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

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

REPLY (re 135 MOTION to Lift Stay) filed by IXI IP,LLC, IXI Mobile (R&D) Ltd.

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5 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. 4:15-CV-03755-HSG LLC, 14 REPLY MEMORANDUM IN FURTHER Plaintiff, SUPPORT OF PLAINTIFFS' MOTION TO 15 LIFT STAY v. 16 APPLE, INC., 17 Defendant. 18 IXI MOBILE (R&D) LTD. and IXI IP, CASE NO. 4:15-CV-03754-HSG LLC, (RELATED CASE) 19 Plaintiff, 20 v. 21 BLACKBERRY CORPORATION, et al., 22 Defendant. 23 IXI MOBILE (R&D) LTD. and IXI IP, CASE NO. 4:15-CV-03752-HSG LLC, (RELATED CASE) 24 Plaintiff, 25 v. 26 SAMSUNG ELECTRONICS CO., et al., 27 Defendant. 28 H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION .............................................................................................................. 1 II. ARGUMENT ...................................................................................................................... 2 4 A. IXI Will Be Prejudiced By A Continued Stay; Apple's Tactical Delays 5 Will Be Rewarded By A Continued Stay................................................................ 2 1. The '532 Patent ........................................................................................... 3 6 2. The '033 Patent ........................................................................................... 5 7 B. Maintaining The Stay Will Not Simplify The Issues .............................................. 8 8 C. The Length Of The Stay Makes The Status Of Discovery And Trial Date Factor Neutral........................................................................................................ 10 9 D. Possible New Claims In the '532 Patent Should Not Be Considered ................... 11 10 III. CONCLUSION ................................................................................................................. 11 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 H OPKINS & C ARLEY ATTORNEYS AT LAW -i- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 TABLE OF AUTHORITIES 2 Page 3 Cases 4 Acer, Inc. v. Tech. Properties Ltd., No. 5:08-CV-00877 JF/HRL, 2011 WL 1838768 (N.D. Cal. May 13, 2011) ............................9 5 6 Akeena Solar Inc. v. Zep Solar Inc., No. C 09-05040 JSW, 2011 WL 2669453 (N.D. Cal. July 7, 2011) ......................................4, 5 7 Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., 8 672 F.3d 1335 (Fed. Cir. 2012) ...................................................................................................9 9 Click-To-Call Techs., LP v. Ingenio, Inc., YellowPages.com, LLC, 899 F. 3d 1321 (Fed. Cir. 2018) ..........................................................................................5, 6, 9 10 Depomed, Inc. v. Purdue Pharma L.P., 11 No. CV 13-571 (MLC), 2017 WL 438738 (D.N.J. Jan. 31, 2017) .............................................9 12 Grobler v. Apple Inc., 13 Case No. 12-cv-01534, 2013 WL 6441502 (N.D. Cal. Dec. 8, 2013) ..................................2, 10 14 Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2012-00027 (P.T.A.B. Jun. 11, 2013) (Paper 26) .................................................................7 15 Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd., 16 IPR2013-00066, Paper 24 (Jul. 18, 2013) ...................................................................................7 17 Milwaukee Elec. Tool Corp. v. Hilti, Inc., 18 2016 U.S. Dist. LEXIS 180365 (E.D. Wis. Dec. 30, 2016) ......................................................10 19 MLC Intellectual Prop., LLC v. Micron Tech., Inc., Case No. 14-CV-03657-SI, 2016 WL 9175599 (N.D. Cal. Mar. 29, 2016) .........................2, 10 20 Network-1 Sec. Sols., Inc., v. Alcatel-Lucent USA Inc., 21 No. 6:11CV492, 2015 WL 11439060 (E.D. Tex. Jan. 5, 2015) .................................................8 22 Ohio Willow Wood Co. v. Alps South Corp., 23 2008 WL 4683222 (S.D. Ohio Oct. 21, 2008) ........................................................................4, 5 24 Papst Licensing GmbH & Co., KG v. Apple, Inc., Case No. 6:15-CV-01095-RWS, 2018 WL 3656491 (E.D. Tex. Aug. 1, 2018) ........................3 25 Pers. Audio LLC v. Google, Inc., 26 230 F. Supp. 3d 623 (E.D. Tex. 2017) ........................................................................................3 27 Proppant Express Investments, LLC (PropX) v. Oren Technologies, LLC (Oren), 28 IPR2018-00914, Paper 21 (Nov. 8, 2018) ..............................................................................6, 9 H OPKINS & C ARLEY ATTORNEYS AT LAW -2- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 TABLE OF AUTHORITIES (continued) 2 Page 3 Proppant Express Investments, LLC (PropX) v. Oren Technologies, LLC (Oren), IPR2018-00914, Paper 24 (Dec. 3, 2018) ...................................................................................6 4 Puget BioVentures, LLC v. Biomet Orthopedics, LLC, 5 Case No. 3:10-cv-00465, 2017 WL 3484744 (N.D. Ind. Aug. 14, 2017)...................................3 6 Puget BioVentures, LLC v. Med. Device Bus. Servs., Inc., 7 Case No. 3:17-CV-503-JD-MGG, 2017 WL 6947786 (N.D. Ind. Sept. 22, 2017) ...........................................................................................................3 8 Smart Modular Techs., Inc. v. Netlist, Inc., 9 No. 2:12-CV-02319-TLN-EFB, 2016 WL 5159524 (E.D. Cal. Sept. 21, 2016) ..................8, 10 10 Statutes 11 35 U.S.C. § 315(b) ............................................................................................................................5 12 35 U.S.C. § 315(e)(1) ........................................................................................................................5 13 Other Authorities 14 37 CFR § 1.181 (Apr. 2, 2018) .........................................................................................................7 15 Crouch, Dennis, "Percentage of Patents that were Initially Rejected," PatentlyO, 16 April 3, 2009, available at https://patentlyo.com/patent/2009/04/percentage-of- patents-that-were-initially-rejected.html (last accessed Dec. 13, 2018) .....................................8 17 18 Key, Stephen, "A Former Patent Examiner Pulls Back the Curtain at the USPTO," Inc., December 11, 2015, available at https://www.inc.com/stephen- 19 key/a-former-patent-examiner-pulls-back-the-curtain-at-the-uspto.html (last accessed Dec. 18, 2018) ..............................................................................................................8 20 S. Rep. 110-259 (2007); available at 21 https://www.congress.gov/110/crpt/srpt259/CRPT-110srpt259.pdf (last 22 accessed Dec. 21, 2018) ..............................................................................................................5 23 24 25 26 27 28 H OPKINS & C ARLEY ATTORNEYS AT LAW -3- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 I. INTRODUCTION 2 Enough is enough. The balance of functions between the United States district courts and 3 the USPTO, and the timing of sometimes overlapping adjudications between the two, often 4 supports the stay mechanism to preserve judicial resources and support fairness between the parties. 5 Unfortunately, the stay mechanism also provides savvy parties with tools to abuse the process and 6 indefinitely delay a patent owner her day in court. The procedural facts at the USPTO show 7 unfettered and unapologetic gamesmanship from Apple. It is finally time for IXI to have its day in 8 court. 9 This case was stayed more than three years ago (November 2015), pending the resolution 10 of several IPRs filed by Defendants Samsung and Apple. Years later, that first wave of IPRs is 11 complete; but, Apple is attempting to create further delay. The strategy is clear—file strategically 12 timed serial post-grant challenges to maintain a steady state of post-grant review proceedings; then, 13 rely on such proceedings as justification for continued stay of the district court case. 14  On April 3, 2018, Apple requested the Patent Office to commence a new post-grant review 15 proceeding for Claim 10 of the '532 Patent – a claim that the PTAB had already refused to 16 invalidate in Apple's 2015 IPR – and a request that would have been timely two and a half years 17 earlier. 18  On November 8, 2018, only two days after IXI filed the instant motion to lift the stay, Apple 19 filed another wave of serial attacks in the form of six IPR petitions that challenge the nearly 20 year old '033 Patent claims issued by the PTO upon reexamination. The new petitions are time 21 barred by statute. 22 Not surprisingly, Defendants rely on these serial filings (filed four years after this litigation was 23 filed) to argue that this case should remain stayed indefinitely. Apple provides no explanation of 24 why it waited so long to file its new post-grant requests; nor could it because there is no reasonable 25 explanation. 26 With these post-grant proceedings pending, Defendants suggest that the Court's original 27 reasoning for staying the case remains just as strong today as it did in 2015. Nothing could be 28 further from the truth. First, four years has already passed since these cases were filed; any further H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -1- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 delay presents real prejudice to IXI. Second, Apple's post-grant filings have real deficiencies that 2 call into question the good faith of these filings. Apple has delayed in filing every single additional 3 post-grant request with no explanation for its delay. Finally, efficiencies have already been 4 achieved through the first wave of post-grant reviews; substantial additional efficiencies are highly 5 unlikely. 6 Therefore, for the reasons set forth more fully below, the balance of interests weighs in 7 favor of lifting the stay. To find otherwise would subscribe to Apple's proffered argument that an 8 accused infringer could indefinitely stay a district court patent litigation through serial post-grant 9 review proceedings. 10 II. ARGUMENT 11 A. IXI Will Be Prejudiced By A Continued Stay; Apple's Tactical Delays Will Be Rewarded By A Continued Stay. 12 13 Defendants claim that a stay is warranted because it preserves "the status quo." (Defs' Opp. 14 Br. at 11.) While the Court initially found this 'prejudice' factor weighed in favor of a stay, that 15 decision was made more than three years ago. The facts have changed. The longer the case is 16 stayed, the more IXI is prejudiced because the delay continues to cloud IXI's ability to license its 17 patents. 18 Courts often find lengthy periods of inactivity to be a significant consideration when 19 weighing this factor. See e.g., MLC Intellectual Prop., LLC v. Micron Tech., Inc., Case No. 14-CV- 20 03657-SI, 2016 WL 9175599, at *2 (N.D. Cal. Mar. 29, 2016) (finding it was "concerned that there 21 ha[d] not been substantive activity on this case since November 2014" – about a year and a half of 22 inactivity); Grobler v. Apple Inc., Case No. 12-cv-01534, 2013 WL 6441502 at *3 (N.D. Cal. Dec. 23 8, 2013) (finding that plaintiff "is likely to suffer prejudice if the stay remains in place"). Here, the 24 continued stay sought by Defendants would result in an indeterminable amount of additional delay 25 while Apple's serial post-grant challenges (and any additional challenges it has yet to file) and any 26 subsequent appeals are resolved. 27 Such a continued delay will severely prejudice IXI because further delay in these cases will 28 continue to impact patent licensing and enforcement discussions with any third party. Indeed, H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -2- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 courts have found that lengthy stays are extremely prejudicial to a patentee as they create "a cloud 2 over [the patentee's] ability to license its intellectual property." Pers. Audio LLC v. Google, Inc., 3 230 F. Supp. 3d 623, 627 (E.D. Tex. 2017) (finding continued stay inappropriate where "[a]s a 4 practical matter, the fact that a major corporation...evidently believes the patent is not enforceable 5 creates a cloud over Plaintiff's ability to license its intellectual property."); see also, Puget 6 BioVentures, LLC v. Biomet Orthopedics, LLC, Case No. 3:10-cv-00465, 2017 WL 3484744, at *3 7 (N.D. Ind. Aug. 14, 2017) (finding undue prejudice to plaintiff weighed in favor of lifting stay, in 8 part, where it "prevent[ed plaintiff] from further licensing the [asserted] patent as well as its broader 9 portfolio of patents"); Puget BioVentures, LLC v. Med. Device Bus. Servs., Inc., Case No. 3:17- 10 CV-503-JD-MGG, 2017 WL 6947786, at *2 (N.D. Ind. Sept. 22, 2017) (finding relevant to the 11 prejudicial analysis "the question of whether a delay in enforcing patent rights 'creates a cloud over 12 [the patentee's] ability to license its intellectual property.'") (quotations omitted); Papst Licensing 13 GmbH & Co., KG v. Apple, Inc., Case No. 6:15-CV-01095-RWS, 2018 WL 3656491, at *2 (E.D. 14 Tex. Aug. 1, 2018) (finding "considerable" the additional prejudice resulting from maintaining the 15 stay pending exhaustion of appeals). Here, the lengthy stay has already clouded IXI's ability to 16 enforce its patent rights. Even worse, there would be no need to request an additional stay had 17 Apple filed its multiple post-grant challenges earlier. 18 Put simply, allowing a continued stay for serial challenges effectively takes away a patent 19 owner's ability to enforce its patent rights in court. If an alleged infringer has the funds and 20 wherewithal (as Defendants here clearly do), the alleged infringer could file ongoing serial post- 21 grant challenges indefinitely. This appears to be precisely Defendants' playbook. 22 1. The '532 Patent. 23 IXI should not be penalized with further delay because Apple has strategically filed serial 24 validity challenges. As illustrated in the timeline below, the PTAB instituted inter partes reviews 25 of all challenged claims of the '532 Patent except Claim 10 on January 2, 2016. Yet, rather than 26 taking any action after the PTAB denied institution of Claim 10, Apple waited for over two years 27 to file a reexamination request with the Patent Office on the '532 Patent on April 3, 2018. 28 /// H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -3- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 2 3 4 5 6 7 Defendants attempt to downplay this strategic delay, arguing that the Court previously 8 declined to read a dilatory motive into Defendants' exercise of their "statutory rights" when they 9 filed their inter partes review petitions on the eve of the one year statutory deadline. (Defs' Op. Br. 10 at 8, 11.) Defendants, however, fail to account for the change in circumstances. This is now the 11 second wave of Defendants' post-grant proceedings against the '532 Patent, and at some point, the 12 litigation must be permitted to resume. Further, unlike inter partes reviews where a defendant has 13 one year to file a petition from the date the complaint was served, a party can file an ex parte request 14 for reexamination at any time during the period of enforcement of the patent. Here, Apple waited 15 two more years before filing its second post-grant challenge to the '532 Patent. Apple could file 16 another tomorrow or two years from now. 17 Again, Defendants provide no excuse or justification for Apple's two-year delay in 18 requesting the pending reexamination. Instead, Defendants cite to Akeena Solar Inc. v. Zep Solar 19 Inc. for the proposition that a stay can be continued in light of a second reexamination being 20 requested after a first inter partes reexamination. Case No. C 09-05040 JSW, 2011 WL 2669453, 21 at *3, 5 (N.D. Cal. July 7, 2011); (Defs' Opp. Br. at 9.) Of course, a stay can be continued—the 22 question for this Court is whether it should be continued. In Akeena, which was decided before the 23 America Invents Act ("AIA") (which eliminated inter partes reexaminations and discourages serial 24 post-grant attacks), the Court found that defendant's petition for a second reexamination was likely 25 "substantive, as opposed to dilatory or tactical purposes" because it was done on "the earliest date 26 possible." Id. at *4. This is not the case here as Apple waited years to request reexamination of 27 the '532 Patent. In fact, Akeena distinguished itself from another case, Ohio Willow Wood, where 28 a stay was lifted, stating "this is not a case where litigation has been stayed for four years." Id. at 3 H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -4- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 (citing Ohio Willow Wood Co. v. Alps South Corp., 2008 WL 4683222 (S.D. Ohio Oct. 21, 2008)). 2 Unlike Akeena, where the case was only stayed for 18 months, these IXI cases have already been 3 stayed for over three years – much closer to the facts in Ohio Willow Wood from which Akeena 4 distinguished itself. 5 Finally, as noted by IXI in its opening brief (Opening Br. at 7), Apple's serial waves of 6 post-grant challenges run contrary to one of the basic purposes of the AIA, which, as the legislative 7 history explains, is to streamline litigation and prevent challengers from getting multiple bites at 8 the apple in the form of serial validity challenges.1 The Defendants' opposition offers no attempt 9 to explain how multiple waves of post-grant attacks are not completely inconsistent with the stated 10 goals of the AIA. 11 2. The '033 Patent 12 Continuing its pattern of abusive post grant filings, and despite being past the one year 13 statutory time bar of 35 U.S.C. § 315(b) that governs petitions for IPRs, Apple recently petitioned 14 for six additional IPRs only two days after IXI filed the instant motion. These six new IPR petitions 15 challenge the validity of the claims that the Patent Office issued after reexamination of the '033 16 Patent.2 17 As a preliminary matter, these IPRs are procedurally time-barred as explained by the 18 Federal Circuit's recent opinion in Click-To-Call Techs., LP v. Ingenio, Inc., YellowPages.com, 19 LLC, 899 F. 3d 1321, 1325, 1332 (Fed. Cir. 2018). In Click-To-Call, the Federal Circuit assessed 20 whether claims obtained during a reexamination were subject to the one year time bar of a petition 21 of IPR triggered by the filing of litigation and stated, "the text of § 315(b) clearly and unmistakably 22 considers only the date on which the petitioner, its privy, or a real party in interest was properly 23 24 1 The reasoning behind the restrictions noted in the estoppel provisions of 35 U.S.C. § 315(e)(1) was a result of Congress's concerns regarding the possibility of serial attacks of a patent. See 25 S. Rep. 110-259 (2007); available at https://www.congress.gov/110/crpt/srpt259/CRPT- 110srpt259.pdf (last accessed Dec. 21, 2018). ("This 'one bite at the apple' provision was included 26 in Committee to quell concerns that a party bent on harassing a patent holder might file serial PGR [Post Grant Review] petitions."). 27 2 The six new IPR petitions are IPR No. 2019-00124; IPR No. 2019-00125; IPR No. 2019-00139; IPR No. 2019-00140; IPR No. 2019-00141; and IPR No. 2019-00181. Exhs. 4-9. Each petition is 28 also accompanied by a motion for joinder. Exhs. 10-15. H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -5- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 served with a complaint" even though, subsequent to the filing of the complaint, the asserted patent 2 underwent ex parte reexamination where several claims were cancelled, amended, and newly 3 added. Id. Indeed, Apple implicitly recognized that its new IPR petitions are procedurally time 4 barred. At the same time that it filed the IPR petitions, Apple also filed motions to "join" its new 5 IPR petitions with its 2015 IPR proceedings. Of course, the 2015 IPRs were terminated in 2016, 6 so there is nothing to "join." However, even if there were an open IPR to join, parties may not join 7 their own petitions. See Proppant Express Investments, LLC (PropX) v. Oren Technologies, LLC 8 (Oren), IPR2018-00914, Paper 21, (Nov. 8, 2018).3 9 Though the issues related to the procedural propriety of the IPR petitions (and the related 10 joinder motion) are not for this Court to decide, it is important for the Court to understand that there 11 are, at the very least, significant questions as to whether the new IPR petitions are procedurally 12 proper. In light of the questionable procedural propriety, it is not difficult to wonder whether 13 Apple's six new IPR petitions—filed just two days after IXI's motion to lift the stay was filed— 14 are as much a tactic to maintain the stay as they are an attempt to challenge '033 Patent claims. 15 Setting aside the questionable procedural propriety of the new IPR petitions, the timing of 16 such requests strongly suggests tactical delay. IXI provided formal notice to Apple of the then- 17 pending claims under reexamination in 2017. Exh. 1 (April 3, 2017 Ltr. to Apple).4 As illustrated 18 in the timeline below, the reexamination certificate for the '033 Patent issued on February 1, 2018. 19 Yet, it took Apple until November 8, 2018 to file the new IPR petitions – more than one year after 20 it was put on notice of the new claims, nine months after the new claims issued, two months after 21 the Federal Circuit affirmed the original IPR decisions, and curiously, a month after IXI initially 22 requested the Court to lift the stay, and only two days after IXI filed the instant motion. 23 /// 24 /// 25 26 3 After Apple filed its motion for joinder, the PTAB determined to review this decision in a Precedential Opinion Panel. Proppant Express Investments, LLC (PropX) v. Oren Technologies, 27 LLC (Oren), IPR2018-00914, Paper 24, (Dec. 3, 2018). 4 "Exh.__" refers to an Exhibit to the accompanying declaration of Mark W. Halderman In 28 Support Of Plaintiffs' Motion to Lift Stay. H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -6- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 2 3 4 5 6 7 Further evidence of Apple's knowledge of the '033 reexam claims and procedural gamesmanship 8 is exhibited by the fact that shortly after the USPTO issued the Reexamination Certificate for the 9 '033 Patent on February 2, 2018, Apple filed a Petition to the Director of the Patent Office asking 10 the Patent Office to withdraw the reexamination certificate. Apple failed to serve the petition on 11 IXI or otherwise provide IXI with any notice of this communication to the Patent Office. The 12 Patent Office promptly expunged Apple's petition as an improper filing. Exh. 2. (Decision 13 Expunging Papers in Reexamination (April 10, 2018) & Petition to the Director Under 37 CFR § 14 1.181 (Apr. 2, 2018)). There is no question that Apple was monitoring the re-examination of the 15 '033 Patent and has been waiting to launch its new post-grant attacks on IXI patents. 16 Again, enough is enough. Defendants are utilizing intentional delay tactics in a case that 17 has already been stayed for over three years. Even knowing the IPRs will not be instituted because 18 the petitions are time-barred, Apple is relying on the IPR petitions as a means to continue the stay. 19 In their opposition, Defendants seem to excuse the delay by pointing at IXI for obtaining 20 reexamined claims, suggesting that IXI requested the reexamination of the '033 Patent for the 21 improper propose of "avoid[ing] the results of the IPR." (Defs' Opp. Br. at 5.) However, the PTAB 22 encourages patent owners to use reexaminations to amend claims that are subject to cancellation in 23 IPRs. See, e.g., Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2012-00027, at 6 (P.T.A.B. Jun. 11, 24 2013) (Paper 26) ("If a patent owner desires a complete remodeling of its claim structure according 25 to a different strategy, it may do so [via] ex parte reexamination."); Innolux Corp. v. Semiconductor 26 Energy Lab. Co., Ltd., IPR2013-00066, Paper 24 (Jul. 18, 2013) (''To the extent that [the patent 27 owner] perceives the limit for motions to amend to be unfair [in an IPR], [the patent owner] may 28 possibly pursue such additional claims by filing a request for ex parte reexamination.''). IXI H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -7- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 properly sought reexamination of the '033 Patent by presenting the Patent Office with the complete 2 record from the first wave of IPRs, including all of the prior art, which resulted in the United States 3 Patent Office confirming the patent protection to which IXI is entitled in the form of the claims that 4 were issued in the '033 Reexamination Certificate. Exh 3 ('033 Patent Ex Parte Reexamination 5 Certificate). Defendants' attempts to shift blame and suggest that IXI has partaken in any 6 gamesmanship should be rejected. 7 B. Maintaining The Stay Will Not Simplify The Issues. 8 The case has already been simplified. Resolution of pending post-grant challenges will not 9 further materially simplify the case. See, e.g., Smart Modular Techs., Inc. v. Netlist, Inc., No. 2:12- 10 CV-02319-TLN-EFB, 2016 WL 5159524 (E.D. Cal. Sept. 21, 2016); Network-1 Sec. Sols., Inc., v. 11 Alcatel-Lucent USA Inc., No. 6:11CV492, 2015 WL 11439060 (E.D. Tex. Jan. 5, 2015). Like the 12 claims in Network-1 and Smart Modular, Claim 10 of the '532 Patent was considered in the original 13 IPR proceedings and its validity was upheld. That Defendants have opted to effectively appeal the 14 Patent Office's decision regarding Claim 10 by filing another serial post-grant proceeding should 15 not change this analysis. In both Network-1 and Smart Modular, the Court found that under the 16 circumstances, the stay should be lifted unless it could be shown (among other factors) that the 17 Patent Office's decision was likely to be reversed. See Smart Modular Techs., 2016 WL 5159524, 18 at *3 ("That Defendant has already filed its appellate brief and is awaiting the final decision to be 19 rendered by the PTAB does not alter this conclusion because Defendant has not shown that the 20 appeal will result in a reversal of the PTO examiner's decision."). Defendants cannot make such a 21 showing here. Their suggestion that the Patent Office's initial rejection of Claim 10 in 22 reexamination is indicative that the claim will ultimately be rejected is unsupported. (Defs' Opp. 23 Br. at 4, 7.) In fact, initial office action rejections are quite common and examiners are encouraged 24 to reject initial claims as a matter of course.5 25 5 See, Crouch, Dennis, "Percentage of Patents that were Initially Rejected," PatentlyO, April 3, 26 2009, available at https://patentlyo.com/patent/2009/04/percentage-of-patents-that-were-initially- rejected.html (last accessed Dec. 13, 2018); see also, Key, Stephen, "A Former Patent Examiner 27 Pulls Back the Curtain at the USPTO," Inc., December 11, 2015, available at https://www.inc.com/stephen-key/a-former-patent-examiner-pulls-back-the-curtain-at-the- 28 uspto.html (last accessed Dec. 18, 2018). (In this interview with a former patent examiner, the H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -8- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 Defendants do not challenge IXI's position that there is substantial overlap between the 2 infringement and discovery issues concerning Claim 10 of the '532 Patent and the reexamined 3 claims of the '033 Patent. (Opening Br. at 4-5.) Instead, Defendants call into question whether the 4 '033 reexam claims should be part of the analysis.6 (Defs' Opp. Br. at 8-9.) While it is true that 5 IXI has not yet moved for leave to amend its infringement contentions to include the '033 reexam 6 claims, such a motion has not been possible because the case has been stayed. The newly issued 7 '033 reexam claims are part of this case because they are part of the '033 Patent, which IXI asserted 8 in its Complaint in its Third Count for Relief. See Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., 9 672 F.3d 1335, 1341–42 (Fed. Cir. 2012) ("Unlike reissue, reexamination does not result in the 10 surrender of the original patent and the issuance of a new patent.").7 11 Defendants argue that there may be further simplification because it "is likely that the PTAB 12 will institute the recently-filed '033 IPRs" based only on the fact that the PTAB invalidated claims 13 in the original IPRs. (Defs' Opp. Br. at 9.) The decisions in the original IPRs are in no way 14 indicative of the outcome of Apple's new '033 IPR petitions particularly here where the '033 15 reexam claims were allowed over the references submitted by Apple in the first IPRs. Moreover, 16 as explained above, the new '033 IPRs are procedurally improper and unlikely to be instituted. See 17 Click-To-Call Techs. and Proppant, supra. 18 /// 19 20 examiner was asked "Are all claims rejected the first time around? If so, why?" The examiner responded "Yes, I almost always rejected claims the first time…. We were almost never permitted 21 to allow anything the first time around.") 6 Conversely, Defendants argue that the stay should be continued because IXI has requested 22 that new claims be issued in the '532 Patent that may ultimately become part of this litigation. Defendants get ahead of themselves, speculating about possible outcomes of a reexamination that 23 Apple belatedly requested. If and when IXI obtains reissue claims, this Court will determine whether such claims may be added to the existing litigation. 24 7 Though beyond the scope of the present motion to lift the stay, a timely request to amend infringement contentions will be appropriate. See, e.g., Acer, Inc. v. Tech. Properties Ltd., No. 5:08- 25 CV-00877 JF/HRL, 2011 WL 1838768, at *1, 4 (N.D. Cal. May 13, 2011) (granting leave to amend 26 infringement contentions where patentee "seeks to assert certain claims that it reasonably could not have asserted prior to the reexamination of the patents" reasoning that the scope of the claims 27 cannot be enlarged during reexamination); Depomed, Inc. v. Purdue Pharma L.P., No. CV 13-571 (MLC), 2017 WL 438738, at *1, 4 (D.N.J. Jan. 31, 2017) (finding motion timely when promptly 28 filed after stay was lifted). H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 -9- SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 Finally, Defendants' argument that the "PTO's expertise will obviously be helpful in 2 simplifying" the remaining infringement issues neglects to consider the fact that the Patent Office 3 already provided its expertise. (Defs' Opp. Br. at 10.) Specifically, the Patent Office offered its 4 insight relating to the technology in the '033 Reexamination proceeding and granted the '033 5 reexam claims. 6 C. The Length Of The Stay Makes The Status Of Discovery And Trial Date Factor Neutral. 7 8 Contrary to Defendants' claim that the circumstances have not changed "[i]n the time since 9 [the Court's initial decision to stay]," the length of the stay must be considered when weighing this 10 factor. (Defs' Opp. Br. at 6.) Indeed, as IXI clearly stated in its Opening Brief, courts have found 11 this factor to be neutral in instances where the length of the stay has already been significant. 12 (Opening Br. at 7.) See MLC Intellectual Prop., LLC v. Micron Tech., Inc., No. 14-cv-03657, 2016 13 WL 9175599, at *2 (N.D. Cal. Mar. 29, 2016) (lifting stay after two extensions where "[t]he Court 14 does not wish to further delay this action and is concerned that there has not been substantive 15 activity on this case since November 2014."); Milwaukee Elec. Tool Corp. v. Hilti, Inc., 2016 U.S. 16 Dist. LEXIS 180365, *7 (E.D. Wis. Dec. 30, 2016) ("The Court appreciates that substantial 17 discovery remains to be done in this case and that this normally weighs in favor of a stay. Yet, until 18 the stay in this case is lifted, there will always be a great deal of discovery remaining.") (internal 19 citations omitted). 20 As explained above, Defendants' attempt to distinguish Smart Modular and Grobler misses 21 the point. (Defs' Opp. Br. at 6-7.) In both cases, the Court cited to the lengthy delay as a reason 22 for lifting the stay even though the appeals process from the IPR proceeding had yet to conclude 23 and there was a chance that the Federal Circuit would overturn the IPR ruling. Smart Modular 24 Techs., Inc. v. Netlist, Inc., 2016 WL 5159524, at *3; Grobler v. Apple Inc., 12-cv-01534, 2013 25 WL 6441502 at *3. Regardless of the success of the original IPRs, however, IXI still has multiple 26 claims that it plans to assert in the litigation. 27 Here, the original IPRs and the appeals process already resulted in a lengthy stay; any 28 additional delay will significantly prejudice IXI. Therefore, this factor is neutral at best. H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 - 10 - SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY 5 1 D. Possible New Claims In the '532 Patent Should Not Be Considered. 2 Defendants suggest that the stay should be maintained because additional claims may issue 3 in the reexamination of the '532 Patent. (Defs' Opp. Br. at 12.) At this time, no new claims have 4 issued, and even if they did, IXI has not decided whether it would assert such hypothetical new 5 claims in this litigation. If and when such claims issue and if and when IXI seeks to include such 6 claims in the case, this Court will have discretion as to whether to allow such claims at that time. 7 At this point, the Defendants' conjecture about the possibility of the Patent Office issuing additional 8 patent claims for the '532 Patent is irrelevant to the stay issue before the Court. 9 III. CONCLUSION 10 IXI respectfully requests that the Court grant its Motion because the original IPR 11 proceedings have now concluded, and the cases will not be further simplified by Apple's belated, 12 serial post-grant proceedings. The case has already been stayed for over three years, and 13 Defendants have engaged in an abusive pattern of requesting serial post-grant proceedings with the 14 intention of further delay the litigation, contrary to the purpose of the America Invents Act. 15 Continuing the stay would further prejudice IXI by restricting its inability to assert the remaining 16 valid patents and claims against Defendants. 17 18 Dated: December 21, 2018 HOPKINS & CARLEY A Law Corporation 19 20 By: /s/ John V. Picone III 21 John V. Picone III Jennifer S. Coleman 22 Aleksandr Korzh Attorneys for Plaintiffs 23 IXI MOBILE (R&D) LTD. and IXI IP, LLC 24 25 26 27 28 H OPKINS & C ARLEY ATTORNEYS AT LAW 614\3175554.1 - 11 - SAN JOSE PALO ALTO REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS' MOTION TO LIFT STAY