Ixi Mobile (R&D) Ltd. et al v. Apple, Inc.

Northern District of California, cand-4:2015-cv-03755

MOTION to Lift Stay filed by IXI IP,LLC, IXI Mobile (R&D) Ltd. Motion Hearing set for 2/21/2019 02:00 PM in Oakland, Courtroom 2, 4th Floor before Judge Haywood S Gilliam Jr. Responses due by 11/20/2018. Replies due by 11/27/2018.

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1 John V. Picone III, Bar No. 187226 jpicone@hopkinscarley.com 2 Jennifer S. Coleman, Bar No. 213210 jcoleman@hopkinscarley.com 3 HOPKINS & CARLEY A Law Corporation 4 The Letitia Building 70 South First Street 5 San Jose, CA 95113-2406 6 mailing address: P.O. Box 1469 7 San Jose, CA 95109-1469 Telephone: (408) 286-9800 8 Facsimile: (408) 998-4790 9 Attorneys for Plaintiffs IXI MOBILE (R&D) LTD. and IXI IP, LLC 10 11 UNITED STATES DISTRICT COURT 12 NORTHERN DISTRICT OF CALIFORNIA 13 IXI MOBILE (R&D) LTD. and IXI IP, CASE NO. 3:15-CV-03752-HSG LLC, 14 Plaintiffs, 15 v. SAMSUNG ELECTRONICS CO., et al., 16 Defendants. 17 IXI MOBILE (R&D) LTD. and IXI IP, CASE NO. 3:15-CV-03754-HSG 18 LLC, (RELATED CASE) 19 Plaintiffs, v. 20 BLACKBERRY CORPORATION, et 21 al., Defendants. 22 IXI MOBILE (R&D) LTD. and IXI IP, CASE NO. 4:15-CV-03755-HSG LLC, (RELATED CASE) 23 Plaintiffs, PLAINTIFFS' MOTION TO LIFT STAY 24 v. Date: February 21, 2019 25 APPLE, INC. Time: 2:00 p.m. Defendant. Ctrm: Courtroom 2, 4th Floor 26 1301 Clay Street Oakland, CA 94612 27 Judge: Hon. Haywood S. Gilliam, Jr. 28 H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 NOTICE OF MOTION 2 PLEASE TAKE NOTICE that on February 21, 2019 at 2:00 p.m., Courtroom 2, 4th Floor, 3 at the United States District Court located at 1301 Clay Street, Oakland, CA 94612 before the 4 Honorable Haywood S. Gilliam, Jr., Plaintiffs' will, and hereby does, move for an order granting 5 this Motion to Lift Stay. The Motion will be based on this Notice of Motion, the Brief in Support 6 of Plaintiffs' Motion to Stay and the [Proposed] Order. 7 REQUESTED RELIEF 8 Movant requests that the Court lift the current, November 12, 2015, stay upon the case. 9 MEMORANDUM OF POINTS AND AUTHORITIES 10 I. INTRODUCTION 11 Three years ago, the Court stayed this 2014 patent infringement action to allow for the 12 completion of several inter partes reviews ("IPRs") commenced by the Defendants. 1 Now, the 13 IPRs and related appeal process are concluded. It is time for these proceedings to move forward 14 so that the pending actions can advance to resolution on the merits. Thus, Plaintiffs IXI Mobile 15 (R&D) LTD and IXI IP, LLC (collectively, "Plaintiffs" or "IXI") hereby move the Court to lift the 16 stay. 17 A lift of the existing stay is timely and resumption of the actions is fair to all parties. IXI 18 filed these actions over three and a half years ago, and has been patiently waiting as the IPRs 19 proceeded to conclusion. Defendants resist a lifting of the stay, arguing that the stay should remain 20 in place until the resolution of a reexamination that involves IXI's asserted '532 Patent. But, 21 Defendant Apple, Inc. ("Apple") made the tactical decision to wait for over two years from the 22 institution of the IPRs to request this new reexamination proceeding, in a transparent attempt to 23 further delay the resolution of this action and further prejudice IXI's case. The Court should not 24 permit these tactics. 25 26 1 Apple and Samsung challenged three of IXI's patents in the IPR proceedings—United 27 States Patent Nos. 7,039,033 (the "033 Patent"), 7,295,532 (the "'532 Patent"), and 7,016,648 (the "'648 Patent"). 28 H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -1- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 Moreover, a continuation of the stay does not yield any efficiencies. Regardless of whether 2 Apple is successful in this new reexamination proceeding, the same issues will need to be resolved 3 by this Court. IXI's patent rights that remain share the general background and generally relate to 4 the same technology space. Indeed, litigation of the claims and defenses relating to IXI's asserted 5 patents are substantially similar—each patent accuses similar products of infringement and has 6 similar discovery issues. And, if Apple's reexamination efforts are unsuccessful, it will likely 7 repeat the same arguments in the District Court, arguing that reexaminations (unlike IPRs) do not 8 include estoppel provisions prohibiting them from doing so. 9 Therefore, because there is no efficiency to be gained from a continued stay, and IXI stands 10 to suffer substantial prejudice from further delay beyond the three years that it has already endured, 11 IXI respectfully requests that the Court lift the stay. 12 II. BACKGROUND 13 A. The District Court Proceedings. 14 In 2014, IXI commenced these patent infringement actions in the Southern District of New 15 York. IXI's asserted patents describe technology for improving network communications between 16 smart phones and other wireless peripheral devices, such as tablets, speakers, televisions, and 17 printers. Each Defendant manufactures, sells, and markets smartphones and other devices which 18 incorporate the technology at issue. 2 19 The actions were subsequently transferred to this Court in August 2015. In the months that 20 preceded transfer, the parties proceeded through the discovery process: the parties had engaged in 21 significant discovery, including the taking of depositions, exchanging written discovery, and 22 making several productions of documents; IXI had also spent significant resources reviewing 23 massive amounts of Defendants' source code. The parties additionally exchanged respective 24 infringement and invalidity contentions; submitted several claim construction disclosures; and IXI 25 filed its opening claim construction brief. Though the original case management schedule 26 2 27 Examples of the infringing devices include lines of the popular Samsung Galaxy and the Apple iPhone. 28 H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -2- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 anticipated claim construction briefing to conclude by August 14, 2015 and fact discovery to 2 conclude by November 10, 2015, the deadlines were delayed when the matters were transferred to 3 California. 3 4 B. The Inter Partes Review And Court Ordered Stay. 5 In June 2015, Defendants Samsung and Apple filed IPR petitions that challenged the 6 validity of certain of IXI's patent claims. After filing the IPR petitions, Defendants moved to stay 7 this litigation until the IPRs were resolved by the Patent Trial and Appeal Board (the "PTAB"). 8 This Court granted the stay on November 12, 2015. Dkt. Nos. 119, 133. On January 2, 2016, the 9 PTAB instituted IPR proceedings for all of the challenged claims from the patents, except for Claim 10 10 of the '532 Patent. On December 21, 2016, the PTAB issued its Final Written Decisions in 11 favor of Apple and Samsung. Dkt. No. 138. IXI appealed with respect to the '033 Patent, but the 12 Federal Circuit affirmed the decision on September 10, 2018, and the IPR proceedings concluded. 13 C. IXI's Ex Parte Reexaminations Of The '033 Patent. 14 In March 2017, IXI requested an ex parte reexamination of the '033 Patent. On February 15 2, 2018, the USPTO issued a reexamination certificate that granted IXI additional claims over all 16 of the prior art cited by Defendants' IPR challenges. IXI intends to assert many of these reexamined 17 claims when this litigation resumes. Apple recently stated in a joint status letter to this Court that 18 it may challenge the reexamined claims in yet another post-grant proceeding. Dkt. No. 142. 19 However, to date, Apple has lodged no challenge. 20 D. Apple's Belated Reexamination Of The '532 Patent. 21 On April 3, 2018, after strategically waiting for over two years after the PTAB denied 22 institution of Claim 10 of the '532 Patent, Apple requested an ex parte reexamination of this same 23 claim, as well as four additional claims of the '532 Patent that were not challenged by Defendants' 24 IPR in prior petitions. The USPTO granted Apple's ex parte reexamination request on May 23, 25 2018 (the "'532 Reexam"). This reexamination is presently ongoing. 26 3 27 Pursuant to Court's October 22, 2018 Order, IXI will work with the Defendants to submit a joint case management statement including a proposed case schedule prior to the hearing date for the 28 instant motion. H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -3- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 III. ARGUMENT 2 It is time for IXI to resume enforcement of its property rights. The IPRs that led to the stay 3 are resolved; the Defendants have had their chances to timely challenge the asserted patents; and 4 fairness and efficiency weigh in favor of lifting the stay. Further delay is unfair to IXI, rewards 5 Defendants' procedural gamesmanship, and does not yield any efficiencies. 6 It is in the Court's discretion whether to stay a case during the pendency of the ex parte 7 reexamination, weighing factors of fairness and efficiencies. See Pro-Troll, Inc. v. Shortbus 8 Flashers, LLC, No. 16-CV-04062-VC, 2016 WL 11432003, at *1 (N.D. Cal. Dec. 23, 2016) 9 ("Courts have inherent power to manage their dockets, including by ordering a stay during a patent 10 reexamination.") (citing Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988)). In 11 making this determination, Courts in this district apply three factors: (A) whether a stay will 12 simplify the issues in question and trial of the case; (B) whether a stay would unduly prejudice or 13 present a clear tactical disadvantage to the nonmoving party; and (C) whether discovery is complete 14 and whether a trial date has been set. Id. (citing Telemac Corp. v. Teledigital, Inc., 450 F. Supp. 15 2d 1107, 1111 (N.D. Cal. 2006)). As discussed below, the circumstances here favor lifting the stay. 16 A. A Continued Stay Will Not Simplify The Issues. 17 A continuation of the stay will not simplify issues. In originally granting the stay, the Court 18 reasoned that it "could simplify the case by rendering some or all of Plaintiffs' infringement claims 19 moot." Dkt No. 133, at 5. Now that the IPRs have concluded, however, the issues cannot be further 20 simplified, and this reasoning has been extinguished. See Smart Modular Techs., Inc. v. Netlist, 21 Inc., No. 2:12-CV-02319-TLN-EFB, 2016 WL 5159524, at *3 (E.D. Cal. Sept. 21, 2016) ("The 22 termination of the IPR has eliminated the likelihood that a stay will simplify the issues subject to 23 litigation in this action."). 24 IXI expects that Defendants will argue that their strategically-delayed, sequential post-grant 25 review request for the '532 reexamination could result in more claims being deemed invalid, and 26 that such result would lead to simplification of the overall case; IXI respectfully disagrees. The 27 '532 Reexam cannot result in any meaningful simplification of the remaining issues in this case 28 because: (1) it does not impact the majority of the asserted claims and (2) the same discovery will H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -4- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 be required with or without the '532 Patent. 2 First, the '532 Reexam concerns only a handful of claims from the asserted patents. 3 Indeed, the vast majority of the claims at issue in this litigation will remain entirely unaffected by 4 the '532 Reexam, weighing in favor of lifting the stay. See Finjan, Inc. v. FireEye, Inc., No. C 13- 5 03133 SBA, 2017 WL 1150283, at *2–3 (N.D. Cal. Mar. 28, 2017) ("granting a stay is more likely 6 to meaningfully simplify a case when a party has obtained PTO review of all or a substantial 7 portion of the patents-in-suit.") (citing Finjan Inc. v. Symantec Corp., 139 F. Supp. 3d 1032, 1036 8 (N.D. Cal. 2015) (emphasis added). 9 Next, there is substantial overlap between the infringing conduct covered by the claims 10 challenged in the '532 Reexam and the remaining claims that will be asserted in this litigation that 11 are not the subject of any ongoing post-grant proceeding. In this regard, the remaining claims are 12 generally infringed by the same products as the claims challenged in the '532 Reexam. Thus, the 13 burden on the parties resulting from written discovery, depositions, and expert reports will be 14 substantially the same regardless of whether the challenged '532 Patent claims are found invalid 15 during reexamination. 16 Even if the PTO finds the claims to be valid following the reexamination, Defendants are 17 likely to reassert the same arguments made during the '532 Reexam because (unlike IPR 18 proceedings) there is no estoppel effect resulting from reexaminations. See Pro-Troll, Inc., 2016 19 WL 11432003, at *1 ("In other words, even if the PTO decided not to invalidate the patent after 20 reexamination, [defendant] could continue to press an invalidity argument here. This is in contrast 21 to inter partes review, which is 'guaranteed to finally resolve at least some issues of validity.'") 22 (quoting Avago Techs. Fiber IP (Singapore) Pte. Ltd. v. IPtronics Inc., No. 10-cv-02863-EJD, 2011 23 WL 3267768, at *5 (N.D. Cal. July 28, 2011)). 24 Under similar circumstances, courts have lifted stays – even where appeals or other 25 proceedings existed. For example, in Network-1 Sec. Sols., Inc. v. Alcatel-Lucent USA Inc., the 26 Eastern District of Texas lifted the stay, finding "simplification and streamlining" had been 27 achieved from the conclusion of the IPR proceedings. Indeed, the court chose to lift the stay prior 28 to the conclusion of the appeals process. The court noted that maintaining the stay was unnecessary H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -5- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 because there was no possibility of achieving the "ultimate simplification" of the entire case being 2 invalidated because the Patent Office issued an ex parte reexamination certificate adding new 3 claims to plaintiff's patent. No. 6:11CV492, 2015 WL 11439060, at *1 (E.D. Tex. Jan. 5, 2015) 4 ("the addition of the fourteen new claims to the '930 Patent, 'some or all of which' Network-1 5 represents it will assert once/if the case is reopened, forecloses the possibility of 'ultimate 6 simplification.'"). In this case, not only have the IPR proceedings concluded, but so has the appeals 7 process, and there is likewise no possibility of the "ultimate simplification." IXI should not be 8 forced to wait any longer for the possibility that the issues could be, at best, negligibly simplified. 9 B. IXI Will Be Prejudiced If The Stay Is Not Lifted. 10 IXI will be unduly prejudiced if the stay is maintained. As previously stated, these cases – 11 which originally commenced in 2014 – have been stayed for over three years. At the time of the 12 stay, the parties had already expended substantial resources on this litigation. Given the conclusion 13 of the IPR proceedings, it is only logical and fair that the stay be lifted so that IXI may continue 14 towards a trial on the merits. Should the stay be maintained, IXI's ability to enforce its property 15 rights will be unjustifiably prejudiced. For example, as the length of the stay increases, so does the 16 likelihood that key deposition witnesses will forget important details, or even leave their respective 17 companies, which may force IXI to treat them as third party witnesses. In MLC Intellectual Prop., 18 LLC v. Micron Tech., Inc., this Court found that the plaintiff would be unduly prejudiced by any 19 further delay of the case under similar circumstances. No. 14-CV-03657-SI, 2016 WL 9175599, 20 at *2 (N.D. Cal. Mar. 29, 2016). Specifically, in lifting the stay, the Court cited the one year delay 21 from the date of the stay, and noted that it was "concerned that there ha[d] not been substantive 22 activity on this case since November 2014," about a year and a half of inactivity. Id. See also 23 Grobler v. Apple Inc., 12-cv-01534, 2013 WL 6441502 at *3 (N.D. Cal. Dec. 8, 2013) (finding that 24 plaintiff "is likely to suffer prejudice if the stay remains in place"). 25 Again, though Defendants may argue that the current reexamination of the '532 Patent is a 26 reason to maintain the stay, such an argument only highlights Defendants' role in fostering further 27 delay. Defendants have been on notice since early 2016 that the PTAB declined to include Claim 28 10 of the '532 Patent in its IPR proceedings but, Apple waited more than two years to file its ex H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -6- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 parte reexamination request for the '532 Patent. See Belden Techs. Inc. v. Superior Essex 2 Commc'ns LP, No. 08-63 (SLR), 2010 WL 3522327, at *2 (D. Del. Sept. 2, 2010) ("A request for 3 reexamination made well after the onset of litigation followed by a subsequent request to stay may 4 lead to an inference that the moving party is seeking an inappropriate tactical advantage."). Apple's 5 tactical decision to delay the filing of the '532 Reexam seems self-evident. IXI should not be 6 further blocked from asserting its patents while Apple waits out the clock, adding to pressure to the 7 inherent risk of the unknown in patent litigation. 8 C. The Status Of Discovery And Trial Date Factor Is Neutral. 9 Finally, the status of discovery and trial date is neutral. Courts find this factor to be neutral 10 where the length of the stay has already been significant, even when there had been little or no 11 discovery. See, e.g., Smart Modular Techs., 2016 WL 5159524, at *2-3 (finding the first factor to 12 be neutral despite the infancy of the case because the matter had already been stayed for three 13 years). Here, significant discovery has taken place, as explained above. See, Section II(A). But, 14 even if this case had been in its infancy, this factor is at best neutral because the three year stay has 15 already been significant and further delay is unwarranted. 16 Finally, continuing to stay the litigation while Defendants sequentially take advantage of 17 post-grant proceedings in order to cause further delay undercuts the purpose of the IPR process (to 18 provide swift resolution) and rewards Defendants for serial challenges to IXI's patents, in direct 19 contrast to one of the very purposes of enacting the America Invents Act: 20 In addition, the bill would improve the current inter partes administrative process for challenging the validity of a patent. It 21 would establish an adversarial inter partes review, with a higher threshold for initiating a proceeding and procedural safeguards to 22 prevent a challenger from using the process to harass patent owners. It also would include a strengthened estoppel standard to 23 prevent petitioners from raising in a subsequent challenge the same patent issues that were raised or reasonably could have been 24 raised in a prior challenge. The bill would significantly reduce the ability to use post-grant procedures for abusive serial challenges 25 to patents. 26 SAS Inst., Inc. v. Complementsoft, LLC., 842 F.3d 1223, 1228 (Fed. Cir. 2016) (citing 157 CONG. 27 REC. S952 (daily ed. Feb. 28, 2011) (emphasis added)). Apple had a chance to challenge the '532 28 Patent in the patent office via its IPR. Continuing the stay here, while Apple gets a second chance H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -7- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836 1 with a belated reexamination challenge of one of IXI's multiple patents, would thwart these 2 purposes of the America Invents Act by allowing the Defendants to serially delay the litigation 3 without any mechanism for estoppel and tie up this Court's docket. See, e.g., Grobler v. Apple Inc., 4 2013 WL 6441502, at *3-4 (acknowledging Apple has no explanation for its decision to 5 "strategically chose not to join in the IPR initiated by Sony," and citing Apple's "deliberate failure" 6 as a reason for lifting the stay). 7 CONCLUSION 8 The Court should grant IXI's motion to lift the stay because the original reasons for granting 9 the stay are no longer applicable. These cases have already been stayed for almost three years, the 10 IPR proceedings have now concluded, the cases would not be further simplified by maintaining the 11 stay, and any further delay will be extremely prejudicial to IXI. 12 13 Dated: November 6, 2018 HOPKINS & CARLEY 14 A Law Corporation 15 16 By: /s/ John V. Picone III John V. Picone III 17 Jennifer S. Coleman Attorneys for Plaintiffs 18 IXI MOBILE (R&D) LTD. and IXI IP, LLC 19 20 21 22 23 24 25 26 27 28 H OPKINS & C ARLEY ATTO RNEY S AT LAW 626\3147860.2 -8- SAN JO SE PALO AL TO BURBA NK MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 120495836