Papst Licensing GmbH & Co., KG v. Apple, Inc.

RESPONSE in Opposition re Opposed MOTION to Lift Stay Temporarily for Limited Purpose with Regard to Samsung Defendants

E.D. Tex.December 6, 2018

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION Papst Licensing GmbH & Co. KG, Plaintiff, v. Apple Inc., Defendant. Civil Action No. 6:15-cv-1095-RWS (LEAD CASE) Papst Licensing GmbH & Co. KG, Plaintiff, v. Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc., Defendants. Civil Action No. 6:15-cv-1102-RWS (CONSOLIDATED CASE) JURY TRIAL DEMANDED SAMSUNG’S OPPOSITION TO PLAINTIFF’S MOTION (DKT. 737) TO LIFT STAY TEMPORARILY FOR LIMITED PURPOSE Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. (collectively, “Samsung”) oppose Papst Licensing GmbH & Co. KG’s (“Papst”) Motion to Lift Stay Temporarily for Limited Purpose (“Motion”). Dkt. 737. Well over a year after the parties completed all discovery and dispositive motion practice, and only months after it agreed to the present stay (knowing all the same facts about the IPRs as it knows now), Papst asks the Court to “lift [the] stay temporarily” for the “limited purpose” of asking the Court to allow it to amend its final infringement contentions. Papst wants to assert a claim that Papst chose not to include in its final election of asserted claims almost two years ago Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 1 of 11 PageID #: 421796 - 2 - in early 2017. And it also wants to accuse totally new products of infringement. The Court should deny Papst’s request to lift the stay because Papst’s belated attempt to re-cast this case is not good cause to lift the stay. It is unwarranted and contrary to the stay order and Federal Rule of Civil Procedure 1. Papst made its strategic choices based on entirely foreseeable outcomes and chose to proceed in the face of substantial IPR challenges. Having made its choices, it is far too late for Papst to get a do-over. The Court should deny Papst’s request to lift the stay. RELEVANT BACKGROUND 1. Papst Opposed An Early Stay of the 5-Patent Case This case was filed three years ago on November 30, 2015. Samsung first sought to stay the case pending IPR petitions during fact discovery on January 3, 2017. Papst opposed. See Dkts. 204, 215, 219, 231. While the motion was pending, Papst made its final election of asserted claims on March 14, 2017 and fact discovery closed on April 4, 2017. The Court held a hearing on the motion to stay on April 10, 2017. At the hearing, Papst’s counsel argued that a stay would be unfair following its final election of asserted claims - but before the final election of prior art - because “Papst has given up property rights and can’t assert those property rights, and has had no reciprocal benefit on the prior art side.” Ex. 1, Tr. 26:25-27:2 (emphasis added). Following the hearing, and before decision on the motion to stay, Samsung made its final election of prior art on April 21, 2017. Papst now wants the Court to resurrect those property rights it admitted it had given up and cannot assert. To do so would render claim election procedures meaningless. The Court denied Samsung’s stay motion on June 16, 2017 - the same day that expert discovery closed and four days before dispositive motions and Daubert motions were due. See Dkts. 376, 388.1 The case proceeded, with Samsung and Papst both filing, briefing, and arguing 1 Samsung sought reconsideration of the Court’s denial of a stay but later withdrew that motion for reconsideration in view of Samsung’s second motion to stay discussed below. See Dkts. 708, 712. Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 2 of 11 PageID #: 421797 - 3 - dispositive and Daubert motions in advance of trial scheduled for November 2017 for all five asserted patents. On October 17, 2017 - days before the scheduled pretrial conference - the Court sua sponte continued the 5-patent case sine die for re-setting of trial in 2018. Dkt. 655. 2. The Parallel Patent Office Proceedings Parallel to the litigation (and serving as the basis for Samsung’s unsuccessful stay request) the consolidated defendants in this Court and in the co-pending MDL in Washington, D.C. filed dozens of IPR petitions against every patent-in-suit. The PTAB issued many final written decisions, including four concerning the ’746 patent (the last issuing in April 2018). These decisions found all final elected claims of the ’746 patent to be unpatentable. See Dkts. 677, 698, 707. None of those IPRs found unelected claim 14 to be unpatentable. Papst has appealed the adverse decisions to the Federal Circuit. Likewise, Apple has appealed from the PTAB decision that it did not show claims of the ’746 patent, including claim 14, to be unpatentable. Those appeals are currently pending. See Dkt. 707. 3. Papst Agreed to the Current Stay on the Eve of Trial Only After All Pretrial Matters Were Concluded While still awaiting the continued trial, on April 30, 2018, Samsung filed a second opposed motion to stay the entire 5-patent case pending appeals of the IPR decisions (which invalidated all final elected claims except two from the ’449 patent). Dkt. 708, 716, 718, 721. In the alternative, Samsung asked the Court to stay the case for four out of the five patents (“the IPR patents”), including the ’746 patent. In its response, filed on May 14, 2018, Papst finally agreed for the first time to stay the case as to the four IPR patents, including the ’746 patent. Dkt. 716. At that time, Papst knew that claim 14 of the ’746 patent had survived the IPRs. Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 3 of 11 PageID #: 421798 - 4 - On August 1, 2018, the Court GRANTED-IN-PART BY AGREEMENT Samsung’s motion to stay the case with respect to the ’399, ’746, ’144, and ’437 patents. Dkt. 726.2 The Court further ordered this case “STAYED and ADMINISTRATIVELY CLOSED pending the Federal Circuit’s final decision on appeal of the invalidated claims of the ’399, ’746, ’144, and ’437 patents, or until subsequent order of this Court.” Id. at 12. The Court ordered that “[a]ny party may request that the Court re-open the lead case and lift the stay upon a final decision from the Federal Circuit as to the ’399, ’746, ’144, and ’437 patents.” Id. This case remains stayed at this time. LEGAL STANDARD The decision of whether to extend or lift a stay falls solely within the court’s inherent power to control its docket. ThinkOptics, Inc. v. Nintendo of Am., Inc., No. 6:11-CV-455, 2014 WL 4477400, at *1 (E.D. Tex. Feb. 27, 2014). The same court that grants a stay pending IPR proceedings may also later “abandon its imposed stay of litigation if the circumstances that persuaded the court to impose the stay in the first place have changed significantly.” Canady v. Erbe Elektromedizin GmbH, 271 F. Supp. 2d 64, 75 (D.D.C. 2002). When deciding whether to either impose a stay or lift an already-imposed stay pending IPR, the court considers the same three factors: (1) whether a stay will simplify the issues in question and trial of the case; (2) whether the stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; and (3) whether discovery is complete and whether a trial date has been set. Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. Feb. 9, 2005); Ex. 2, Harris Corp. v. Ruckus Wireless Inc., Case No. 6:11-cv-618-CEM-KRS, 2 The Court also denied Samsung’s motion for leave to file a motion for summary judgment of invalidity for the ’449 patent, severed that patent into a new case, and proceeded to trial in October and November, 2018. Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 4 of 11 PageID #: 421799 - 5 - Dkt. 145, Order at 4 (M.D. Fla. October 2, 2014) (“Logically, those same factors are relevant in determining whether to lift a stay.”). ARGUMENT 1. Papst’s Motion is Untimely Under the Court’s Stay Order As an initial matter, the Court ordered this case stayed and administratively closed pending the Federal Circuit’s decisions on appeal for the ’399, ’746, ’144, and ’437 patents. Dkt. 726 at 12. The Court made clear when a party “may request that the Court re-open the lead case and lift the stay” - “upon a final decision from the Federal Circuit as to the ’399, ’746, ’144, and ’437 patents.” Id. (emphasis added). Because the appeals are still pending for all of these patents, Papst’s motion is untimely and should be denied on this basis alone. There is no reason to depart from the Court’s order and engage in disputed motion practice now. 2. Papst Also Fails to Demonstrate Good Cause to Lift the Stay In its motion, Papst fails to address the pertinent stay factors and thus fails to demonstrate that any circumstances have “changed significantly” to justify lifting the stay for any reason, let alone for Papst’s stated reason (to alter its election of claims and add new products). Canady, 271 F. Supp. 2d at 75; Uniloc USA, Inc. v. Distinctive Devs. Ltd., No. 6:12-CV-462-RWS, 2016 WL 11485612, at *2 (E.D. Tex. Dec. 13, 2016) (denying motion for leave to amend infringement contentions). In particular, Papst fails to explain why its desire to assert claim 14 is good cause to lift a stay that Papst agreed to knowing that claim 14 had survived the IPRs. That circumstance is exactly the same now as it was when Papst agreed to stay the case. Even if Papst had engaged in a proper analysis, the stay factors weigh in favor of maintaining the stay that the parties agreed to only a few months ago. Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 5 of 11 PageID #: 421800 - 6 - a. A stay will not simplify the issues in question and trial of the case The first factor weighs in Samsung’s favor. Lifting the stay - “even temporarily” - will not conceivably simplify the issues in question and trial in this case. On the contrary, Papst seeks to begin contested motion practice, which is anathema to the stay. Papst also fails to support its request with any authority to invite such contested motion practice during the agreed stay. In addition, Papst does not seek to simplify the issues and trial but instead seeks to expand the case in two significant ways - by reviving an abandoned claim and accusing new products of infringement. The complications that would result are monumental given that all fact and expert discovery has long concluded and dispositive motion practice has concluded. All that remains - if any final elected claim of any of the four stayed patents is revived on appeal - is trial. Accordingly, this factor weighs against lifting the stay. b. Lifting the stay would unduly prejudice or present an unfair tactical disadvantage to Samsung Lifting the stay would unduly prejudice and impose an unfair tactical disadvantage on Samsung. Samsung has litigated this case to the finish line, but now Papst improperly wants a do- over. Papst’s tactics fly in the face of the parties’ agreed-to and orderly case-narrowing procedure. This procedure does not contemplate Papst being able to re-shuffle its “final” claim elections during (or after) the IPR process. Indeed, Papst initially opposed staying the case before it made its final elections. If it had not opposed a stay then, it might not be in this position now. But this position was the clearly foreseeable result of the strategic decision Papst made. Papst seeks an unfair tactical advantage over Samsung by seeking to expand its case well after the close of all discovery and dispositive motions. The Court will recall that, when the instituted IPRs concerning the ’449 patent were dismissed because of settlements, Samsung sought leave to file a motion for summary judgment of invalidity of the two elected claims of the ’449 Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 6 of 11 PageID #: 421801 - 7 - patent. Papst strenuously opposed Samsung’s request to modify the case’s deadlines on account of events in the IPR proceedings. But Papst wants different rules for the goose and the gander. Papst wants to be able to upend the deadlines for final election of claims because of events in the IPR proceedings after opposing Samsung’s request to file a post-deadline motion for summary judgment prompted by events in the IPR proceedings. It would be fundamentally unfair for Papst to reformulate its election of asserted claims after successfully opposing Samsung’s request to file for summary judgment. Papst could have included claim 14 of the ’746 Patent when it served its final election of claims on March 14, 2017, but chose not to do so. By that point, the Court had already issued the claim construction order and IPR petitions had been filed. Papst made the strategic and calculated decision not to assert claim 14 of the ’746 patent against Samsung and instead selected 16 other claims. If Papst had wanted the option of selecting (or changing) its elected claims after the PTAB proceedings ended, Papst should have agreed to Samsung’s January 2017 motion to stay the case. Papst did not. Instead Papst now seeks to keep its cake and eat it too. It won denial of a stay, in part by keeping quiet about its desire to re-do any election of claims, but now announces it wants to re-do its election of claims after all. But, after the stay was denied, discovery proceeded under the scope dictated by the case-narrowing procedures based on the Court’s Model Order (which was also agreed to by the parties). Pursuant to those procedures, Samsung served its final election of prior art on April 21, 2017 based on the final 16 claims that Papst chose in its final election. Samsung did not have to consider claim 14 of the ’746 patent when making its election of prior art. But now Papst wants to spring claim 14 back into the case. The unfair prejudice to Samsung is manifest. Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 7 of 11 PageID #: 421802 - 8 - The fact that an unelected claim survived IPR is not a sufficient reason to allow a do-over. The position that Papst finds itself in was entirely foreseeable and in fact agreed-to and advocated- for by Papst. Papst had defendants’ invalidity contentions well before its final election of claims. Papst also had the Court’s claim construction opinion before its final election. Papst opposed staying the case pending resolution of the IPRs with full knowledge that this precise situation might arise down the road. Papst should live with its calculated strategy. Papst’s eleventh hour attempt to add claim 14 back into this case comes far too late. See Uniloc, 2016 WL 11485612, at *2 (denying motion for leave to amend infringement contentions where plaintiff “has not shown that it was diligent in seeking to amend its infringement contentions” and “offered no reason why it could not have included claims 21 and 22 in its original infringement contentions or sought to amend those contentions before the stay” where those contentions rely on the same information it had prior to the stay). To grant Papst’s motion to lift stay allowing it a potential redo of its prior claim elections and accused products at this stage of the proceedings would give it an unfair tactical advantage severely prejudicing Samsung. c. Discovery is complete The third factor - whether discovery is complete and whether a trial date has been set - weighs strongly in favor of maintaining the stay throughout the appeal process just as the parties agreed to and the Court ordered. Discovery closed long ago and the focus of discovery was guided by the parties’ elections of claims and prior art. It is far too late to wind back the clock, re-open discovery for additional fact discovery and supplemental expert reports and depositions followed by another round of dispositive and Daubert motion practice. That would allow Papst to re-litigate this case anew all because it now regrets a tactical decision it made long ago. Discovery has been completed and is closed. It should remain closed. Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 8 of 11 PageID #: 421803 - 9 - 3. Papst’s Request to Add New Products is Improper Finally, Papst’s justification to lift the stay to add new products is without merit. If Papst wished to litigate any of its surviving patent claims against at least 16 new products released after Papst’s infringement contentions (plus the 180 products already accused), Papst should have sought leave of Court to do so long ago, not after all discovery had closed. See, e.g., Packet Intelligence LLC v. NetScout Sys., Inc., No. 2:16-CV-230-JRG, 2017 WL 2531591, at *2-3 (E.D. Tex. Apr. 27, 2017) (denying motion to amend infringement contentions to include new products after several months of discovery); CyWee Grp. Ltd. v. Apple Inc., No. 14-cv-1853-HSG (HRL), 2016 WL 7230865, at *1-3 (N.D. Cal. Dec. 14, 2016) (denying patentee leave to amend its infringement contentions to accuse two recently released products because 20 accused products were already in the suit and fact discovery was set to close in two weeks); Richtek Tech. Corp. v. uPi Semiconductor Corp., No. C 09-5659 WHA, 2016 WL 1718135, at *2-3 (N.D. Cal. Apr. 29, 2016) (after a stay pending reexamination had been lifted, denying patentee leave to amend its infringement contentions to accuse products that were developed after the patentee filed its infringement complaint). Papst certainly should not be permitted to introduce new products after dispositive motions have been filed, briefed, and argued. Papst’s request to lift the stay to add new products to the case should be denied. CONCLUSION Papst successfully opposed staying this case pending IPR and it should not be allowed to then wait until the completion of discovery and dispositive motion practice to see how things shake out, and then seek to alter the status of the case. Papst made a decision early to proceed despite knowing the risk that its elected claims would be found unpatentable. That has now happened and Papst should not be able to get a do-over and start all over again. There is no basis for Papst to lift the stay that Papst belatedly agreed to for the improper purpose of amending its elected claims to Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 9 of 11 PageID #: 421804 - 10 - effectively turn its prior claim election on its head and start over. . Samsung respectfully requests the Court deny Papst’s Motion to Lift Stay Temporarily. Respectfully submitted, Dated: December 6, 2018 /s/ Patrick J. Kelleher Michael E. Jones State Bar No. 10929400 POTTER MINTON A Professional Corporation 110 N. College, Suite 500 Tyler, Texas 75702 mikejones@potterminton.com Phone: (903) 597-8311 Fax: (903) 593-0846 Stephen E. McConnico State Bar No. 13450300 Kim Gustafson Bueno State Bar No. 24065345 SCOTT DOUGLAS & MCCONNICO LLP 303 Colorado Street, Suite 2400 Austin, Texas 78701 smcconnico@scottdoug.com kbueno@scottdoug.com Phone: (512) 495-6300 Fax: (512) 495-6399 Patrick J. Kelleher (LEAD COUNSEL) IL ARDC No. 6216338 Carrie A. Beyer IL ARDC No. 6282524 DRINKER BIDDLE & REATH LLP 191 North Wacker Drive, Suite 3700 Chicago, IL 60606-1698 patrick.kelleher@dbr.com carrie.beyer@dbr.com Phone: (312) 569-1000 Fax: (312) 569-3000 Nick Colic IL ARDC No. 6296112 DRINKER BIDDLE & REATH LLP 1500 K Street, N.W., Ste. 1100 Washington, DC 20005-1209 nick.colic@dbr.com Phone: (202) 842-8800 Fax: (202) 842-8465 Francis DiGiovanni DE Bar No. 3189 Thatcher A. Rahmeier DE Bar No. 5222 DRINKER BIDDLE & REATH LLP 222 Delaware Ave., Ste. 1410 Wilmington, DE 19801 francis.digiovanni@dbr.com thatcher.rahmeier@dbr.com Phone: (302) 467-4200 Fax: (302) 467-4201 Attorneys for Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 10 of 11 PageID #: 421805 - 11 - CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was electronically filed in compliance with Local Rule CV-5(a). As such, this document was served on all counsel who have consented to electronic service, Local Rule CV-5(a)(3), on this 6th day of December, 2018. /s/ Patrick J. Kelleher Patrick J. Kelleher 94343468 Case 6:15-cv-01095-RWS Document 753 Filed 12/06/18 Page 11 of 11 PageID #: 421806