Intellectual Ventures II LLC v. Nextel Operations Inc. et al

Filing 162

MEMORANDUM AND ORDER (please see order for details). Signed by Judge Leonard P. Stark on 9/8/2014.

UNITED STATES DISTRICT COURT
DISTRICT OF DELAWARE

INTELLECTUAL VENTURES I LLC,
Plaintiff,
v.

C.A. No. 12-193-LPS

AT&T MOBILITY LLC; AT&T
MOBILITY II LLC; NEW CINGULAR
WIRELESS SERVICES, INC.; SBC
INTERNET SERVICES, INC.; and
WAYPORT, INC.,
Defendants.
INTELLECTUAL VENTURES II LLC,
Plaintiff,
v.

C.A. No. 13-1631-LPS

AT&T MOBILITY LLC; AT&T
MOBILITY II LLC; NEW CINGULAR
WIRELESS SERVICES, INC.; SBC
INTERNET SERVICES, INC.; and
WAYPORT, INC.,
Defendants.
INTELLECTUAL VENTURES I LLC,
Plaintiff,
C.A. No. 13-1634-LPS

v.
NEXTEL OPERATIONS INC.; and
SPRINT SPECTRUM LP,
Defendants.

INTELLECTUAL VENTURES II LLC,
Plaintiff,
C.A. No. 13-1635-LPS

v.
NEXTEL OPERATIONS INC.; and
SPRINT SPECTRUM LP,
Defendants.
INTELLECTUAL VENTURES I LLC;
and INTELLECTUAL VENTURES II
LLC,
Plaintiffs,

C.A. No. 13-1668-LPS

v.
AT&T MOBILITY LLC; AT&T
MOBILITY II LLC; NEW CINGULAR
WIRELESS SERVICES, INC.,
Defendants.
INTELLECTUAL VENTURES I LLC;
and INTELLECTUAL VENTURES II
LLC,
Plaintiffs,
v.

C.A. No. 13-1669-LPS

CRICKET COMMUNICATIONS INC.,
Defendant.

INTELLECTUAL VENTURES I LLC;
and INTELLECTUAL VENTURES II
LLC,
Plaintiffs,
C.A. No. 13-1670-LPS

v.
NEXTEL OPERATIONS INC.; and
SPRINT SPECTRUM LP,
Defendants.
INTELLECTUAL VENTURES I LLC;
and INTELLECTUAL VENTURES II
LLC,
Plaintiffs,
v.

C.A. No. 13-1671-LPS

T-Mobile USA Inc.; and T-MOBILE
US, Inc.
Defendants.
INTELLECTUAL VENTURES I LLC;
and INTELLECTUAL VENTURES II
LLC,
Plaintiffs,
C.A. No. 13-1672-LPS

v.
UNITED STATES CELLULAR CORP.,
Defendant.

MEMORANDUM ORDER

At Wilmington this 8th day of September, 2014:
Having reviewed the parties' filings related to Sierra Wireless America Inc.' s ("Sierra")
Motion to Intervene (C.A. No. 12-193-LPS D.I. 200, 201, 216, 225; C.A. No. 13-1634-LPS D.I.
113; 114, 126, 133); Ericsson Inc. and Telefonaktiebolaget LM Ericsson's ("Ericsson")
(collectively, "Intervenors") Motions to Intervene (see e.g., C.A. No. 13-1668-LPS D.I. 32, 34,
39, 40); Plaintiff Intellectual Ventures I LLC ("IV I") and Intellectual Ventures II LLC's ("IV
II") (collectively, "N" or "Plaintiffs") Motions for Leave to Amend (see, e.g., C.A. No. 12-193LPS D.I. 203, 218, 230); Nextel Operations Inc., Sprint Spectrum LP (collectively, "Nextel"),
United States Cellular Corporation, AT&T Mobility LLC, AT&T Mobility II LLC, New
Cingular Wireless Services Inc., Cricket Communications Inc., Leap Wireless Int'l, Inc., 1
T-Mobile USA Inc., T-Mobile US, Inc.'s (collectively, "Defendants") Motions to Sever (see,

e.g., C.A. No. 13-1668-LPS D.I. 12, 13, 17, 20); and Nextel's Motion to Redact (C.A. No. 131634 D.I. 130),
IT IS HEREBY ORDERED that, for the reasons stated below, Intervenors' motions (C.A.

No. 12-193-LPS D.I. 200; C.A. No. 13-1634-LPS D.I. 113; C.A. No. 13-1668-LPS D.I. 32; C.A.
No. 13-1669-LPS D.I. 33; C.A. No. 13-1670-LPS D.I. 33; C.A. No. 13-1671-LPS D.I. 32; C.A.
No. 13-1672-LPS D.I. 31) are GRANTED; Plaintiffs' motions for leave to amend (C.A. No. 12193-LPS D.I. 203; C.A. No. 13-1634-LPS D.I. 115; C.A. No. 13-1635-LPS D.I. 85) are
GRANTED; Defendants' motions to sever (C.A. 13-1668-LPS D.I. 12; C.A. No. 13-1669-LPS

1

Plaintiffs' claims against Leap Wireless International, Inc. have been dismissed pursuant
to the joint stipulation of the parties filed on December 19, 2013. (C.A. No. 13-1669-LPS D.I.
14)

D.I. 12; C.A. No. 13-1670-LPS D.I. 12; C.A. No. 13-1671-LPS D.I. 11; C.A. No. 13-1672-LPS
D.I. 10)) are GRANTED; and Nextel's unopposed motion to redact (12-193-LPS D.I. 222;
13-1631-LPS D.I. 88; 13-1635-LPS D.I. 96; 13-1634-LPS D.I. 130) is GRANTED.
1.

On February 16, 2012, IV filed suit against numerous defendants alleging

infringement of various patents. (C.A. No. 12-193-LPS D.I. 1) In an Order dated March 26,
2013, the Court severed the claims brought by Plaintiffs into eight separate actions. (C.A. No.
12-193-LPS D.I. 59) On October 1, 2013, pursuant to the Order, the following were among
those actions created: IV Iv. AT&T Mobility LLC, AT&T Mobility II LLC, New Cingular
Wireless Services, Inc., SBC Internet Services, Inc., and Wayport, Inc. (collectively, "AT&T")
(C.A. No. 12-193-LPS); IV II v. AT&T (C.A. No. 13-1631-LPS); IV Iv. Nextel (C.A. No. 131634-LPS); and IV II v. Nextel (C.A. No. 13-1635-LPS).
2.

Sierra seeks to intervene in two of those actions (C.A. No. 12-193-LPS and C.A.

No. 13-1634-LPS) as a matter of right or, alternatively, as a permissive party based on its
manufacture of products for AT&T and Nextel that IV I claims infringe four ofIV's patents:
U.S. Patent No. 5,577,677 ("the '677 patent"); U.S. Patent No. 6,977,944 ("the '944 patent");
U.S. Patent No. 7,343,011 ("the '011 patent"); and U.S. Patent No. 7,136,392 ("the '392
patent"). (C.A. No. 13-1634-LPS D.I. 113;2 D.I. 113)
3.

On March 5, 2013, IV I moved for leave to amend its complaint to add AT&T

subsidiary Aio Wireless LLC ("Aio Wireless") as a named defendant (C.A. No. 12-193-LPS D.I.
203) and, in the Nextel actions, Plaintiffs moved for leave to amend their complaints to add

2

For simplicity, in the remainder of this Order the Court refers to the "D.I." number in
C.A. No. 13-1634-LPS, unless otherwise indicated.

Sprint subsidiaries Virgin Mobile USA, L.P. and Boost Mobile, LLC (collectively the "Prepaid
Sprint Subsidiaries") (D.I. 115; C.A. No. 13-1635-LPS D.I. 85). On October 7, 2013, Plaintiffs
filed five additional actions against AT&T Mobility LLC, AT&T Mobility II LLC, and New
Cingular Wireless Services Inc. (C.A. No. 13-1668-LPS D.I. l); Leap Wireless Int'l, Inc. and
Cricket Communications Inc. (C.A. No. 13-1669-LPS D.I. 1); Nextel (C.A. No. 13-1670-LPS
D.I. 1); T-Mobile USA, Inc. and T-Mobile US, Inc. (C.A. No. 13-1671-LPS D.I. 1); and United
States Cellular Corporation (C.A. No. 13-1672-LPS D.I. 1), alleging infringement of various
patents. Ericsson seeks to intervene in these five actions as a matter of right or, alternatively, as
a permissive party. (See, e.g., C.A. No. 13-1668-LPS D.I. 32)
4.

Under Fed. R. Civ. P. 24(a)(2), a person is entitled to intervene if (1) the

application for intervention is timely, (2) the applicant has a sufficient interest in the litigation,
(3) the interest may be affected or impaired, as a practical matter, by the disposition of the
action, and (4) the interest is not adequately represented by an existing party in the litigation.
See Pennsylvania v. Rizzo, 530 F.2d 501, 504 (3d Cir. 1976).

5.

Pursuant to Fed. R. Civ. P. 24(b)(l)(B), the Court may permit anyone to intervene

who "has a claim or defense that shares with the main action a common question oflaw or fact."
"Whether to grant permissive intervention under Rule 24(b), as the doctrine's name suggests, is
within the discretion of the district court .... " Brody v. Spang, 957 F.2d 1108, 1124 (3d Cir.
1992). To establish that intervention is warranted under Rule 24(b ), the intervenor must
demonstrate: (1) an independent basis for subject matter jurisdiction, (2) a timely motion, and
(3) a claim or defense that has a common question oflaw or fact with the primary litigation. See
In re Linerboard Antitrust Litig., 333 F. Supp. 2d 333, 338-39 (E.D. Pa. 2004).

6.

The Court finds Intervenors' motions are timely based on the early, pre-Markman

stage of the proceedings and, additionally, the immediacy with which Intervenors filed their
motions. Further, intervention is necessary to enable Intervenors to protect their interest in
products which Intervenors manufacture for Defendants, an interest put at risk by the litigation as
Plaintiffs accuse these products of infringement. Additionally, Intervenors, as designers and
manufacturers of those products, possess superior technical knowledge of how the accused
devices and their components are configured and operate. Finally, intervention will ensure
adequate representation oflntervenors' interests; while Defendants maintain similar interests as
Intervenors, they are not as well-situated to understand and defend Intervenors' products.
Therefore, all four requirements strongly favor intervention. 3
7.

The Court rejects IV' s assertion that intervention as a right is limited to proposed

intervenors who: (1) owe an indemnity obligation to defendants or have a non-economic interest
at risk (D.I. 85 at 1-2; D.I. 126 at 1-2); or (2) are inadequately represented as a result of
collusion, adverse interests, or failures by the representative defendant (D.I. 85 at 2-3; D.I. 126 at
2-3).
8.

With regard to the issue of sufficient interests, IV mischaracterizes Intervenors'

interests here as "merely a generalized economic interest." See Kliessler v. US. Forest Serv.,
157 F.3d 964, 970 (3d Cir. 1998) (holding that "phraseology such as 'mere economic interests'
3

As per the agreement of the parties, Sierra's intervention will be limited to the four
patents concerning its products and the two defendants (AT&T and Nextel) for whom Sierra
manufactures products. (D.I. 114 at 1; D.I. 126 at 6; C.A. No. 12-193-LPS D.I. 201at1)
Further, Sierra agrees to work in good faith on discovery limitations and agrees that IV is not
obligated to raise additional claims against Sierra in this proceeding. (D.I. 133 at 1; C.A. No. 12193-LPS D.I. 225 at 1)

are not considered probative in the Third Circuit;" rather, the Circuit has "more often relied on
pragmatic considerations"). To establish a sufficient interest, an intervenor must demonstrate
"an interest relating to the property or transaction which is the subject of the action." Liberty
Mut. Ins. Co. v. Treesdale, Inc., 419 F.3d 216, 220 (3d Cir. 2005) (internal quotation marks and

citation omitted). Here, Intervenors have done just that by demonstrating their interest in the
very devices accused of infringement.
9.

IV cites no binding authority for the proposition that a proposed intervenor must

show an indemnity obligation. Indeed, courts have held an interest sufficient without mention of
indemnity obligations. See Honeywell Int 'l Inc. v. Audiovox Commc 'ns Corp., CIV. A.
04-1337-KAJ, 2005 WL 2465898 (D. Del. May 18, 2005) ("[Intervenor] has a sufficient interest
in the litigation; indeed, as a manufacturer of the product component which is at the heart of
these cases, it has a compelling interest."). 4
10.

With regard to the issue ofrepresentation, IV's reliance on the adequacy of

representation standard set forth in Stadin v. Union Electric Co., 309 F.2d 912, 919 (8th Cir.
1962), is misplaced where, as here, the proposed intervenors' interests are not substantially
identical with those of the defendants. See Deutschman v. Beneficial Corp., 132 F.R.D. 359, 381
(D. Del. 1990) (applying the Stadin three-prong test where proposed intervenor's interests were
"substantially identical" with defendant's interests); Pierson v. United States, 71 F.R.D. 75, 79

4

But see Nikon Corp. v. ASM Lithography B. V., 222 F.R.D. 647, 651 (N.D. Cal. 2004)
("'[A]n economic stake in the outcome of the litigation, even if significant, is not enough' to
qualify as a protectable interest . . . . This is no less true, in the Ninth Circuit, where an
unsubstantiated claim of indemnification is also made.") (citing Greene v. United States, 996
F.2d 973, 976 (9th Cir. 1993))

(D. Del. 1976) ("Once it is clear that the interests of [the proposed intervenor] and [defendant]
are identical, it becomes necessary to determine what type of compelling showing must be made
in order to demonstrate inadequacy ofrepresentation .... [M]ost federal courts have utilized a
three-prong test first articulated in Stadin."). 5 The Court does not find, nor does IV contend, that
Intervenors' interests as manufacturers are identical to those of Defendants as customers, making
the Stadin test inapposite here.
11.

Additionally, the Court finds that permissive intervention is appropriate under

Rule 24(b ). Intervenors have demonstrated (1) an independent basis for subject matter
jurisdiction, (2) timeliness, and (3) a claim or defense that has a common question oflaw or fact
with the primary litigation. See In re Linerboard Antitrust Litig., 333 F. Supp. 2d at 338-39. As
such, it is within the Court's discretion to grant permissive joinder.
12.

As IV has failed to show that intervention is unwarranted, the Court rejects IV's

proposed limitations on intervention with regard to: (1) a requirement that Intervenors' actions
not "expand the scope" of the litigation; and (2) a requirement that Intervenor Sierra's expert
reports be jointly served with AT&TorNextel. (See D.I. 126 at 6-8; C.A. No. 13-1668-LPS D.I.
39 at 1) 6

5

See also Steinberg v. Shearson Hayden Stone, Inc., 598 F. Supp. 273, 281 (D. Del. 1984)
("The most important factor in determining adequacy of representation is how the interest of the
absentee compares with the interests of the present parties .... If his interest is identical to that
of one of the present parties, or if there is a party charged by law with representing his interest,
then a compelling showing should be required to demonstrate why this representation is not
adequate.").
6

IV states that it does not oppose Intervenors' intervention, "[so] long as the intervention
is limited, and does not unduly burden, delay or expand the scope of the cases." (D.I. 126 at 3;
see also C.A. No. 13-1668-LPS D.I. 39 at 1).

13.

Turning to Plaintiffs' motions for leave to amend, the Court will grant leave to

amend the complaints in the requested cases to add Aoi Wireless and the Prepaid Sprint
Subsidiaries as named defendants. Pursuant to Federal Rule of Civil Procedure 15, courts
generally grant motions to amend absent a showing of undue delay, bad faith, or dilatory motive
on the part of the movant, undue prejudice to the opposing party, or futility of the amendment.
See Dole v. Arco Chem. Co., 921F.2d484, 487 (3d Cir. 1990). Having filed each amendment

by the appropriate deadline (D.I. 5), and having identified the infringing products and services
(by incorporating each subsidiary into the respective definitions of their parent company in the
Complaint), the Court finds there was no undue delay, bad faith, or dilatory motive and that the
amendment is not futile or unfairly prejudicial.
14.

Next, the Court will exercise its discretion to grant Defendants' motions to sever.

The Court orders that the following ten (10) cases be created and that the parties propose
coordinated schedules for these cases: (a) Intellectual Ventures I LLC v. AT&T Mobility LLC,
AT&T Mobility II LLC, and New Cingular Wireless Services Inc. (C.A. No. 13-1668-LPS); (b)
Intellectual Ventures I LLC v. Cricket Communications Inc. (C.A. No. 13-1669-LPS); (c)
Intellectual Ventures I LLC v. Sprint Spectrum LP and Nextel Operations, Inc. (C.A. No.
13-1670-LPS D.I. 1); (d) Intellectual Ventures I LLC v. T-Mobile USA, Inc. and T-Mobile US,
Inc. (C.A. No. 13-1671-LPS); (e) Intellectual Ventures I LLC v. United States Cellular
Corporation (C.A. No. 13-1672-LPS); (f) Intellectual Ventures II LLC v. AT&T Mobility LLC,
AT&T Mobility II LLC, and New Cingular Wireless Services Inc. (C.A. No. 14-

-LPS); (g)

Intellectual Ventures II LLC v. Cricket Communications Inc. (C.A. No. 14-_ _-LPS); (h)
Intellectual Ventures II LLC v. Sprint Spectrum LP and Nextel Operations, Inc. (C.A. No.

14-__-LPS); (i) Intellectual Ventures II LLC v. T-Mobile USA, Inc. and T-Mobile US, Inc.
(C.A. No. 14-_ _-LPS); (j) Intellectual Ventures II LLC v. United States Cellular Corporation
(C.A. No. 14-_ _-LPS). The parties shall work jointly to file all necessary papers to
accomplish the purposes of this Order within seven (7) days of the date of this Order and shall
submit proposed coordinated scheduling orders within fourteen (14) days of the date of this
Order.
15.

Finally, the Court will grant Nextel's unopposed motion to redact portions of the

February 12, 2014 Discovery Conference Transcript, because the proposed redactions involve
confidential and sensitive business information of the type that should be protected from public
disclosure and Nextel has shown good cause for its proposed redactions. Any publicly available
copies of the transcript, including but not limited to the transcripts that are or will be available by
remote electronic access, shall be redacted consistent with the highlighted portions of the
transcript as set forth in Exhibit A to the motion, in the following cases: C.A. No. 12-193-LPS,
D.I. 199; C.A. No. 13-1631-LPS, D.I. 78; C.A. No. 13-1634-LPS, D.I. 112; and C.A. No.
13-1635-LPS, D.I. 84.

UNITED STATES DISTRICT JUDGE