American Patents LLC v. Mediatek, Inc. et al

Western District of Texas, txwd-6:2018-cv-00339

Lenovo's Response to 95 Plaintiff's Sur-Reply to 82 Opposed MOTION to Sever AND STAY PURSUANT TO THE CUSTOMER-SUIT EXCEPTION DOCTRINE filed by Defendants Lenovo (Shanghai) Electronics Technology Co. Ltd andLenovo Group Ltd.

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION AMERICAN PATENTS LLC, Plaintiff, v. CIVIL ACTION NO. 6:18-CV-339-ADA MEDIATEK INC., MEDIATEK USA INC., BROADCOM PTE. LTD., BROADCOM CORPORATION, LENOVO (SHANGHAI) ELECTRONICS TECHNOLOGY CO. LTD., LENOVO GROUP, LTD., NXP SEMICONDUCTORS N.V., NXP B.V., NXP USA, INC., QUALCOMM INCORPORATED and QUALCOMM TECHNOLOGIES, INC., Defendants. SPECIALLY APPEARING DEFENDANTS LENOVO (SHANGHAI) ELECTRONICS TECHNOLOGY CO., LTD. AND LENOVO GROUP LTD.'S RESPONSE TO PLAINTIFF'S SUR-REPLY TO MOTION TO SEVER AND STAY PURSUANT TO THE CUSTOMER-SUIT EXCEPTION DOCTRINE I. PLAINTIFF AGAIN MISREPRESENTS THE CUSTOMER-SUIT EXCEPTION Plaintiff's sur-reply is premised on the notion that a severance and stay under the customer- suit exception is improper "where the main action would not resolve all issues in the stayed action." (E.g., Sur-reply, p. 2.) This is incorrect. Instead, "the manufacturer's case need only have the potential to resolve the 'major issues' concerning the claims against the customer—not every issue—in order to justify a stay of the customer suits." Spread Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349, 1358 (Fed. Cir. 2011) (emphasis added). The Lenovo Defendants' proposed stipulation to be bound easily satisfies the Federal Circuit's requirement for severance and stay. They are willing to be bound by rulings against Qualcomm and MediaTek as to Markman, invalidity rulings, and technical infringement. Plaintiff does not dispute that these are "major issues" in the case. Nor does Plaintiff dispute that as to liability, the only issue that could remain to be litigated is "whether Lenovo imports infringing products into the US or offers them for sale in the US." (Sur-reply, p. 3.) This is precisely the opposite of the "highly duplicative" litigation Plaintiff purports to warn against. (Id., p. 3.) In fact, that any issue would remain to be litigated assumes that the case is not entirely mooted due to the asserted claims being found invalid or not infringed, or due to a judgment against Qualcomm or MediaTek that exhausts the claims against the Lenovo Defendants. Contrary to being "duplicative," whether the Lenovo Defendants import or sell the accused products in the U.S. is an inquiry independent of Qualcomm and MediaTek. Proceedings have been stayed in just such circumstances. Opticurrent, LLC v. Power Integrations, Inc., No. 2:16- CV-325-JRG, 2016 WL 9275395, at *5 (E.D. Tex. Oct. 19, 2016) (staying case against customer, finding that if plaintiff "succeed[s] in its case against [manufacturer], the Court will permit it to conduct discovery on the issue of importation of certain Accused Products" by customer.). Indeed, the issue of whether the foreign Lenovo Defendants—Chinese entities operating -1- thousands of miles away—import or sell the accused products in the U.S. is being heavily litigated right now in a separate motion to dismiss. (Dkts. 44, et seq.) Plaintiff says a stipulation would only be "feasible" if the Lenovo Defendants would stipulate to having committed acts of infringement in the U.S. (Sur-reply, p. 1.) But as explained in the motion to dismiss, the Lenovo Defendants do not commit acts of infringement in the U.S. Thus, the Lenovo Defendants cannot, will not, and should not so stipulate. Plaintiff again asserts that the Lenovo Defendants are not "mere resellers" of the accused chipsets. But the Lenovo Defendants do not do anything with respect to those chipsets that in any way gives rise to Plaintiff's infringement claims. (Dkts. 44, et seq.) In any event, Plaintiff again ignores prevailing case law finding "irrelevant" the distinctions between "mere resellers" and customers that do more with the accused components. E.g., Cellular Communs. Equip., LLC. v. Apple Inc., No. 6:14-CV-251, 2016 WL 6884648, at *2 (E.D. Tex. Aug. 26, 2016) (that the carrier defendants "configure the [accused] device in a way that is compatible with their network" is "irrelevant because it does not change the fact that they do not modify or alter the patented technology at issue, which is the source code on the baseband chip"); see also Global Equity Management (SA) Pty. Ltd. v. Ericsson, Inc., 2017 WL 365398, at *10 (E.D. Tex. Jan. 25, 2017) (finding "a 'flexible approach' should be applied, regardless of whether a customer Defendant is really a reseller of another Defendant's technology"). Finally, contrary to Plaintiff's suggestion, the Lenovo Defendants have no obligation to present affirmative evidence that the accused chipsets are "merely incorporated" into the accused tablet devices. Plaintiff has alleged nothing more than mere incorporation.1 (See Compl., ¶¶ 53, 1 However, should the Court wish to see such affirmative evidence, the Lenovo Defendants would provide it. -2- 74, 92, 111 (entirety of Plaintiff's infringement theory is that the Lenovo Defendants allegedly "include" accused chipsets in their devices).) Moreover, even if the accused chipsets are more than "merely incorporated" into the devices (they are not), this would have no relevance to the case, because Plaintiff's infringement theory is directed solely to the chipset itself. (Id.) II. THE THINKVISION 28 MONITOR IS A COMPLETE SIDESHOW The ThinkVision 28 monitor is not what this case about. Instead, it is clearly just Plaintiff's last ditch attempt to avoid a stay or dismissal. Even if the ThinkVision 28 monitor were to come into the case, it would at most represent only a tiny percentage of the case, and would not justify dragging the Lenovo Defendants through the entire litigation. Respectfully, the Court should not indulge Plaintiff's attempt to improperly manipulate the proceedings. It would be extremely unjust to deny the motion on the grounds of the ThinkVision 28 monitor. If the Court is so inclined, however, the Plaintiff must be ordered to amend the Complaint. Plaintiff itself has alternatively sought leave to amend the Complaint to "explicitly name additional accused products." (Sur-reply, p. 5.) If Plaintiff is indeed aware of "additional accused products" beyond the ThinkVision 28, Plaintiff must amend to include those also. The Lenovo Defendants would reserve all rights to seek to join NVIDIA and any other appropriate manufacturer as a necessary party under Rule 19(a), and then reprise its motion to sever and stay. Plaintiff cannot decide to leave chipset manufacturers unnamed, and then use this as an excuse to keep the Lenovo Defendants in the case as proxy defendants and subject them to potentially years of gratuitous and costly discovery and litigation. To permit this and deny the stay would be extraordinarily unfair and prejudicial. To the extent any such manufacturer parties are not or cannot be joined, then the Lenovo Defendants reserve all rights to file a motion to dismiss under Rule 12(b)(7) or a motion for judgment on the pleadings under Rule 12(c) for failure to join a necessary party under Rule 19(b). -3- Dated: April 26, 2019 /s/ Eric H. Findlay Eric H. Findlay Texas State Bar No. 00789886 FINDLAY CRAFT, P.C. 102 North College Avenue, Suite 900 Tyler, TX 75702 (903) 534-1100 (903) 534-1137 (Fax) Martin Bader (Admitted Pro Hac Vice) Michael J. Hopkins (Admitted Pro Hac Vice) SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 12275 El Camino Real, Suite 200 San Diego, CA 92130-4092 (858) 720-8900 (858) 509-3691 (Fax) Lai L. Yip (Admitted Pro Hac Vice) Toni Qiu (Admitted Pro Hac Vice) SHEPPARD, MULLIN, RICHTER & HAMPTON LLP Four Embarcadero Center, 17th Floor San Francisco, CA 94111 (415) 434-9100 (415) 434-3947 (Fax) Attorneys for Specially Appearing Defendants Lenovo (Shanghai) Electronics Technology Co., Ltd. and Lenovo Group Ltd. -4-