Free Statement - District Court of Arizona - Arizona

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LEWIS AND ROCA LLP 40 North Central Avenue Phoenix, Arizona 85004-4429 Facsimile (602) 734-3746 Telephone (602) 262-5311 Peter D. Baird (001978) [email protected] Robert H. McKirgan (011636) [email protected] Richard A. Halloran (013858) [email protected] Kimberly A. Demarchi (020428) [email protected] Attorneys for POST Integrations, Inc., et al.

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA ) ) Plaintiff, ) vs. ) ) Nelcela, Inc., et al., ) ) Defendants. ) ) ) And Related Counterclaims, Cross-Claims, ) and Third-Party Claims. ) No. CIV 02-1954-PHX-MHM STATEMENT RE JOINT PARTIES PROPOSED INTERIM CASE MANAGEMENT SCHEDULE

9 Merchant Transaction Systems, Inc., 10 11 12 13 14 15 16

After meeting and conferring, the parties have been unable to reach agreement on

17 a proposed schedule for resolving the issues discussed at the August 15, 2007 hearing: 18 (1) Nelcela's argument that the software owned by Lexcel is not copyrightable; and (2) 19 Nelcela's statute of limitations defense to Lexcel's claims of copyright infringement. 20 Accordingly, the parties have agreed to each file a proposed schedule accompanied by a 21 brief explanation of their respective positions. 22 I. 23 Areas of Disagreement Between the Parties. Simultaneous Briefing. The Nelcela Parties have suggested simultaneous briefing

24 on both the analytic dissection and statute of limitations issues. Rather than have 25 duplicative briefs, the Joint Parties have suggested that Nelcela take the lead in briefing 26 its analytic dissection and statute of limitations positions, and the Joint Parties shall 27 simply respond to each. This will reduce the volume of briefing for the Court, without 28 disadvantage to the Nelcela Parties.
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Additional Discovery on Statute of Limitations. In response to Nelcela's contention that Lexcel's infringement claims are barred by the statute of limitations, Lexcel has contended: (1) that Nelcela is estopped from asserting the statute of limitations because of its own conduct inducing Lexcel not to sue by promising not to use the software and (2) that Nelcela has engaged in acts of infringement within the threeyear period prior to Lexcel's suit in June 2005. (Docket no. 351 at 18-20.) Based on that information, this Court denied Nelcela's prior motion for summary judgment against Lexcel on the statute of limitations issue and reserved that issue for Phase II of these proceedings. (See Docket no. 324 at 11-15 (Nelcela's motion for summary judgment against Lexcel); Docket no. 383 at 31 (denying that motion).) Accordingly, the statute of limitations issue was not tried during Phase I, and discovery on the issue remains incomplete, as Nelcela pointed out in the Joint Proposed Pretrial Order filed before the Phase I trial. (Docket no. 424 at 14 ("Nelcela believes that discovery on the Statute(s) of Limitation was not concluded and must be done prior to trial.").) The Joint Parties seek only the opportunity to conduct limited discovery as necessary to respond to Nelcela's argument that it is entitled to summary judgment on the statute of limitations issue, and our proposed schedule incorporates a brief period (until October 15) for expedited discovery limited to that issue. In order to facilitate that process, the Joint Parties have issued subpoenas to two non-parties who they believe Nelcela caused to use the Lexcel software during the three years prior to Lexcel's suit in June 2005. The Joint Parties' understanding of the hearing on August 15, 2007 was that the Court would permit limited discovery on an expedited schedule to be proposed by the parties, and the issuance of the subpoenas was intended only to facilitate speedy resolution of this issue. Any additional discovery during this interim phase would be limited to document production and requests between the parties, and to follow up depositions of the two non-parties to which the subpoenas have been issued. Even with time for such discovery, the Joint Parties' proposed schedule would permit complete briefing of the statute of limitations by November 5, 2007. 2
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Identification of Works and Elements Allegedly Infringed. The ordinary process for resolving analytic dissection issues is for the copyright holder to identify the works and elements thereof that have allegedly been copied, and for the defendant in the infringement action to respond by identifying which of the works or elements at issue are not copyrightable. This process enhances the clarity and efficiency of the briefing by ensuring that all parties are clear about which specific instances of alleged copying are at issue. The Joint Parties' proposed schedule incorporates such a statement, with Nelcela's brief to follow within two weeks. II. Joint Parties' Proposed Schedule. A. Analytic Dissection. 1. Lexcel shall file with this Court by August 31, 2007 a statement

identifying: (a) the works and elements thereof alleged to have been copied by the Nelcela Parties. 2. Nelcela shall file an opening brief by September 14, 2007, setting

forth their arguments as to why the software identified by Lexcel is not copyrightable. 3. B. The Joint Parties shall respond by September 28, 2007.

Statute of Limitations. 1. Discovery shall be limited to (1) document production and requests

between the parties and (2) subpoenas to, and depositions of, Electronic Payment Exchange (aka "EPX") and Phoenix Payment Systems, which shall be concluded by October 15, 2007. 2. The Nelcela Parties shall file a brief regarding their statute of

limitations defense against Lexcel by October 15, 2007; the Joint Parties shall respond by October 29, 2007; and the Nelcela Parties shall reply by November 5, 2007. RESPECTFULLY SUBMITTED this 22nd day of August.

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BRYAN CAVE LLP By s/ George C. Chen George C. Chen Attorneys for Lexcel, Inc. and Lexcel Solutions, Inc. LEWIS AND ROCA LLP By __s/ Kimberly A. Demarchi Peter D. Baird Robert H. McKirgan Richard A. Halloran Kimberly A. Demarchi Attorneys for POST Integrations, Inc., Ebocom, Inc., Mary L. Gerdts, and Douglas McKinney

DICARLO CASERTA & PHELPS PLLC Nicholas J. DiCarlo and LAW OFFICES OF WILLIAM McKINNON By s/ William McKinnon William McKinnon Attorneys for Merchant Transaction Systems, Inc. and Gene and Tone Clothier

CERTIFICATE OF SERVICE I hereby certify that on August 22, 2007, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing.

s/

Debi Garrett

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