *5 (E.D. Tex. Dec. 12, 2014).) In Syneron, Defendants filed its Rule Motion “roughly three months after the litigation commenced.” Id. at *1. The record shows the opposite. Defendants raised the issue as early as its Counterclaims, served its first interrogatory on February 7, 2018, asking Dynamic to identify any non-frivolous grounds for validity, served the Rule 11 motion on November 2, 2018, after discussion over the interrogatory responses reached an impasse, and did not immediately file after the safe harbor expired. (See Ex. A, Conrad Decl.) Defendants acknowledge the gravity of the instant Motion and do not take their action lightly. In fact, this is the first and only Rule 11 Motion that Lead Counsel for Defendants has filed in his 12 years of practice. Conscious of the severity of the sanctions sought, Defendants waited long after than the statutory 21-day safe harbor before filing the instant Motion to try to Case 4:17-cv-00860-ALM-KPJ Document 102 Filed 02/19/19 Page 5 of 7 PageID #: 20948 5 help Dynamic’s counsel understand the frivolous nature of their infringement claims and find other avenues for dismissal. For example, counsel for Defendants consented to the request of Plaintiff’s counsel to wait until the issuance of the Court’s Claim Construction Order, as numerous terms could prove dispositive, allowing the parties to avoid the issue of Rule 11 sanctions. Following the Court’s Claim Construction Order, Dynamic refused to accept the dispositive nature of the rulings, so counsel for Defendants sent a letter to Plaintiff’s counsel informing Plaintiff that it intended to file its Rule 11 Motion on January 25, 2019—over two months after the Rule 11 Motion was served—if Plaintiff did not agree to dismiss its case in light of the Netscape references. (See Ex. 5 to Conrad Decl.) Rather than provide Defendants with a substantive response as to how the accused instrumentalities were different from those taught in the Netscape references, Plaintiff served Amended Infringement Contentions, adding a new claim and materially shifting its infringement theory. Defendants filed only when left with no other option than to file the instant Motion, and Dynamic’s subsequent gamesmanship proves that the filing was warranted. Defendants have demonstrated both clearly and convincingly that each element of the asserted claims, as identified by Dynamic in the accused instrumentalities, are identically disclosed in the prior art Netscape references. If Defendants infringe, the patent is invalid. Defendants should not be forced to expend any additional resources to defend itself against claims that both Plaintiff and counsel for Plaintiff know are “so weak that they are not grounded in fact and legally tenable.” Rayon, LLC v. Complus Data Innovations, Inc., 700 F.3d 1361, 1373 (Fed. Cir. 2012). For the foregoing reasons, Defendants respectfully request that Dynamic’s claims for infringement be dismissed with prejudice, and that Defendants be awarded their fees and expenses accrued since the filing of Defendant’s Answers and Counterclaims. Case 4:17-cv-00860-ALM-KPJ Document 102 Filed 02/19/19 Page 6 of 7 PageID #: 20949 6 Dated: February 19, 2019 Respectfully submitted, By: /s/ David B. Conrad Neil J. McNabnay mcnabnay@fr.com Texas Bar No. 24002583 David B. Conrad conrad@fr.com Texas Bar No. 24049042 Lance Wyatt wyatt@fr.com Texas Bar No. 24093397 Theresa M. Dawson tdawson@fr.com Texas Bar No. 24065128 FISH & RICHARDSON P.C. 1717 Main Street, Suite 5000 Dallas, TX 75201 (214) 747-5070 (Telephone) (214) 747-2091 (Facsimile) ATTORNEYS FOR DEFENDANTS MATTRESS FIRM, INC., SLEEPY’S, LLC, HOLLISTER CO., AND URBAN OUTFITTERS, INC. CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the above and foregoing document has been served on February 19, 2019, to all counsel of record who are deemed to have consented to electronic service via the Court’s CM/ECF system per Local Rule CV-5(a)(3). /s/ David B. Conrad David B. Conrad Case 4:17-cv-00860-ALM-KPJ Document 102 Filed 02/19/19 Page 7 of 7 PageID #: 20950