Stemcells, Inc. et al v. Neuralstem, Inc. et al

MOTION for Extension of Time to File Answer re Amended Complaint,

N.D. Cal.July 14, 2008

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO THE AMENDED COMPLAINT CASE NO. C 08-02364 (CW) Clark S. Stone (SBN 202123) cstone@macpherson-kwok.com Steven M. Levitan (SBN 148716) slevitan@macpherson-kwok.com Inchan A. Kwon (SBN 247614) ikwon@macpherson-kwok.com MACPHERSON KWOK CHEN & HEID LLP 2033 Gateway Place, Suite 400 San Jose, CA 95110 Telephone: (408) 392-9250 Facsimile: (408) 392-9262 Alan L. Barry (pro hac vice) abarry@bellboyd.com Michael J. Abernathy (pro hac vice) mabernathy@bellboyd.com Sanjay K. Murthy (SBN 212097) smurthy@bellboyd.com Brian J. Arnold (pro hac vice) barnold@bellboyd.com BELL, BOYD & LLOYD LLP 70 West Madison Street, Suite 3100 Chicago, Illinois 60602 Telephone: (312) 372-1121 Facsimile: (312) 827-8000 Attorneys for Defendants NEURALSTEM, INC., KARL K. JOHE, and I. RICHARD GARR UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION STEMCELLS, INC., a Delaware corporation, and STEMCELLS CALIFORNIA, INC., a California corporation, Plaintiffs, v. NEURALSTEM, INC., a Delaware corporation, KARL K. JOHE, an individual, and I. RICHARD GARR, an individual, Defendants. Case No. C 08-02364 CW NOTICE OF MOTION; MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO THE AMENDED COMPLAINT Judge: Hon. Claudia Wilken Date: August 26, 2008 Time: 2:00 p.m. Courtroom: Courtroom 2, 4th Floor Case 4:08-cv-02364-CW Document 38 Filed 07/14/2008 Page 1 of 6 DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO AMENDED COMPLAINT CASE NO. C 08-02364 (CW) 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO ALL PARTIES AND THEIR RESPECTIVE ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that, pursuant to Federal Rule of Civil Procedure 6(b), Defendants Neuralstem, Inc., Karl K. Johe, and I. Richard Garr (collectively “Defendants”) respectfully request that this Court extend the time to answer or otherwise respond to StemCells, Inc. and StemCells California, Inc.’s (collectively “StemCells” or “Plaintiffs”) Amended Complaint until the lesser of: (1) ten 10 days after the District of Maryland’s ruling on StemCells’ potential Motion to Transfer or (2) sixty (60) days.1 I. STATEMENT OF FACTS On May 7, 2008, Neuralstem filed a declaratory judgment action in the District of Maryland (the “Maryland Action”), seeking a declaration that U.S. Patent 7,361,505 (“the ‘505 patent’) is invalid, not infringed and unenforceable.2 On May 13, 2008, defendant Neuralstem filed a First Amended Complaint, adding invalidity and non-infringement claims against U.S. Patent 7,115,418 (“the ‘418 patent’) and seeking a declaration that statements made regarding the reexamination of certain StemCells patents do not constitute “trade libel” or “unfair competition.” Because the Maryland Action pre-dates the instant matter and the two actions are substantially identical, Defendants filed a Motion to Stay, Dismiss or Transfer in this Court on May 30, 2008. (Dkt. No. 19, Defendants’ Motion to Dismiss, Transfer or Stay). For reasons stated therein, Defendants believe the District of Maryland-i.e. the first filed court-is the proper forum. On July 1, 2008, this Court held “the first-to-file rule is applicable” and “defer[red] to the District of Maryland to decide the appropriate forum and whether an exception to the first-to-file rule is applicable.” (Dkt. No. 37, Order at 8). It further instructed that if StemCells wished to have its complaint heard in this Court it should file a motion to transfer the Maryland Action no 1 All Exhibits are attached to the Declaration of Sanjay K. Murthy In Support of Defendants’ Motion to Extend Time to Answer or Otherwise Respond to the Amended Complaint. 2 The “Neuralstem Maryland Action” is Civil Action No. 08-cv-1173. Case 4:08-cv-02364-CW Document 38 Filed 07/14/2008 Page 2 of 6 DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO AMENDED COMPLAINT CASE NO. C 08-02364 (CW) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 later than July 15, 2008. (Id.). Finally, this Court denied Defendants’ motion to dismiss, transfer or stay this action and stated that the case management conference scheduled for August 26, 2008 will go forward, “unless by that date the case has been transferred to Maryland or stayed.” (Id.). As of today, StemCells has not filed a Motion to Transfer in the Maryland Action. Nevertheless, recent correspondence from StemCells’ counsel indicates that it intends to file a motion transfer on July 15, 2008, the very last day of this Court’s deadline. (Ex. A). StemCells’ decision to wait until July 15, 2008 to file its motion virtually guarantees that the Maryland Court will not have sufficient time to rule on the forum issue before the Case Management Conference scheduled for August 26, 2008. On July 2, 2008, counsel for Defendants requested a limited extension of time to file an answer or otherwise respond to StemCells’ First Amended Complaint. (Ex. B). On July 7, 2008, counsel for StemCells rejected this request. (Ex. C). Specifically, counsel for StemCells claimed that an extension of time was inconsistent with this Court’s July 1, 2008 Order. (Ex. C). II. LAW AND ARGUMENT “A district court has inherent power to control the disposition of the causes on its docket in a manner which will promote economy of time and effort, for itself, for counsel, and for litigants.” See, e.g., Filtrol Corp. v. Kelleher, 467 F.2d 242 (9th Cir. 1973). Under Federal Rule of Civil Procedure 6(b)(1), “[w]hen an act may or must be done within a specified time, the court may for good cause, extend the time: (A) with or without motion or notice if the court acts, or if a request is made, before the original time or its extension expires.” Defendants respectfully request this Court extend the time to answer or otherwise respond to StemCells’ First Amended Complaint until after the District of Maryland decides the appropriate forum and whether an exception to the first-to-file rule is applicable. Proceeding with the pleadings in this case before that time would undermine the purpose of the first-to-file rule and Case 4:08-cv-02364-CW Document 38 Filed 07/14/2008 Page 3 of 6 DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO AMENDED COMPLAINT CASE NO. C 08-02364 (CW) 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 would result in costly duplicative litigation that Defendants believe this Court intended to avoid. In Texas Instruments, Inc. v. Micron Semiconductors, Inc., for example, the court rejected the plaintiff’s argument that a second-filed court can proceed, in its discretion, as long as it does not interfere with the first-filed court’s jurisdiction. 815 F. Supp. 994, 999 (E.D. Tex. 1993) (“federal district courts are courts of coordinate jurisdiction and equal rank, and must exercise care to avoid interference with each other’s affairs and duplicative litigation”). The court explained, “[a]ny other conclusion would undermine the considerations of comity that courts of concurrent jurisdiction must observe.” Id. Similarly, in Custom Energy, LLC v. Liebert Corp., the court granted the defendants an extension of time to file responsive pleadings until ten days after the first-filed court determined the appropriate forum. 1998 U.S. Dist. LEXIS 8319, at *5 (D. Kan. June 1, 1998) (“the Court will grant an extension until ten days after the Ohio court issues an order determining the appropriate forum”). Based on the language of the Order, Defendants do not believe this Court intended to have the parties address substantive issues before the District of Maryland decides the appropriate forum and whether an exception to the first-to-file rule is applicable. (See Order at 8). Having this case proceed along with the Maryland case simultaneously would unduly increase the Defendants’ litigation costs by forcing them to litigate the same issues in two forums and waste already scarce judicial resources by burdening this Court with substantive motions-and additional briefing- before the Maryland court has ruled. These are precisely the sort of inefficiencies that applying the first-to-file rule is designed to prevent. As this Court has recognized, a motion under the first-to-file rule is not considered within the ambit of the defenses enumerated in Rule 12(b). Fujitsu Ltd v. Nanya Tech. Corp., 2007 WL 484789, at *3 (N.D. Cal. Feb. 9, 2007) (noting “motions under the first-to-file rule are generally considered to be outside of the ambit of the Rule 12(b) motions that suffice as responsive Case 4:08-cv-02364-CW Document 38 Filed 07/14/2008 Page 4 of 6 DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO AMENDED COMPLAINT CASE NO. C 08-02364 (CW) 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 pleadings”). Accordingly, Defendants have the right to file a substantive motion to dismiss under Rule 12(b) concurrent with any responsive pleading. As Defendants previously pointed out, the Amended Complaint fails to meet Rule 8(a)’s pleading requirements, thus warranting at least a motion to dismiss for failure to state a claim upon which relief can be granted.3 (Dkt. No 19, Motion to Dismiss, Transfer or Stay at 1 n.1). Plaintiffs, moreover, have plead no facts sufficient to support the exercise of personal jurisdiction over the two non-resident defendants (Mr. Garr and Dr. Johe) both of whom are Neuralstem officers. (See Amended Complaint, at ¶¶ 3-9, Dkt. No. 19 at 6, lines 6-7). Plaintiffs’ related unfair competition and trade libel claims likewise suffer from similar deficiencies. Absent an extension of time, Neuralstem, StemCells, and this Court will be forced to expend considerable resources addressing these threshold issues, all of which would be moot if the Maryland court denies StemCells’ to-be-filed motion to transfer. Defendants do not seek this extension to delay the resolution of this matter, they only desire to avoid litigating the same issues in two different courts simultaneously until the proper forum is decided. Indeed, Defendants filed a declaratory judgment action in Maryland before this case to have these issues resolved. Under these circumstances, a limited extension of time to respond to the Amended Complaint until the forum issue is resolved would conserve judicial resources and ensure that Defendants do not have to answer repetitive allegations on a piecemeal basis. CONCLUSION For reasons state above, Defendants’ respectfully request this Court grant their Motion to Extend Time to Answer or Otherwise Respond to StemCells’ Amended Complaint until the lesser of ten (10) days after the Maryland court determines the appropriate forum as called for by this 3 Plaintiffs effectively conceded that their Amended Complaint is deficient by belatedly identifying new facts that they claim support their infringement allegations in their Opposition to Defendants’ Motion to Dismiss, Transfer or Stay. (Dkt No. 33, Opposition to Defendants’ Motion to Dismiss, Transfer or Stay at 5 n.3). Case 4:08-cv-02364-CW Document 38 Filed 07/14/2008 Page 5 of 6 DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO AMENDED COMPLAINT CASE NO. C 08-02364 (CW) 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Court’s Order of July 1, 2008 or sixty (60) days. Dated: July 14, 2008 Respectfully submitted, BELL, BOYD & LLOYD LLP By: /s/ Sanjay K. Murthy___________ Alan L. Barry (pro hac vice) abarry@bellboyd.com Michael J. Abernathy (pro hac vice) mabernathy@bellboyd.com Sanjay K. Murthy (SBN 212097) smurthy@bellboyd.com Brian J. Arnold (pro hac vice) barnold@bellboyd.com 70 West Madison, Suite 3100 Chicago, Illinois 60602-4207 (312) 372-1121 (312) 827-8000 Clark S. Stone (SBN 202123) cstone@macpherson-kwok.com Steven M. Levitan (SBN 148716) slevitan@macpherson-kwok.com Inchan A. Kwon (SBN 247614) ikwon@macpherson-kwok.com MACPHERSON KWOK CHEN & HEID LLP 2033 Gateway Place, Suite 400 San Jose, CA 95110 Telephone: (408) 392-9250 Facsimile: (408) 392-9262 Attorney for Defendants NEURALSTEM, INC., KARL K. JOHE, and I. RICHARD GARR Case 4:08-cv-02364-CW Document 38 Filed 07/14/2008 Page 6 of 6 DECLARATION OF SANJAY K. MURTHY IN SUPPORT DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO THE AMENDED COMPLAINT CASE NO. C 08-02364 (CW) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Clark S. Stone (SBN 202123) cstone@macpherson-kwok.com MACPHERSON KWOK CHEN & HEID LLP 2033 Gateway Place, Suite 400 San Jose, CA 95110 Telephone: (408) 392-9250 Facsimile: (408) 392-9262 Alan L. Barry (pro hac vice pending) abarry@bellboyd.com Michael J. Abernathy (pro hac vice pending) mabernathy@bellboyd.com Sanjay K. Murthy (SBN 212097) smurthy@bellboyd.com BELL, BOYD & LLOYD LLP 70 West Madison Street, Suite 3300 Chicago, Illinois 60602 Telephone: (312) 372-1121 Facsimile: (312) 827-8000 Attorneys for Defendants NEURALSTEM, INC., KARL K. JOHE, and I. RICHARD GARR UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION STEMCELLS, INC., a Delaware corporation, and STEMCELLS CALIFORNIA, INC., a California corporation, Plaintiffs, v. NEURALSTEM, INC., a Delaware corporation, KARL K. JOHE, an individual, and I. RICHARD GARR, an individual, Defendants. Case No. C 08-02364 CW DECLARATION OF SANJAY K. MURTHY IN SUPPORT OF DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO THE AMENDED COMPLAINT Judge: Hon. Claudia Wilken Date: August 26, 2008 Time: 2:00 p.m. Courtroom: Courtroom 2, 4th Floor Case 4:08-cv-02364-CW Document 38-2 Filed 07/14/2008 Page 1 of 2 DECLARATION OF SANJAY K. MURTHY IN SUPPORT DEFENDANTS’ MOTION TO EXTEND TIME TO ANSWER OR OTHERWISE RESPOND TO THE AMENDED COMPLAINT CASE NO. C 08-02364 (CW) 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I, Sanjay K. Murthy, declare: 1. I am a partner with the law firm of Bell, Boyd & Lloyd LLP and I am counsel for defendants Neuralstem, Inc., Karl K. Johe and I. Richard Garr (collectively “Defendants”) in the above-captioned matter. I submit this Declaration in support of Defendants’ Motion to Extend Time to Answer or Otherwise Respond to the Amended Complaint. 2. Attached hereto as Exhibit A is a true and correct copy of an e-mail I received from John R. Fuisz, counsel for StemCells, Inc. and StemCells California, Inc. on July 9, 2008. 3. Attached hereto as Exhibit B is a true and correct copy of a letter I sent to William Gaede, counsel for StemCells, Inc. and StemCells California, Inc. on July 2, 2008. 4. Attached hereto as Exhibit C is a true and correct copy of a letter I received from John R. Fuisz, counsel for StemCells, Inc. and StemCells California, Inc., on July 7, 2008 in response to my letter of July 2, 2008. I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed this 14th day of July, 2008 at Chicago, Illinois. /S/Sanjay K Murthy Sanjay K. Murthy Case 4:08-cv-02364-CW Document 38-2 Filed 07/14/2008 Page 2 of 2 Jager, Julie A. From: Fuisz, John [jfuisz@mwe.com] Sent: Wednesday, July 09, 2008 11:26 AM To: Murthy, Sanjay K.; StemCells-NeuralStem (1877) (0109015-00044) Cc: Gaede, William; Shahida, Stephen Subject: RE: Neuralstem, Inc. v. StemCells, Inc et al. - Civil Action No. 08-1877 Page 1 of 2Message 7/14/2008 Sanjay - We disagree on the service issue. Nevertheless, we interpret the Court's Order as requiring a response on July 15, 2008 by all of the defendants, which includes Neurospheres. As of today, I am still working though representation issues and cannot provide you with a response on behalf of Neurospheres. We should have the representation issues resolved prior to July 15th such that you can expect a motion to dismiss being filed on behalf of SCI and Neurospheres on the 15th. If we don't work out the representation issues by the 15th, you can expect Neurospheres' counsel will file something by the 15th. John R. Fuisz McDermott Will & Emery LLP Tel. 202.756.8029 From: Murthy, Sanjay K. [mailto:smurthy@bellboyd.com] Sent: Wednesday, July 09, 2008 12:03 PM To: Fuisz, John; StemCells-NeuralStem (1877) (0109015-00044) Cc: Gaede, William; Shahida, Stephen Subject: Neuralstem, Inc. v. StemCells, Inc et al. - Civil Action No. 08-1877 Dear John: As you know Neurospheres Holding Ltd. ("Neurospheres") was served on June 12, 2008. Accordingly, its Answer or other response is past due. Please let me know by close of business today if you will be filing your response. Otherwise, we will move the Court to enter default judgment. Neurospheres was not a party to StemCells, Inc. and StemCells California, Inc.'s ("StemCells") motion for an extension of time. In fact, you even disclaimed representing Neurospheres during our telephonic hearing. Thus, Neurospheres is not covered by Judge Williams' Order and nothing in the Order indicates otherwise. Finally, you argued to Judge Williams that you wanted enough time to guarantee that StemCells' response could be coordinated with Neurospheres' response, which is why StemCells was given until July 15, 2008, the latest date by which we said service would be perfected, plus 20 days. Indeed, the relief you requested was for StemCells' response "to be the same date on which the response is due for the yet to be served Co-Defendant, Neurospheres Holding Ltd," which was July 2. Case 4:08-cv-02364-CW Document 38-3 Filed 07/14/2008 Page 1 of 2 Please call me if you have any questions regarding the above. Best regards, Sanjay Sanjay K. Murthy | Bell, Boyd & Lloyd LLP 70 W. Madison St., Ste. 3100 | Chicago, IL 60602-4207 t. 312-807-4416 | f. 312-827-8138 smurthy@bellboyd.com | www.bellboyd.com The information contained in this e-mail message may be privileged, confidential, and protected from disclosure. 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Page 2 of 2Message 7/14/2008 Case 4:08-cv-02364-CW Document 38-3 Filed 07/14/2008 Page 2 of 2 EXHIBIT B Case 4:08-cv-02364-CW Document 38-4 Filed 07/14/2008 Page 1 of 2 Case 4:08-cv-02364-CW Document 38-4 Filed 07/14/2008 Page 2 of 2 EXHIBIT C Case 4:08-cv-02364-CW Document 38-5 Filed 07/14/2008 Page 1 of 2 Case 4:08-cv-02364-CW Document 38-5 Filed 07/14/2008 Page 2 of 2