American Patents LLC v. Mediatek, Inc. et al

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

Sur-reply to Motion, filed by Broadcom Corporation, Broadcom PTE. Ltd., Lenovo (Shanghai) Electronics Technology Co. Ltd., Lenovo Group Ltd., MediaTek USA Inc., MediaTek, Inc., NXP B.V., NXP Semiconductors N.V., NXP USA, Inc., Qualcomm Incorporated, Qualcomm Technologies, Inc., re 138 Opposed MOTION for Protective Order MOTION FOR ENTRY OF FORM PROTECTIVE ORDER filed by Plaintiff American Patents LLC Defendants' Sur-Reply to Plaintiff's Motion for Entry of Form Protective Order and Reply in Support of Defendants' Cross-Motion for Entry of Defendants' Proposed Protective Order

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4 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.,) JURY TRIAL DEMANDED 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. DEFENDANTS' SUR-REPLY TO PLAINTIFF'S MOTION FOR ENTRY OF FORM PROTECTIVE ORDER AND REPLY IN SUPPORT OF DEFENDANTS' CROSS- MOTION FOR ENTRY OF DEFENDANTS' PROPOSED PROTECTIVE ORDER* * Defendants are concurrently filing an unopposed motion for leave to file this combined Sur-Reply to Plaintiff's Motion for Entry of Form Protective Order and Reply in support of Defendants' Cross-Motion for Entry of Defendants' Proposed Protective Order, with a total length of no more than ten pages. 4 I. INTRODUCTION AND SUMMARY OF ARGUMENT While Plaintiff relies on a good amount of "hand waving" regarding the differences between the prosecution bar and source code provisions proposed by Defendants and those originally proposed (and then withdrawn without explanation) by Plaintiff, Plaintiff cannot escape three immutable facts. First, Plaintiff has failed to show "good cause" for entry of the non-patent "Appendix H" form protective order. Second, the Appendix H form protective order Plaintiff belatedly proposed is completely insufficient for a patent case involving the design and functionality of integrated circuits of some of the largest and most sophisticated semiconductor manufacturers in the world. And third, the only two objections to Defendants' Proposed Protective Order that Plaintiff raised during the meet-and-confer with Defendants (upon request from Defendants' counsel) were the existence (and not the particulars) of the prosecution bar and source code provisions. Plaintiff made no effort to negotiate with Defendants on a protective order "in a good-faith attempt to resolve the matter by agreement" as required by the Court's Local Rule CV-7(d)(i). Plaintiff claims that it "originally proposed Judge Gilstrap's standard protective order in good faith, as a starting point for further negotiations." Dkt. 145, at 1. Yet Plaintiff subsequently withdrew Judge Gilstrap's standard patent protective order and threatened to unilaterally seek entry of an "interim" protective order (and only agreed to meet-and-confer on that order at Defendants' urging). Dkt 140, Ex. E. Then, without a subsequent meet-and-confer, Plaintiff changed its position entirely and unilaterally moved to enter Appendix H. See id., Ex. G. 1 1 Apparently, Plaintiff's idea of "good faith" negotiations is to initially propose a prosecution bar and source code provisions, then propose an interim solution without those provisions, and then, after conferring with Defendants on the interim proposal, unilaterally move for entry of a proposed protective order (without a subsequent meet-and-confer) that does not contain either provision (despite explicit comment from Defendants that both provisions were necessary). 4 Plaintiff's complaints about the specific prosecution bar and source code provisions in Defendants' Proposed Protective Order should be disregarded, as Plaintiff never raised any of those issues in the parties' meet-and-confer, or subsequently. To the contrary, Plaintiff only objected to the existence of those provisions (despite the existence of those provisions in Judge Gilstrap's standard patent protective order that Plaintiff proposed). Perhaps if Plaintiff had negotiated with Defendants and mentioned any of the particular issues raised for the first time in Plaintiff's Reply, the parties could have come to an agreement, or at least presented the Court with only one or two discrete disputes. Instead, Plaintiff went in the opposite direction, proposing an order that looks nothing like its "starting point for further negotiations." Dkt. 145, at 1. Plaintiff repeatedly asserts that Defendants failed to show "good cause" for their proposed prosecution bar and source code provisions. This is a straw man, as Plaintiff itself has already established the "good cause" for those provisions. Specifically, Plaintiff originally proposed Judge Gilstrap's standard patent protective order, which includes a prosecution bar and source code provisions. After changing course and proposing a "modified interim protective order," Plaintiff again acknowledged the need for a prosecution bar and source code provisions in a final protective order. Dkt. 140, at Ex. F ("We are willing to discuss defendant's proposed provisions for a final protective order, but continue to think that those provisions should be presented as a redline against our proposed final protective order [i.e., Judge Gilstrap's standard patent protective order]"). Because Plaintiff acknowledged that a prosecution bar and source code provisions should be included in "a final protective order," and never articulated any specific objection to Defendants' proposal for those provision, Plaintiff cannot now complain that Defendants have failed to show "good cause" for their inclusion. In light of Plaintiff's conduct, the Court is presented with two vastly different protective 2 4 orders; one that puts Defendants' highly confidential technical information at risk (and which Plaintiff acknowledges is incomplete and may need to be later supplemented), 2 and one that is sufficient to protect both Defendants' (and relevant third parties') highly confidential technical information for the entirety of the case. As such, Plaintiff's Motion should be denied, and Defendants' Cross-Motion should be granted. II. ARGUMENT A. Plaintiff has failed to demonstrate "good cause" for entry of non-patent Appendix H Plaintiff contends that Defendants do not "genuinely dispute that any of the protections in this Court's standard protective order … should be entered." Dkt. 145, at 2. However, even a cursory review of Defendants' Cross-Motion demonstrates otherwise. See Dkt. 140, at 7-8. Nevertheless, Plaintiff contends that "good cause exists for entering Appendix H now," because Plaintiff unilaterally "determined that this Court's standard protective order adequately meets the needs of all parties." Dkt. 145, at 2; see also Dkt. 138, at 1. Yet, Plaintiff, a non-practicing entity, admits that it does not have sufficient knowledge to make such a determination. Dkt. 145, at 4 ("Defendants have neither provided any evidence about what technical information is at risk for misappropriation … nor identified what elements of its commercially available products are still confidential and not subject to reverse engineering.") (internal quotation marks omitted); id. at 7 ("Defendants have not even stated that they have any relevant source code to produce …"). Thus, Plaintiff admittedly lacks sufficient information to determine whether any protective order provision adequately protects Defendants' confidential information. Plaintiff likewise offers no support for its contention that it "was forced to file its motion" 2 Dkt. 145, at 2 ("To the extent a future need arises and is supported by the factual circumstances, the parties may agree to additional terms at the appropriate time."). 3 4 due to "Defendants' refusal to engage." Id. at 2. To the contrary, as set forth above and in Defendants' Cross-Motion, Plaintiff elected to proceed with the filing of its Motion notwithstanding Defendants' efforts to meet-and-confer. Moreover, while Plaintiff alleges that it "will be producing confidential information" (id. at 6), Plaintiff fails to identify any such information. Thus, the only basis Plaintiff has offered for entry of non-patent Appendix H is to allow its experts to review Defendants' confidential information. The Federal Rules, however, do not provide for the entry of a protective order under such circumstances. 3 Further, Plaintiff fails to cite any case in which a court found "good cause" to enter a protective order under such circumstances, let alone over the producing party's strenuous objection. 4 Thus, Plaintiff has not shown good cause for the entry of Appendix H. B. A prosecution bar is necessary to protect against the inadvertent use of Defendants' confidential technical information Due to Plaintiff's ever-shifting position on what constitutes an appropriate protective order for this case, it is difficult to discern Plaintiff's actual position regarding a prosecution bar. Plaintiff initially acknowledged a prosecution bar was necessary in this case when it proposed Judge Gilstrap's standard patent protective order, which includes a prosecution bar. 5 Plaintiff now argues that no prosecution bar is necessary. Dkt. 145, at 6. There is no justification for Plaintiff's flip-flop, as nothing in the case changed between the time Plaintiff originally proposed a 3 Fed. R. Civ. P. 26(c)(1) (providing that "[a] party … from whom discovery is sought may move for a protective order…") (emphasis added). 4 Plaintiff's reliance on YETI Coolers, LLC v. JDS Indus., Inc., and MiMedx Grp., Inc. v. Tissue Transplant Tech., Ltd., in support of its contention that "good cause exists for entering Appendix H now" is inapposite because the defendants in those cases (which involved different types of products than those here) proposed the entry of Appendix H and the plaintiffs agreed in principal to the entry of Appendix H. YETI, Dkt. 90, at 1; MiMedX, 2014 WL 12634550, at *1. 5 See Dkt. 145, at 6 ("After all, American Patents will be producing confidential information as well, and it very likely will need to rely on the confidential information of third parties. To that effect, American Patents originally proposed Judge Gilstrap's standard protective order, which contains a two-sided bar") (emphasis added). 4 4 protective order with a prosecution bar (admitting its necessity), and the time Plaintiff decided to unilaterally seek entry of non-patent Appendix H (without a prosecution bar). To the contrary, Defendants are still required to produce highly confidential technical information, which necessitates a prosecution bar. Unable to avoid this fact, Plaintiff argues that it proposed the non-patent Appendix H because "it became clear Defendants were not interested in restricting their own activities—despite claiming to be direct competitors." Id. That argument misses the mark, however, as it ignores the fact that Defendants' Proposed Protective Order does not give the individual Defendants access to each other's confidential technical information that will be produced in this case. 6 Simply put, Plaintiff cannot present any legitimate argument for its removal of a prosecution bar from the protective order to be entered in this case. 7 While Plaintiff argues that Defendants have failed to provide any justification for their proposed prosecution bar (Dkt. 145, at 4), such argument disregards the fundamental nature of patent litigation (particularly one concerning semiconductors), which focuses on the design and functionality of products, and necessarily involves the production of (highly confidential) technical 6 Dkt. 140, Ex. A, at ¶ 1.b ("Plaintiff shall not share Protected Material produced by one Defendant with any other Defendant(s) in this Litigation, absent express written permission from the producing Defendant…. Unless otherwise provided herein, this Order does not confer any right to any Defendant to access the Protected Material of any other Defendant."). 7 Plaintiff argues that Defendants' proposed prosecution bar is broad enough to prevent Plaintiff's litigation counsel from acting as IPR counsel. Dkt. 145, at 5. Unlike the protective orders in dispute in many of Plaintiff's cited cases, Defendants' proposed prosecution bar does not expressly prohibit Plaintiff's counsel from acting as IPR counsel. Further, Plaintiff never raised this issue during the parties' meet-and-confer or at any point prior to filing its Reply. Again, had Plaintiff done so, the parties could have potentially negotiated revisions to Defendants' proposed prosecution bar to address Plaintiff's concerns. 5 4 information concerning those products. 8 Indeed, pursuant to the Agreed Scheduling Order, Defendants must produce "technical documents, including software where applicable, sufficient to show the operation of the accused product(s)" on or before August 30, 2019. Dkt. 121, at 2. It is axiomatic that these "technical documents. . . sufficient to show the operation of the accused products" are not the types of documents that companies generally make publicly available. Plaintiff's counsel admitted as much in the e-mail transmitting Judge Gilstrap's standard patent protective order. 9 If the information in "defendants' upcoming productions" – i.e., the "technical documents. . . sufficient to show the operation of the accused products" – is not highly confidential, then there would be no need for Plaintiff to seek entry of a protective order before such productions were made. Because Defendants will be producing highly confidential technical information once a protective order is entered, the need to include a prosecution bar to protect against the inadvertent use of that information is present since Plaintiff's counsel may engage in patent prosecution. Plaintiff's counsel admitted as much in Plaintiff's Reply, stating that they "have (and intend to have) little if any involvement in prosecution." 10 Dkt. 145, at 4. Little is not none, and that carefully worded sentence suggests that there is a legitimate possibility that Plaintiff's counsel is and/or will be engaged in prosecution activities – for Plaintiff or otherwise – which raises the possibility of inadvertent disclosure of Defendants' confidential technical information. A 8 Such argument also ignores the fact that a prosecution bar is a standard provision in patent cases such as this. See, e.g., Dkt. No. 140, at 2 n.1 (citing exemplary protective orders entered patent cases). 9 Dkt. 140, Ex. B ("In advance of defendants' upcoming productions, we would like to get a protective order on file that allows our experts and consultants to review the materials in those productions.") (emphasis added). 10 Notably, Plaintiff's counsel previously represented that it does not participate in patent prosecution. Likewise, Plaintiff does not contend that they are not involved in competitive decision-making. In re Deutsche Bank Trust Co. Americas, 605 F.3d 1373, 1379 (2010). 6 4 prosecution bar is therefore essential to protect against that risk. Further, the risk of inadvertent use of Defendants' confidential information is magnified by the fact that Plaintiff's technical experts will have access to such information. Plaintiff conveniently neglects to mention that a prosecution bar exists not only to protect against the inadvertent use of confidential information by counsel, but also by Plaintiff's consultants and experts. To date, Plaintiff has not disclosed any information concerning (or even the identity of) the expert witness(es) that Plaintiff has retained (or intends to retain) for this case, despite acknowledging almost a month ago that it needed a protective order entered "that allows our experts and consultants to review the materials" in Defendants' upcoming productions. Dkt. 140, Ex. B. This only furthers the risks to Defendants and makes it all the more necessary that Defendants' confidential technical information be protected against any inadvertent use by such experts/consultants. Defendants' proposed prosecution bar protects against that risk, as it applies to not only counsel, but experts and consultants. 11 Finally, as to Plaintiff's argument that any prosecution bar "must apply equally to both sides," such argument overlooks one simple truth: Plaintiff is a non-practicing entity that does not make or sell any products, and, thus, Plaintiff does not have any confidential technical information concerning the operation of any products to produce. Because Plaintiff has no technical information to produce (confidential or otherwise), there is no risk that Defendants may inadvertently use Plaintiff's technical information during prosecution. See Smartflash LLC v. Apple, Inc., 6:13-cv-00447-MHS-KNM, Dkt. 139, at 2-4 (adopting a unilateral prosecution bar and rejecting plaintiff's argument because plaintiff did not sell any products). Thus, there is no 11 Dkt. 140, Ex. A, at ¶ 9.a (applying prosecution bar to any person who receives attorneys' eyes only or source code material pursuant to the protective order). 7 4 need for the prosecution bar to apply to Defendants, and a unilateral prosecution bar is appropriate for this case. C. A provision governing the production of source code is essential and should be included in any protective order Plaintiff cannot seriously dispute that source code is extremely confidential information that has a special place in the hierarchy of such information in a patent litigation. That fact is known to anyone who has participated in a modern patent litigation in the semiconductor space, and that is why source code is routinely dealt with in a protective order in separate, detailed provisions. See, e.g., Dkt. 140, at 2 n.1 (citing exemplary protective orders entered patent cases). Unable to dispute that fact, Plaintiff falls back on its mantra that "Defendants fail to provide good cause for including any provisions governing the production of source code." Dkt. 145, at 7. Plaintiff also asserts that "Defendants have not even stated that they have any relevant source code to produce, or that they intend to produce any." Id. Plaintiff's assertion strains credibility. During the parties meet-and-confer, in response to direct questions from Defendants' counsel, Plaintiff's counsel refused to confirm that Plaintiff would not be seeking the production of source code in this case. Plaintiff's refusal is not surprising, as it is consistent with Plaintiff's original proposal of Judge Gilstrap's standard patent protective order, which includes source code provisions. Moreover, Defendants expressly noted in their Opposition/Cross-Motion that they may affirmatively produce relevant source code "in aid of their defenses." Dkt. 140, at 8 n.5. Ignoring all of these facts, Plaintiff argues that "[t]o the extent a future need arises and is supported by the factual circumstances, the parties may agree to additional terms at the appropriate time." Dkt. 145, at 2. Plaintiff's approach ignores the realities of the case and simply "kicks the can down the road." Further, the "ultrasensitive information protocol" contemplated in the non- patent Appendix H form protective order proposed by Plaintiff is triggered only "'in the event that 8 4 a court orders that ultrasensitive documents or information be produced.'" Id. at 7 (quoting Dkt. 138, Ex. A, at ¶ 3(d)). Here, this "protocol" may never be triggered because Defendants may voluntarily produce relevant source code in order to support their defenses (a scenario in which the court has not ordered production). As such, this "protocol" is not "sufficient and appropriate protection at this stage," despite Plaintiff's assurances to the contrary. Dkt. 145, at 7. Plaintiff also argues that "some (if not all) source code relevant to the patents-in-suit is likely to come from a third party, ARM Ltd.," and that Defendants have failed to show, or even argue, "that ARM restricts access to its source code at all, let alone only allows review under conditions equivalent to the stringent provisions that Defendants include in their proposed protective order." Id. (emphasis added). Setting aside the fact that Plaintiff now admits that source code may be "relevant to the patents-in-suit" (i.e., relevant to Plaintiff's infringement allegations), Plaintiff's argument again strains credibility. Plaintiff's contention that a company, such as ARM, whose business model is the sale and licensing of its proprietary semiconductor designs, would not "restrict[] access to its source code at all," is absurd. Public court filings show that ARM routinely requires heightened source code protections (above those in the existing protective orders in the respective cases) before it will produce its highly confidential source code. 12 Because "some (if not all)" of the relevant source code in this case constitutes ARM's highly confidential information, appropriate source code provisions should be included in the Court's protective order now, rather than forcing the parties to (attempt) to negotiate a source code addendum to the protective order at some future date. 12 See, e.g., In Re Koninklijke Philips Patent Litigation, No. 4:18-cv-01886-HSG, Dkt. 450 (N.D. Cal. Sep. 11, 2018) (stipulated addendum to the protective order submitted by the parties to protect ARM's confidential source code); Advanced Micro Devices, Inc. v. LG Elecs., Inc., No. 3:14-cv-1012-SI, Dkt. 151 (N.D. Cal. Feb. 6, 2017) (same). 9 4 D. Plaintiff should not be now heard to complain about any "remaining provisions" that Plaintiff failed to raise during the parties' meet-and-confer Plaintiff states that "Defendants do not even try to establish good cause for the remaining provisions of their proposed protective order." Dkt. 145, at 8. The reason Defendants did not address the "remaining provisions" of Defendants' Proposed Protective Order in its Cross-Motion is simple – Plaintiff failed to identify any specific objections to those provisions. As noted in Defendants' Cross-Motion, during the parties' meet-and-confer, Defendants specifically requested that Plaintiff identify the provisions of Defendants' Proposed Protective Order that Plaintiff found objectionable. Dkt. 140, at 5. In response, and in subsequent correspondence, Plaintiff claimed that the prosecution bar and the source code provisions were not appropriate for this case (id. at 5- 6), but failed to provide any specific objections to those provisions. Dkt. 145, at 8. Moreover, Plaintiff failed to even mention any of the "remaining provisions" that Plaintiff now claims are "unreasonable." Id. As Plaintiff failed to raise any objections to those provisions during the parties' meet-and-confer, Plaintiff should not be heard to complain about any of the "remaining provisions" now. To give audience to Plaintiff's objections would be to reward Plaintiff for flouting the Court's requirements regarding meeting-and-conferring in good faith to resolve disputes – which Plaintiff clearly failed to do. III. CONCLUSION For all the foregoing reasons, including the "good cause" shown by Defendants, the Court should deny Plaintiff's Motion for Entry of Form Protective Order, and grant Defendants' Cross- Motion for Entry of Defendants' Proposed Protective Order. 10 4 Dated: August 30, 2019 Respectfully submitted, /s/ Eric H. Findlay /s/ Tyler T. VanHoutan Eric H. Findlay Tyler T. VanHoutan Texas Bar No. 00789886 Texas Bar No. 24033290 FINDLAY CRAFT MCGUIREWOODS LLP 102 North College Ave., Suite 900 600 Travis St., Suite 7500 Tyler, TX 75702 Houston, TX 77002 (713) 571-9191 (903) 534-1100 (713) 571-9652 (Fax) (903) 534-1137 (Fax) tvanhoutan@mcguirewoods.com EFindlay@FindlayCraft.com Rebecca Levinson (Admitted Pro Hac Vice) Martin Bader (Admitted Pro Hac Vice) MCGUIREWOODS LLP Michael J. Hopkins (Admitted Pro Hac Vice) 2001 K Street N.W., Suite 400 SHEPPARD, MULLIN, RICHTER & Washington, DC 20006 HAMPTON LLP (202) 828-2816 12275 El Camino Real, Suite 200 (202) 828-3322 (Fax) San Diego, CA 92130-4092 rlevinson@mcguirewoods.com (858) 720-8900 (858) 509-3691 (Fax) Paige Arnette Amstutz mbader@sheppardmullin.com Texas Bar No. 00796136 SCOTT, DOUGLASS & MCCONNICO, LLP mhopkins@sheppardmullin.com 303 Colorado St., Suite 2400 Austin, TX 78701 Lai L. Yip (Admitted Pro Hac Vice) (512) 495-6300 SHEPPARD, MULLIN, RICHTER & (512) 495-6399 (Fax) HAMPTON LLP pamstutz@scottdoug.com Four Embarcadero Center, 17th Floor San Francisco, CA 94111 Counsel for MediaTek Inc., MediaTek USA (415) 434-9100 Inc., Broadcom Pte Ltd., Broadcom (415) 434-3947 (Fax) Corporation, NXP Semiconductors N.V., lyip@sheppardmullin.com NXP B.V., NXP USA, Inc., Qualcomm Incorporated and Qualcomm Technologies, Counsel for Specially Appearing Defendants Inc. Lenovo (Shanghai) Electronics Technology Co., Ltd. and Lenovo Group Ltd. 11 4 Gilbert A. Greene Jonah D. Mitchell (Admitted Pro Hac Vice) Texas Bar No. 24045976 Doyle B. Johnson (Admitted Pro Hac Vice) Pierre J. Hubert Osman Mohammed (Admitted Pro Hac Vice) Texas Bar No. 24002317 REED SMITH LLP DUANE MORRIS LLP 101 2nd St., Suite 1800 900 S. Capital of Texas Hwy, Suite 300 San Francisco, CA 94105 Austin, TX 78746 (415) 543-8700 (512) 277-2300 (415) 391-8269 (Fax) (512) 277-2301 (Fax) jmitchell@reedsmith.com BGreene@duanemorris.com dbjohnson@reedsmith.com PJHubert@duanemorris.com omohammed@reedsmith.com Kevin Anderson (Admitted Pro Hac Vice) R. Jeffrey Layne DUANE MORRIS, LLP Texas Bar No. 00791083 505 9th St., N.W., Suite 1000 Megan Alter Hudgeons Washington, DC 20004-2166 Texas Bar No. 24001645 (202) 776-7800 REED SMITH LLP kpanderson@duanemorris.com 111 Congress Ave., Suite 400 Austin, TX 78701 Counsel for NXP Semiconductors N.V., (512) 563-1816 NXP B.V., NXP USA, Inc., (512) 623-1802 (Fax) Qualcomm Incorporated and mhudgeons@reedsmith.com Qualcomm Technologies, Inc. jlayne@reedsmith.com Counsel for Qualcomm Incorporated and Qualcomm Technologies, Inc. Eric W. Schweibenz (Admitted Pro Hac Vice) John S. Kern (Admitted Pro Hac Vice) Alexander B. Englehart (Admitted Pro Hac Vice) Oblon, McClelland, Maier & Neustadt, LLP 1940 Duke Street Alexandria, VA 22314 (703) 413-3000 eschweibenz@oblon.com jkern@oblon.com aenglehart@oblon.com Counsel for MediaTek Inc. and MediaTek USA Inc. 12 4 CERTIFICATE OF SERVICE Pursuant to the Federal Rules of Civil Procedure and Local Rule CV-5, I hereby certify that all counsel of record who have appeared in this case are being served on this 30th day of August 2019, with a copy of the foregoing via the Court's CM/ECF system. /s/ Tyler T. VanHoutan Tyler T. VanHoutan 13