Free Reply to Response to Motion - District Court of California - California

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Anthony J. Dain (Bar No. 98947) Victor M. Felix (Bar No. 179622) Lisel M. Ferguson (Bar No. 207637) PROCOPIO, CORY, HARGREAVES & SAVITCH LLP 530 B Street, Suite 2100 San Diego, California 92101 Telephone: 619.238.1900 Facsimile: 619.235.0398 Attorneys for Defendants and Counterclaimants, Kyocera International, Inc. and Kyocera Wireless Corp.

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA JENS ERIK SORENSEN, as Trustee of SORENSEN RESEARCH AND DEVELOPMENT TRUST, Plaintiff, Case No.: 08 CV 0411 BTM (CAB) REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS Date: Time: Ctrm.: Judge: May 2, 2008 11:00 a.m. 15 Hon. Barry Ted Moskowitz

KYOCERA INTERNATIONAL, INC., a California corporation; KYOCERA WIRELESS CORP., a Delaware corporation; and DOES 1-100, Defendants.

NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT KYOCERA INTERNATIONAL, INC., a California corporation; KYOCERA WIRELESS CORP., a Delaware corporation, Counterclaimants,

JENS ERIK SORENSEN, as Trustee of SORENSEN RESEARCH AND DEVELOPMENT TRUST, Counterdefendant.

REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
Case No. 80-0411 BTM (CAB) 109934/000230/910381.01

Case 3:08-cv-00411-BTM-CAB 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 A.

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Defendants/Counterclaimants Kyocera International, Inc. and Kyocera Wireless Corp. (collectively, "Kyocera") respectfully submit the following Memorandum of Points and Authorities in Reply to Plaintiff's Opposition to Defendants' Motion to Stay Pending Outcome of Reexamination Proceedings: I. INTRODUCTION A Stay of this case will benefit the parties and the Court and there will be little to no prejudice to Plaintiff. All the facts weigh in favor of a stay; this litigation is in its early stages and U.S. Patent No. 4,935,184 (the "`184 Patent") is now expired. Plaintiff argues that a stay will result in undue, prejudicial delay. However, as discussed in more detail below, Plaintiff not only delayed in bringing this action, but has purposely delayed reexamination proceedings before the U.S. Patent and Trademark Office ("PTO".) Plaintiff merely recycles arguments already rejected by this Court in the case entitled Sorensen v. Energizer, Case No. 07 CV 2321 BTM (CAB), and addressed in this Court's Order Granting a Stay Without Prejudice. Reexamination will simplify issues for the Court and a stay will save unnecessary expenses to the parties. Plaintiff's arguments do not overcome this Court's reasoning expressed in its orders staying other sister cases such as Black & Decker (Case No. 06CV-1572-BTM-(CAB)), Giant (Case No. 07-CV-02121-BTM-(CAB)), Helen of Troy (Case No. 07-CV-2278-BTM-(CAB)), and Energizer ("other `184 Patent cases".) Similarly to the

Energizer case, this Court should stay this litigation without prejudice pending the PTO's reexamination of the `184 Patent. II. LEGAL ARGUMENT Plaintiff's Analysis Of PTO Statistics Is Flawed In an effort to establish undue prejudice, Plaintiff attempts to recalculate (See Opposition Brief, at 5) the same data concerning reexamination proceedings that was available to this Court during the pendency of at least three previous motions to stay in lawsuits alleging infringement of 1
REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
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the `184 Patent. (See Giant, Doc. #28; Helen of Troy, Doc. #26; Black & Decker, Doc. #243.) These arguments were deemed insufficient by this Court to deny other defendants' requests for a stay. (See Giant, Doc. #28; Helen of Troy, Doc. #26; Black & Decker, Doc. #243.) The identical argument was rejected by this Court in the Energizer case where a stay was granted. (See Energizer, Doc. #33.) Plaintiff's "new" assertions regarding the likely duration of a

reexamination are speculative and built upon demonstrably unreasonable and self-serving assumptions. Plaintiff argues that reexamination of the `186 Patent could take up to five years. However, Plaintiff fails to identify a single reexamination that has actually taken five years or longer to complete. Instead, Plaintiff relies on a self-serving projection of a five year going forward average, without any consideration to the particulars of the reexamination of the `184 Patent. Further, Plaintiff's analysis unjustifiably assumes that the PTO's resources and

productivity will remain static in the face of changing demands. Plaintiff divides the purported backlog of 1,658 cases by the number of certificates issued in 2007 (367) to arrive at approximately 4.5 years. (Declaration of Melody A. Kramer In Support of Opposition to

Defendant's Motion to Stay Pending Outcome of Reexamination Proceedings ("Kramer Decl."), at ¶9.) Plaintiff ignores not just contrary historical data but also statements issued by the PTO to the contrary. In reality, the data relied on by Plaintiff shows, for example, that the PTO granted 174 more certificates in 2007 than it did in 2003, showing a substantial increase in resources and productivity in the area of reexamination proceedings over that period. (See USPTO Annual Report Excerpts attached to Kramer Decl. as Exhibit "A".) More importantly, recent statements by PTO director Jon W. Dudas, Director of the PTO, confirm the PTO's intention to complete reexamination proceedings within two years (not the five years postulated by Plaintiff) and to hire 1,200 additional patent examiners per year through 2013 in order to meet its goals. (Exhibit "1" to the accompanying Declaration of Lisel M. Ferguson In Support of Reply to Plaintiff's Opposition to Defendant's Motion to Stay Pending Outcome of Reexamination Proceedings "Ferguson Decl.".) Mr. Dudas testified that the PTO 2
REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
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hired 1,215 additional patent examiners in 2007, and plans to hire an additional 1,200 patent examiners per year going forward. USPTO Oversight Hearing: Hearing Before the Subcomm. on Courts, the Internet, and Intellectual Property, 110th Cong. (Feb. 27, 2008) (statement of Jon W. Dudas, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent Office Ferguson Decl. Exhibit "1"), at ¶ 3. Mr. Dudas further testified that the PTO aims to close prosecution on all ex-parte reexaminations within two years of filing. Id. at 12. Aside from lacking factual support, Plaintiff's conjecture about the possible length of the PTO reexamination of the `184 patent is also legally unsupported. Plaintiff cites no case in which another court has denied a motion to stay because of the length of PTO reexamination proceedings. Indeed, the case upon which Plaintiff heavily relies, NTP, Inc. v. Research in Motion, Ltd., advises against the course Plaintiff advocates. The court in NTP admonished that "any attempt at suggesting a likely time frame and outcome of the PTO reexamination process is merely speculation." NTP, Inc. v. Research in Motion, Ltd., 397 F. Supp. 2d 785, 788 (E.D. Va. 2005) (denying a stay because the litigation, which was on remand on certain issues following a jury verdict and appeal, was too far advanced). B. The Benefit Of A Stay Far Outweighs Any Prejudice To Plaintiff The benefits of a stay in this action are palpable. It would allow the PTO to determine the validity of the `184 patent and the scope of its claims thus simplifying issues for the Court. Furthermore, it would save the parties unnecessary discovery expenses should the PTO reject the claims. In contrast, much of the delay that Plaintiff complains about is exacerbated by Plaintiff's own actions. 1) Plaintiff Is Responsible For The Delay He Complains Of a. Plaintiff Unreasonably Delayed In Filing This Action

Thus far, Plaintiff himself has been the sole source of delay in this case. Plaintiff did not file suit against Kyocera until 2008 even though Plaintiff first notified Kyocera of alleged infringement of the `128 Patent in July 2005. (See July 7, 2005 letter from Sorensen to Kyocera attached to Ferguson Decl. as Exhibit "2") Plaintiff waited nearly three years to file suit against 3
REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
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Kyocera yet claims that a stay will result in unfair prejudice. b. Plaintiff Is Responsible For Current Delays In The Reexaminations

The crux of Plaintiff's Opposition is that the reexamination of the `184 Patent will take a long time. However, Plaintiff fails to advise this Court that he has been the sole source of delay in the reexaminations of the `184 Patent. After a reexamination is granted the patent owner must file an Owner's Statement within two months, or he can expedite the proceedings by advising the PTO that no statement will be filed. 37 CFR 1.530 (b); Manual of Patent Examining Procedures ("MPEP") §2249, citing, CFR §1.530 (attached as Exhibit "3" to the Ferguson Decl.) The PTO will not proceed to the next stage of a reexamination until the Patentee files the Owner's Statement or the two months expire without a response. Here, in the first reexamination requested by Black & Decker (#90/008,775), Plaintiff purposefully allowed the full two months to expire, failing to submit an Owner's Statement or advise the PTO that he would not file a statement. (See Transaction History for the 90/008,775 reexamination attached as Exhibit "4" to the Ferguson Decl.) Similarly, in the second reexamination filed by Phillips Plastics (#90/008,976), Plaintiff failed to file a statement or advise the PTO that he would not file a statement. (See Transaction History for the Thus, Plaintiff's

90/008,976 reexamination attached as Exhibit "5" to the Ferguson Decl.)

arguments that a stay pending reexamination before the PTO will prejudice Plaintiff because of undue delay are disingenuous because Plaintiff has thus far purposely delayed said proceedings. 2) Sorensen Has Presented No Evidence That He Would Be Prejudiced By A Stay Plaintiff fails to identify a single fact suggesting Plaintiff would be prejudiced if the case is stayed. Rather, Plaintiff alludes to speculative concerns about the possible loss of evidence by Kyocera and loss of the ability to identify and serve all proper defendants. These arguments merely reprise the arguments already rejected by this Court in Black & Decker, Giant, Helen of Troy and Energizer. They should likewise be rejected here. Furthermore, the `184 Patent has expired. This allays concerns of any possible prejudice because:(1) injunctive relief is no longer 4
REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
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available as a remedy; and (2) if the PTO does not invalidate the asserted claim of the `184 Patent, Sorensen will be able to pursue monetary damages for any infringement alleged to have occurred prior to the patent's expiration along with prejudgment interest. Broadcast Innovation, L.L.C. v. Charter Communic'ns, Inc., No. 03-cv-2223-ABJ-BNB, 2006 U.S. Dist. LEXIS 46623, at *32; citing, Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998.) Plaintiff's reliance on Telemac is inapposite. Telemac Corp. v. Teledigital, Inc. et al., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006) (documented failure to preserve evidence suggested that a stay could lead to further loss of information.) Here, Plaintiff merely speculates that Kyocera may loose evidence. If a genuine, documented concern regarding the preservation of evidence arises in the future, Plaintiff can, at that time, move for an exception to the stay. See, e.g., Order Granting Stay Giant, Doc. #27, Energizer, Doc. #33 ("any party may apply to the Court for an exception to the stay if it has specific, valid reasons to believe that it needs to obtain discovery in order to preserve evidence that will otherwise be unavailable after the stay".) Likewise, the mere possibility that Plaintiff might add or substitute a party does not create undue prejudice. Identical arguments were considered and rejected in Giant and Helen of Troy. (See Giant, Doc. #22, at 7-8; Giant, Doc. #28; Helen of Troy; Doc. #19, at 5-6; Helen of Troy, Doc. # 26.) Plaintiff does not articulate any facts making the addition or substitution of parties any more likely in this case than in Black & Decker, Giant, Helen of Troy or Energizer. Accordingly, this argument is no barrier to the issuance of an order staying this case. C. Staying This Action Will Conserve Resources. The Federal Circuit has ruled that "one purpose of the reexamination procedure is to eliminate a trial of the patent claim validity or to facilitate trial of that validity by providing the District Court with the expert view of the PTO if a claim survives the reexamination proceeding." Sorensen v. Black & Decker, 2007 U.S. Dist. LEXIS 466712 at *15-16 (2007); citing Gould v. Control Laser Corp., 705 F.2d 1240, 1242 (Fed. Cir. 1982), cert. denied. Requiring Kyocera to litigate this case while the reexaminations are pending would be contrary to the benefits of shifting the validity issue to the PTO. Other District Courts have listed 5
REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
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many benefits courts and litigants would enjoy as a result of reexamination by the PTO: 1. All prior art presented to the Court will have been first considered by the PTO, with its particular expertise; 2. Many discovery problems relating to the prior art could be alleviated by the PTO examination; 3. In those cases resulting in effective invaliding of the patent, the suit will likely be dismissed; 4. The outcome of the reexamination may encourage a settlement without further use of the court; 5. The record of reexamination will likely be entered at trial, thereby reducing the complexity and length of the litigation; 6. Issues, defenses and evidence will be more easily limited in final pre-trial conferences after reexamination; and 7. The costs will likely be reduced to both parties and the court. Broad. Innovation, L.L.C. v. Charter Communs., Inc., No. 03-cv-2223-ABJ BNB, 2006 U.S. Dist. LEXIS 46623, at *9-10 (quoting "Emhart Industries, Inc. v. Sankyo Seiki Mfg. Co., 3

11 U.S.P.Q.2d 1889, 1890 (N.D. Ill. 1987)). 12 This Court has already agreed with other litigants that reexamination of the `184 Patent 13 will simplify the issues for the Court and conserve resources. (See Black & Decker, Doc. #243; 14 Helen of Troy, Doc. #26; Giant Doc. #28; on record at the February 25, 2008 status conference 15 in Helen of Troy, Energizer, Doc. #33.) This court stated that "the PTO's expert evaluation is 16 likely to be of assistance not only as to the issues of validity, but its understanding of the claims 17 is also likely to aid this Court in the preliminary process of claim construction." Sorensen v. 18 Black & Decker LEXIS 66712 at *16-17. In the Black & Decker case, this Court found a stay to 19 be appropriate to avoid the risk of unnecessary litigation and permit clarification of issues before 20 the Court. Id. at *19. The reasons supporting a stay in the instant case are more compelling as 21 the case is in its very early stages, the `184 patent has now expired and the PTO has now granted 22 two reexamination requests. 23 D. 24 Plaintiff sued Kyocera for patent infringement. In order to preserve its rights Kyocera 25 filed counterclaims for declaratory judgment of non-infringement and patent invalidity. 26 Kyocera's counterclaims are compulsory in nature. Fed. R. Civ. P. 13(a). Accordingly, Kyocera 27 had to assert the declaratory judgment counterclaims or be barred from doing so at a future date. 6
REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
Case No. 80-0411 BTM (CAB) 109934/000230/910381.01

Defendants Are Not Estopped From Requesting A Stay.

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Therefore, Plaintiff's argument that Kyocera is estopped from requesting a stay by asserting compulsory counterclaims is disingenuous. III. CONCLUSION There is hardly a more appropriate case than this in which to invoke a stay. Plaintiff has failed to demonstrate any prejudice due to alleged "delay." Plaintiff has been responsible for all documented delays in the reexamination proceedings. The reexaminations will simplify issues for the Court. In addition, discovery has not commenced and a stay will likely prevent the unnecessary expenditure of resources. Further, Plaintiff will not be irreparably harmed by a stay because the `184 Patent has expired. Thus, a stay would not prejudice Plaintiff in any way. For these reasons and those set forth in the moving papers this Court should order this case stayed pending completion of the PTO's two reexaminations of the `184 Patent. DATED: April 25, 2008 PROCOPIO, CORY, HARGREAVES & SAVITCH LLP

By:

s/Lisel M. Ferguson Anthony J. Dain Victor M. Felix Lisel M. Ferguson Counsel for Defendants and Counterclaimants E-mail: [email protected]

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REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS
Case No. 80-0411 BTM (CAB) 109934/000230/910381.01