Netflix, Inc. v. Blockbuster, Inc.

Filing 17

JOINT CASE MANAGEMENT STATEMENT filed by Netflix, Inc., Blockbuster, Inc., Netflix, Inc., Blockbuster, Inc.. (Attachments: # 1 Exhibit Signature Page)(O'Brien, William) (Filed on 6/22/2006)

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Netflix, Inc. v. Blockbuster, Inc. Doc. 17 Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 1 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP KEKER & VAN NEST, LLP Jeffrey R. Chanin (No. 103649) Daralyn J. Durie (No. 169825) Dorothy McLaughlin (No. 229453) Kevin T. Reed (No. 240799) 710 Sansome Street San Francisco, CA 94111-5400 Telephone: (415) 391-5400 Facsimile: (415) 397-7188 Email: jrc@kvn.com ddurie@kvn.com amb@kvn.com kreed@kvn.com Attorneys for Plaintiff and Counterdefendant, Netflix, Inc. ALSCHULER GROSSMAN STEIN & KAHAN LLP Marshall B. Grossman (No. 35958) William J. O'Brien (No. 99526) Tony D. Chen (No. 176635) Dominique N. Thomas (No. 231464) The Water Garden 1620 26th Street Fourth Floor, North Tower Santa Monica, CA 90404-4060 Telephone: 310-907-1000 Facsimile: 310-907-2000 Email: mgrossman@agsk.com wobrien@agsk.com tchen@agsk.com dthomas@agsk.com Attorneys for Defendant and Counterclaimant, Blockbuster Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA NETFLIX, INC., a Delaware corporation, Plaintiff, vs. BLOCKBUSTER INC., a Delaware corporation, DOES 1-50, Defendants. AND RELATED COUNTER ACTION. JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Dockets.Justia.com CASE NO. C 06 2361 WHA JOINT CASE MANAGEMENT STATEMENT Complaint Filed: April 4, 2006 Case Management Conference Date: June 29, 2006 Time: 11:00 a.m. Courtroom: 9, 19th Floor Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 2 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP A. Topics in Court's Supplemental Order The parties provide the following statements on the subjects designated in Paragraph 2 of the Court's Supplemental Order ("Order") filed May 2, 2006 (Document 8 in the Court's file): 1. Jurisdiction and Venue: This Court has subject-matter jurisdiction under 28 U.S.C. 1331, 1337(a), and 1338(a) and 15 U.S.C. 26. The parties know of no issue regarding personal jurisdiction or venue. 2. Claims and Defenses and Related Proceedings: a. Netflix's Claims and Defenses: Netflix alleges that Blockbuster infringes two Netflix patents: U.S. Patent No. 7,024,381 (the "'381 Patent"), entitled "Approach for Renting Items to Customers" issued on April 4, 2006, and U.S. Patent No. 6,584,450 (the "'450 Patent"), entitled "Method and Apparatus for Renting Items," issued on June 24, 2003. At a very high level, the patents relate to a method for subscription-based online DVD rental that allows subscribers to keep the DVDs they rent for as long as they wish without incurring any late fees, to obtain new DVDs upon return of those they have already watched without incurring additional charges, and to prioritize and reprioritize their own personal list--a dynamic queue--of DVDs to be rented. Netflix alleges that Blockbuster willfully infringed the `450 patent. Netflix seeks damages for past infringement of its patents, and an injunction enjoining such infringement in the future. b. Blockbuster's Claims and Defenses: Blockbuster alleges defenses of non-infringement, invalidity, and unenforceability of the two patents asserted by Netflix, as well as patent misuse, laches, and estoppel. Blockbuster's grounds for these defenses include allegations that the patents are anticipated by and obvious in view of prior art and that Netflix's inventors and patent attorneys withheld known, material prior art from the U.S. Patent and Trademark Office in violation of the duty of candor and good 2 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 3 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP faith requiring disclosure of such art. Blockbuster also alleges that Netflix unreasonably and prejudicially delayed its assertion of its first ("'450") patent. Blockbuster alleges that Netflix engaged in an improper scheme that included obtaining a first patent without disclosing any prior art whatsoever to the Patent Office, acquiescing in Blockbuster's expenditure of millions of dollars to enter and develop the online DVD rental market, and then obtaining a second ("'381") patent by flooding the Patent Office with more than one-hundred prior-art references while still concealing known, material prior art. Blockbuster also asserts antitrust counterclaims for monopolization and attempted monopolization in violation of Section 2 of the Sherman Act, as well as counterclaims for declaratory judgment. In its antitrust counterclaims, Blockbuster alleges that Netflix fraudulently obtained the patents that it is asserting in this case, in violation of Walker Process Equipment, Inc. v. Food Machinery and Chemical Corp., 382 U.S. 172, 17577 (1965), and that Netflix's assertion of the patents against Blockbuster constitutes sham litigation actionable under Professional Real Estate Investors, Inc. v. Columbia Pictures Industry, Inc., 508 U.S. 49, 56-61 (1993). In its declaratory-judgment counterclaims, Blockbuster seeks a judgment of non-infringement, invalidity, and unenforceability of each of the asserted Netflix patents. c. 3. Related Proceedings: There are no "Related Cases" as defined in L.R. 3-12(a). Proceedings to Date: a. Netflix filed its Complaint on April 4, 2006, serving the Summons and Complaint on April 20. On June 8, counsel for the parties timely conferred under Federal Rule Civil Procedure 26(f). Blockbuster filed and served its Answer and Counterclaims on June 13, 2006. 3 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 4 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP b. The parties have stipulated to extend the time for exchange of documents in conjunction with initial disclosures under Rule 26(a) by thirty days to July 21, 2006 and to otherwise extend the time for disclosures to June 26, 2006. 4. 5. Pending Motions: No motions are pending. Expected Major Motions Before Trial: Netflix expects to file a motion for summary judgment of infringement and may bring a motion for summary judgment of validity. Netflix also expects to move to dismiss or in the alternative to sever and stay Blockbuster's antitrust counterclaim, and to strike Blockbuster's allegations of inequitable conduct. Blockbuster expects to file one or more motions for summary judgment of invalidity as well as non-infringement of some or all of Netflix's patent claims. 6. 7. Expected Addition or Deletion of Parties: Neither side expects Anticipated Evidentiary, Claim-Construction, or Classparties to be added or deleted at this time. Certification Hearings: The parties anticipate a Markman claim construction hearing in this case but do not presently expect to present testimony at the hearing. Counsel do not presently anticipate other evidentiary hearings. This is not a class action. 8. Compliance with Evidence-Preservation Requirements: The parties have complied with the evidence preservation requirements of Paragraph 4 of the Court's Order. 9. Stipulated Discovery Limits Different from the Federal Rules: a. Netflix believes that the presumptive limit of ten depositions per side is more than adequate for this case, absent some further showing of good cause to exceed that limit. Blockbuster seeks to increase the number of depositions to 15 depositions per side, without precluding either side from requesting further depositions in the future should 4 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 5 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP circumstances support such a request. Blockbuster believes that an increase to 15 depositions is appropriate because of the complexity of this case, including the expected need to depose numerous persons knowledgeable about prior art of multiple types relevant to Netflix's claimed inventions, ranging from subscription libraries, cable and satellite television services, pay television services, and other video and film subscription services to video rental stores and e-commerce businesses. In addition, Blockbuster will be required to depose the three inventors named in the subject patents, other past and present Netflix personnel familiar with the development and features of the Netflix service, the patent attorneys who prosecuted the applications for the subject patents, fact witnesses on damage and antitrust issues, and multiple expert witnesses. b. The parties agree that each side may take up to 3 depositions of 14 hours each. Netflix believes that all other depositions can be concluded within 7 hours. Blockbuster believes it is possible that some other depositions will reasonably require more than 7 hours, in which case Blockbuster's counsel will confer with Netflix's counsel in an attempt to reach agreement on the appropriate length of such depositions. 10. Proposed Deadlines and Court Dates: a. Blockbuster proposes that its time to file preliminary invalidity contentions and produce supporting documents as provided in Patent Local Rules 3-3 and 3-4 be extended to October 23, 2006. While Blockbuster believes that it has already identified prior art sufficient to invalidate the 151 claims of Netflix's asserted business-method patents, much of the important prior art lies outside traditional prior art sources like issued patents and published patent applications, making the prior art in this case particularly time-consuming to locate and document. To fully develop its invalidity defenses, Blockbuster is finding it necessary to identify and 5 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 6 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP locate numerous people who were involved in prior-art subscription libraries, video rental businesses, e-commerce businesses and other unpatented priorart activities, to contact and interview these people, and then to obtain and analyze documents related to their relevant activities, which may be buried deep in storage facilities or other obscure locations. As a result, more time than usual will be required to assemble complete preliminary invalidity contentions and supporting documents. b. Netflix proposes that the Markman hearing be held on or around January 19, 2007. Blockbuster proposes that the hearing be held on or after March 12, 2007. c. d. e. The parties propose that non-expert discovery be cut off The parties propose that the pretrial conference be Netflix proposes that the Court set a trial date in July, ninety days before the trial date. conducted at least fifteen days prior to trial. 2006. Blockbuster proposes that the trial be in or after January 2008. Netflix presently estimates that the trial is likely to require approximately 10 court days, while Blockbuster estimates that it will require 10 to 15 court days. f. Except as provided above, the parties propose that the Court follow the timing indicated in the Patent Local Rules and the Federal Rules of Civil Procedure. 11. 12. Jury Demands: Both sides have properly demanded a jury trial. Relief Sought: Netflix seeks damages from Blockbuster for alleged patent infringement and an injunction. Blockbuster seeks declaratory judgment for non-infringement, invalidity, and unenforceability of Netflix's asserted patents and seeks damages from Netflix for alleged antitrust violations. Both sides seek attorneys' fees and costs of suit. Neither side has had an opportunity to formulate detailed contentions concerning damages. 6 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 7 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP 13. ADR: The parties have conferred about ADR procedures and agree that private mediation is the likely procedure to assist settlement. Because of the complexity of the case, the parties believe that mediation would be premature at this early stage and propose to engage in mediation within 180 days. 14. 15. Consent to Assignment to Magistrate Judge: The parties are not Service List: The following is a service list for all counsel, willing to consent to the assignment of the case to a magistrate judge. including telephone and facsimile numbers: Jeffrey R. Chanin Daralyn J. Durie Dorothy McLaughlin Kevin T. Reed Keker & Van Nest, LLP 710 Sansome Street San Francisco, CA 94111-5400 Telephone: (415) 391-5400 Facsimile: (415) 397-7188 Email: jrc@kvn.com ddurie@kvn.com dmclaughlin@kvn.com kreed@kvn.com Marshall B. Grossman William J. O'Brien Tony D. Chen Dominique N. Thomas Alschuler Grossman Stein & Kahan LLP The Water Garden 1620 26th Street Fourth Floor, North Tower Santa Monica, CA 90404-4060 Telephone: 310-907-1000 Facsimile: 310-907-2000 Email: mgrossman@agsk.com wobrien@agsk.com tchen@agsk.com dthomas@agsk.com 16. Other Items in Local Rule 16-10: Except as set forth above, the parties propose that the matters specified in Civil Local Rule 16-10(b) be scheduled in accordance with the Local Rules, the Federal Rules of Civil Procedure, and the Guidelines for Trial and Final Pretrial Conference in civil jury cases before the Honorable William Alsup. 7 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 8 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP B. Topics in Patent Local Rule 2-1(a) The parties provide the following statements concerning the topics listed in Patent Local Rule 2-1(a): 1. 2. 3. no such limits. 4. Order of Presentation at Claim Construction Hearing: Netflix proposes that the Court adopt its standard procedures regarding the order of presentation at the hearing, such that Netflix will make an initial presentation, followed by Blockbuster, followed by any rebuttal from Netflix. Blockbuster proposes that each side be allowed to make the first presentation as to half of the claim phrases to be construed, with the other side responding and with rebuttal and surrebuttal permitted as reasonably necessary. 5. C. Claim Construction Prehearing Conference: The parties do not believe that such a conference will be necessary. Protective Order In accordance with Federal Rule of Civil Procedure 26(f), counsel have conferred about a stipulated protective order to protect trade secrets and confidential and proprietary information provided in discovery. The parties agree that the protective order should provide two levels of confidentiality ("Confidential" and "Attorneys Only"). Netflix proposes that the Attorneys' Only category should be limited to outside counsel. Blockbuster proposes that one mutually acceptable in-house attorney for each side have access to Attorneys Only information, after signing an appropriate undertaking to prevent inappropriate disclosure or use of such information. Blockbuster and its in-house lawyers take 8 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA Proposed Modification of Patent Local Rule Deadlines: See Live Testimony at Claim Construction Hearing: See Limits on Claim Construction Discovery: The parties propose Paragraph A10 above. Paragraph A7 above. Case 3:06-cv-02361-WHA Document 17 Filed 06/22/2006 Page 9 of 9 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 28 ALSCHULER GROSSMAN STEIN & KAHAN LLP very seriously the important professional responsibilities of in-house counsel to their client and its shareholders, including duties to make prudent decisions, provide legal advice, and exercise direction and control over this important and costly litigation. Blockbuster believes that the requested access is essential to permit its in-house counsel to properly fulfill these responsibilities. DATED: June 22, 2006 KEKER & VAN NEST, LLP By Daralyn J. Durie Attorneys for Plaintiff and Counterdefendant, Netflix, Inc. DATED: June 22, 2006 ALSCHULER GROSSMAN STEIN & KAHAN LLP By /S/ William J. O'Brien Attorneys for Defendant and Counterclaimant, Blockbuster Inc. 9 JOINT CASE MANAGEMENT STATEMENT C 06 2361 WHA

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