Realnetworks, Inc. et al v. DVD Copy Control Association, Inc. et al

Filing 442

Memorandum in Opposition re 433 MOTION for Extension of Time to File Answer Studios Motion Pursuant to Civ. L.R. 6-3 to Extend Time to Respond to RealNetworks' Second Amended Complaint RealNetworks' Opposition to Defendants' Administrative Motion for an Extension of Time to Respond to RealNetworks' Second Amended Complaint filed byRealnetworks Home Entertainment, Inc.(a Delaware corporation), Realnetworks, Inc.. (Bal, Colleen) (Filed on 7/2/2009)

Realnetworks, Inc. et al v. DVD Copy Control Association, Inc. et al

Doc. 442

Case3:08-cv-04548-MHP Document442

Filed07/02/09 Page1 of 5

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

JAMES A. DiBOISE, State Bar No. 83296 Email: [e-mail] LEO CUNNINGHAM, State Bar No. 121605 Email: [e-mail] COLLEEN BAL, State Bar No. 167637 Email: [e-mail] MICHAEL A. BERTA, State Bar No. 194650 Email: [e-mail] TRACY TOSH LANE, State Bar No. 184666 Email: [e-mail] WILSON SONSINI GOODRICH & ROSATI Professional Corporation One Market Street Spear Tower, Suite 3300 San Francisco, CA 94105 Attorneys for Plaintiffs and Counterclaim Defendants REALNETWORKS, INC. and REALNETWORKS HOME ENTERTAINMENT, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA REALNETWORKS, INC., a Washington corporation; and REALNETWORKS HOME ENTERTAINMENT, INC., a Delaware corporation, Plaintiffs, v. DVD COPY CONTROL ASSOCIATION, INC., a Delaware nonprofit corporation, DISNEY ENTERPRISES, INC., a Delaware corporation; PARAMOUNT PICTURES CORP., a Delaware corporation; SONY PICTURES ENTER., INC., a Delaware corporation; TWENTIETH CENTURY FOX FILM CORP., a Delaware corporation; NBC UNIVERSAL, INC., a Delaware corporation; WARNER BROS. ENTER. INC., a Delaware corporation; and VIACOM, Inc., a Delaware corporation, Defendants. AND RELATED CASES Case Nos. C08 04548 MHP; C08 04719 MHP REALNETWORKS' OPPOSITION TO DEFENDANTS' ADMINISTRATIVE MOTION FOR EXTENSION OF TIME TO RESPOND TO REALNETWORKS' SECOND AMENDED COMPLAINT

REAL'S OPP. TO DEFS.' ADMIN. MOT. FOR EXTENSION TO RESPOND TO REAL'S SECOND AMENDED COMPLAINT CASE NOS. 08-cv-04548 MHP; 08-cv-04179 MHP
Dockets.Justia.com

Case3:08-cv-04548-MHP Document442

Filed07/02/09 Page2 of 5

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

The Defendants' administrative requests for a further extension of time to answer RealNetworks, Inc. and RealNetworks Home Entertainment, Inc.'s ("Real's") antitrust claims should be denied. Missing from Defendants' briefs is an acknowledgment that Real already gave Defendants a six-week extension to file a response to Real's claims, providing the Defendants with a total of more than two months to respond.1 Steer Decl, Exh. 1 (Dkt. 414) (stipulation and order extending time); id. at ¶2 (admitting that Real filed antitrust claims on May 13, 2009). Two months is more than enough time for the numerous Studio and DVD CCA counsel to research relevant legal issues, consider strategic options and prepare a well-planned response. There is no legitimate basis for the further delay that Defendants seek to introduce into the schedule. Given that Defendants have already obtained from Real a significant extension of time to respond, their current request for even more time is not driven by any actual need. Instead, Defendants seek an open-ended extension, tethered to a single event that has nothing to do with the merits of Real's antitrust claims: this Court's decision on Defendants' preliminary injunction motion. In short, Defendants seek delay for delay's sake, presumably because they perceive a strategic advantage in putting off for as long as possible adjudication of Real's antitrust claims against them. Defendants' principal "justification" for the requested extension is that Real's antitrust claims supposedly "depend upon the construction of the CSS License." Studio Admin. Req. at 1. They therefore contend that it would be more efficient to permit them to wait to file theoretical Rule 12 motions to dismiss the claims until after the Court issues its preliminary injunction ruling. But this justification has no merit. Real's Second Amended Complaint makes clear that the illegality of Defendants' conduct is not dependant upon judicial interpretation of the CSS Real granted an extension to the DVD CCA to respond to Real's antitrust counterclaims, which were filed as of right, and a separate extension to the Studio Defendants to respond to Real's motion for leave to amend the complaint to add the antitrust claims against the Studio Defendants. Because the Studio Defendants have filed a statement of non-opposition to the motion for leave to amend and are seeking to coordinate their time to respond to Real's antitrust claims with the DVD CCA's time to respond, Real treats the Defendants' response time together in this opposition.
REAL'S OPP. TO DEFS.' ADMIN. MOT. FOR EXTENSION TO RESPOND TO REAL'S SECOND AMENDED COMPLAINT CASE NOS. 08-cv-04548 MHP; 08-cv-04179 MHP
1

-1-

Case3:08-cv-04548-MHP Document442

Filed07/02/09 Page3 of 5

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

License Agreement. See, e.g., Second Amended Complaint at ¶128. As Real has pleaded, the Defendants' have engaged in per se illegal behavior, regardless of the Court's preliminary injunction ruling. Moreover, the preliminary injunction ruling is not by its terms a final adjudication, and given the importance of this case to all concerned, will likely be appealed by one or more of the parties in any event. Permitting the Defendants to delay responding to Real's antitrust claims until after a preliminary ruling would therefore not achieve the certainty concerning the construction of the CSS License Agreement that Defendants claim to seek, and would prejudice Real to no purpose. Real respectfully requests that the Court deny the Defendants' administrative requests for a further indefinite extension of time. I. Real's Antitrust Claims Do Not Turn On the Court's Preliminary Injunction Ruling The Defendants' contention that Real's antitrust claims depend on the Court's construction of the CSS Agreement is incorrect. Real alleges that the Studios and DVD CCA agreed to claim that the CSS License Agreement prohibits CSS licensees from competing in the market for technology that enables consumers to make secure back-up copies of DVDs that they own.2 This is an illegal group boycott. See, e.g., [Proposed] Second Amended Complaint, ¶¶3954, 77-85, 107-108, 118-129; Fashion Originator's Guild v. Federal Trade Commission, 312 U.S. 457, 467-68 (1941). As alleged, the illegality of the Studios and DVD CCA's conduct does not depend on judicial interpretation of the CSS License Agreement, because what is at issue is the Defendants' conduct, not the meaning of the CSS License Agreement.3 Whether or not the Court interprets In its fourth cause of action, Real also alleges a collective refusal deal under Section 1 of the Sherman Act against the Studio Defendants only based on the Studios' collusive agreement to refuse to negotiate with Real in advance of Real's release of the RealDVD product. Nor does the illegality of Defendants' conduct turn on adjudication of the "fair use" issue. Even if Real needed a license to the DVD content from the Studios, the law does not permit the Studios to refuse to negotiate those rights except on collective terms. See Fashion Originator's Guild, 312 U.S. at 468.
REAL'S OPP. TO DEFS.' ADMIN. MOT. FOR EXTENSION TO RESPOND TO REAL'S SECOND AMENDED COMPLAINT CASE NOS. 08-cv-04548 MHP; 08-cv-04179 MHP
3 2

-2-

Case3:08-cv-04548-MHP Document442

Filed07/02/09 Page4 of 5

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

the CSS License Agreement in the Defendants' favor for purposes of the preliminary injunction ruling, the Defendants' group conduct is nevertheless per se illegal. As alleged by Real: [T]he Studio Defendants' and DVD CCA's interpretation of the CSS License Agreement, by which they have denied RealNetworks the right to use the encryption technology that it has licensed from the DVD CCA unless and until RealNetworks assents to the DVD CCA's and the Studio Defendants' demands that it exit the relevant market, have rendered the CSS License Agreement void under Section 1 (if their interpretation is held to be correct), or amounted to a de facto agreement in violation of Section 1 (if their interpretation is held not to be correct). [Proposed] Second Amended Complaint at ¶128; see also id. at ¶¶83-84. The Defendants cite incomplete snippets of the allegations against them to support their claim that Real's antitrust case stands or falls on the Court's interpretation of the CSS Agreement. Studios' Admin. Req. at 2. However, read in their entirety, the passages quoted by Defendants make clear that the Defendants' collective interpretation of the CSS Agreement and corresponding collective conduct are prohibited by the antitrust laws regardless of the Court's ultimate interpretation of the CSS License Agreement. [Proposed] Second Amended Complaint, ¶¶83-84; Motion for Leave at 3. In short, there is no need to delay litigation of Real's claims based on any supposed dependence on construction of the CSS License Agreement. Moreover, the Defendants' suggestion that the Court's preliminary injunction ruling will resolve all uncertainty regarding the ultimate construction of the CSS Agreement, allowing them to file more "efficient" motions to dismiss, ignores reality. A preliminary injunction ruling is not a final ruling on the merits and is an appealable ruling in any event. Thus, even if construction of the CSS License Agreement were relevant to the antitrust claims, a preliminary injunction ruling could not afford any finality sufficient to justify the delay sought by the Defendants. Finally, if the Defendants for whatever reason feel they need to see the Court's preliminary injunction ruling before attacking Real's antitrust claims on the merits, there is a much more straightforward solution to the one they offer. The Defendants should answer Real's claims forthwith. If, after receiving the Court's preliminary injunction ruling they are still interested in attacking Real's antitrust claims on the merits, they have not lost the ability to do so: they can simply file Rule 12(c) motions for judgment on the pleadings. There is no need to delay adjudication of Real's antitrust claims.
REAL'S OPP. TO DEFS.' ADMIN. MOT. FOR EXTENSION TO RESPOND TO REAL'S SECOND AMENDED COMPLAINT CASE NOS. 08-cv-04548 MHP; 08-cv-04179 MHP

-3-

Case3:08-cv-04548-MHP Document442

Filed07/02/09 Page5 of 5

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

II.

Delaying the Antitrust Case Would Allow Defendants To Game The System and Would Be Prejudicial To Real Equally unavailing is the Defendants' claim that the open-ended deadline they seek will

promote "efficiency" without prejudicing Real. There is no efficiency in keeping the rest of the case on ice, particularly where the antitrust claims do not depend on the preliminary injunction ruling. The delay sought by Defendants is highly prejudicial to Real: there is a great deal of work to be done in connection with the antitrust claims and no reason to put up artificial barriers to Real's prosecution of those claims. The prejudice to Real of delay is particularly profound where the relief Real seeks against the Defendants includes an injunction barring them from illegally seeking to stifle competition in the market for products that compete with the Studios, including competition from Real. The fact that Real took the time to carefully research and draft its antitrust claims before filing them is no reason to put them on hold indefinitely, as Defendants contend. CONCLUSION For the foregoing reasons, the Studio Defendants' and DVD CCA's requests for extensions of time to respond to Real's [Proposed] Second Amended Complaint should be denied.

Date: July 2, 2009

WILSON SONSINI GOODRICH & ROSATI Professional Corporation By:__/s/ Colleen Bal Colleen Bal Attorneys for Plaintiffs and Counterclaim Defendants REAL NETWORKS, INC. and REALNETWORKS HOME ENTERTAINMENT, INC.

REAL'S OPP. TO DEFS.' ADMIN. MOT. FOR EXTENSION TO RESPOND TO REAL'S SECOND AMENDED COMPLAINT CASE NOS. 08-cv-04548 MHP; 08-cv-04179 MHP

-4-