EMG Technology, LLC v. Apple, Inc.

Filing 221

REPORT of Rule 26(f) Planning Meeting. (Ainsworth, Charles)

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION EMG TECHNOLOGY, LLC, Plaintiff, v. APPLE INC., AMERICAN AIRLINES, INC., DELL, INC., HYATT CORPORATION, MARRIOTT INTERNATIONAL, INC., & BARNES & NOBLE, INC., Defendants. EMG TECHNOLOGY, LLC, Plaintiff, v. MICROSOFT CORPORATION, SCOTTRADE, INC., SOUTHWEST AIRLINES CO., PRICELINE.COM, INC., ZAGAT SURVEY, LLC, & COMCAST CORPORATION, Defendants. JOINT CONFERENCE REPORT Pursuant to the Court's Orders entered in the above-captioned cases on December 29, 2009, (Docket No. 204 in Case No. 08-cv-447; Docket No. 77 in Case No. 09-cv-367), modifying its prior Orders entered on December 22, 2009, (See Docket Nos. 73 and 74 in Case No. 09-cv-367 and Docket No. 202 in Case No. 08-cv-447), Plaintiff EMG Technology, LLC ("EMG") and Defendants Apple Inc. ("Apple"), American Airlines, Inc. ("AA"), Dell, Inc. Case No. 6:09-cv-367-LED Case No. 6:08-cv-447-LED

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("Dell"), Hyatt Corporation ("Hyatt"), Marriott International, Inc. ("Marriott"), Barnes & Noble, Inc. ("Barnes & Noble"), Microsoft Corporation ("Microsoft"), Scottrade, Inc. ("Scottrade"), Southwest Airlines Co. ("Southwest"), Priceline.com, Inc. ("Priceline"), Zagat Survey, LLC ("Zagat"), and Comcast Corporation ("Comcast") (collectively, "Defendants") hereby submit their Joint Conference Report. A. Description of the Case 1. Plaintiff's Causes of Action

In both of the above-captioned cases, EMG has alleged infringement of U.S. Patent No. 7,441,196 (the "`196 Patent") entitled "Apparatus and Method of Manipulating a Region on a Wireless Device Screen for Viewing, Zooming and Scrolling Internet Content," issued on October 21, 2008, and U.S. Patent No. 7,020,845 (the "`845 Patent") entitled "Navigating Internet Content on a Television Using a Simplified Interface and a Remote Control," issued on March 28, 2006. The `196 Patent and `845 Patent are referred to collectively herein as the "Patents-in-Suit". EMG alleges that each Defendant, by making, using, selling, offering for sale, and/or importing in the United States, including in the Eastern District of Texas, products and/or services embodying the invention, have in the past, do now, and continue to infringe the Patentsin-Suit directly, contributorily and/or by inducement, literally and/or under the doctrine of equivalents, in violation of 35 U.S.C. § 271. EMG opposes the motion to transfer filed by the Defendants, mentioned in the paragraph below. The Central District of California is clearly less convenient than this District for 10 of the 12 Defendants, who possess the bulk of the evidence in this case, and for many identified witnesses, including at the Dallas, Texas headquarters of AT&T, the exclusive carrier of Apple's

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iPhone smart phone products and a carrier of Microsoft's Windows Mobile smart phone products. The remaining convenience factors either weigh against transfer or are neutral. Although the motion to transfer technically will be ready for decision pursuant to Local Rule CV-7(f) at the time of the February 1, 2010, Status Conference, the time for filing EMG's surreply will occur after the Status Conference. Thus, EMG respectfully requests that the Court afford EMG the opportunity to respond by surreply to any issues raised in the Defendants' reply before ruling on the motion to transfer. 2. Defendants' Defenses and Causes of Action

Defendants deny infringement of the Patents-in-Suit. Among other defenses, Defendants also allege that each of the claims of the Patents-in-Suit is invalid under 35 U.S.C. §§ 101, 102, 103, and/or 112. Defendants contend that venue is clearly more convenient for dozens of non-party witnesses and for access to sources of proof (including to documents and to witness testimony) in the Central District of California, where EMG and all of its owners and principals reside and where EMG's alleged inventions, development, and patent prosecution occurred. As such, all but one of the Defendants have moved the Court to transfer the action under 28 U.S.C. § 1404(a) to the Central District of California; the remaining Defendant (Priceline.com) does not oppose the motion and consents to transfer. The transfer motion is pending and will be ready for decision by the time of the February 1, 2010 Status Conference. B. Rule 26(f) Conference The Rule 26(f) conference was held by telephone on January 5, 2010, January 13, 2010, and January 27, 2010. The persons in attendance at one or more of the sessions, and the parties they represent, are as follows:

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Counsel for EMG Charles Ainsworth PARKER, BUNT & AINSWORTH, P.C. Shawn Hansen MANATT, PHELPS & PHILLIPS, LLP Counsel for Apple and Southwest David Healey Garland Stephens John Lane FISH & RICHARDSON, P.C. Counsel for AA & Hyatt Constance Boland Russ Genet David McKone NIXON PEABODY, LLP Jeff Rambin Jessica Hannah CAPSHAW DERIEUX LLP Counsel for Dell Constance Boland Russ Genet David McKone NIXON PEABODY, LLP Counsel for Marriott John Guaragna DLA PIPER US LLP Counsel for Barnes & Noble and Priceline Chad Walker FISH &RICHARDSON, P.C.

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Counsel for Microsoft Chris Carraway Salumeh Loesch KLARQUIST SPARKMAN, LLP Counsel for Scottrade Jason Schwent THOMPSON COBURN, LLP Counsel for Zagat Allen Gardner POTTER MINTON Counsel for Comcast Anthony Fenwick Jesse Dyer DAVIS POLK &WARDWELL C. Related Cases & Consolidation The above-captioned cases are related at least in that EMG asserts one or more claims of the Patents-In-Suit against each Defendant and the Defendants assert many of the same defenses and counterclaims. EMG believes that the above-captioned cases should be consolidated for all purposes, including trial, pursuant to Federal Rule of Civil Procedure 42(a) because the cases involve common questions of law and fact regarding the Patents-in-Suit and the Defendants' defenses and Counterclaims. EMG does not oppose deferring the determination on consolidation issues relating to trial. However, because the same affects, e.g., the preparation of expert reports, EMG believes that consolidation issues relating to trial should be determined substantially in advance of the Markman hearing. Defendants agree to consolidate the above-captioned cases through and including pretrial activities. Defendants contend, however, that consolidation of the cases for trial would be improper. Given the independent nature of the different accused activities and the wide diversity of accused instrumentalities (including Web sites, web browsers, handheld devices, home

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entertainment systems, an open-source development environment, laptop computers, multimedia software, etc.), the cases against the Defendants do not arise out of "the same transaction, occurrence, or series of transactions or occurrences," Fed. R. Civ. P. 20(a)(1)(A), and would inherently be impracticable, unfair to the Defendants, and confusing to a jury. Accordingly, Defendants propose that the Court postpone the decision on consolidation for trial until approximately the claim construction hearing, at which time the Court will have a more complete record regarding which Defendants and accused instrumentalities are sufficiently related to merit trial together. D. Expected Length of Trial Plaintiff's Statement: EMG expects the trial to last approximately 12 court days if the cases are consolidated for trial. If the cases are not consolidated for trial, EMG expects the separate trials to last approximately 6 days each. Defendants' Statement: Defendants expect the separate trials to last approximately 7 court days each. E. Trial before a Magistrate Judge EMG and the Defendants do not consent to trial before a magistrate judge. F. Jury Demand A jury demand has been made. G. Deadlines in the Proposed Docket Control Order and Discovery Order Plaintiff's Proposed Trial Date ­ July 2011 Defendants' Proposed Trial Date ­ August 2011. The parties will meet and confer to work out a proposed Docket Control Order and Discovery Order once the Court sets dates for the Markman hearing and trial. The Parties will submit to the Court their agreed provisions of the proposed Docket Control Order and Discovery Order and their briefing on any disputed provisions within fourteen days of the Status Conference. As set forth in EMG's Response in Opposition to Apple's Motion to Vacate the Docket 6

Control and Discovery Orders (Docket No. 206 in Case No. 08-cv-447), EMG believes that the existing schedule for disclosures by Defendants Apple and AA under P.R. 3-3 and 3-4 and Paragraphs 1 and 2 of the existing Discovery Order in Case No. 08-cv-447 should remain in effect for those Defendants. (See Docket Nos. 99-100 (existing Discovery and Docket Control Orders) in Case No. 08-cv-447.) As set forth in Apple's Motion to Vacate the Docket Control and Discovery Orders (Docket No. 99), Apple has already timely complied with P.R. 3-3 and produced nonconfidential documents under P.R. 3-4. Apple cannot produce confidential documents under P.R. 3-4 until a protective order is entered, and believes that a common schedule for document production should be entered for plaintiff and all defendants. AA has also already timely complied with P.R. 3-3, produced documents under P.R. 3-4, and begun producing documents relevant to the parties' pleaded claims and defenses. AA believes that a common schedule for document production should be entered for plaintiff and all defendants, including AA. Subject to the foregoing, at this time, the parties agree to the following deadlines: 1. P.R. 3-1, 3-2, 3-3, 3-4, and 4-1 Disclosures

Pursuant to the Court's existing Docket Control Order in Case No. 08-cv-447, EMG made its disclosures under P.R. 3-1 and 3-2 to Apple and AA, and other parties that since have been dismissed, on June 5, 2009. (Docket No. 74 in Case No. 08-cv-447.) EMG has amended the same twice with leave of Court. (Docket Nos. 98, 138 in Case No. 08-cv-447.) EMG's disclosures under P.R. 3-1 and 3-2 will be due on February 19, 2010, for all Defendants in Case No. 09-cv-367 and for Dell, Hyatt, Marriott, and Barnes & Noble in Case No. 08-cv-447. 1 Subject to the confidentiality provisions of P.R. 2-2 or a Protective Order, if one has been entered, EMG will also provide by February 19, 2010 to all defendants that have

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The parties expressly agree that this proposed deadline does not allow EMG to amend its September 22, 2009 P.R. 3-1 contentions for defendants Apple and American Airlines. However, nothing herein is intended to alter the provisions of P.R. 3-6 regarding amendments of contentions.

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not previously received discovery from EMG, copies of all discovery provided by EMG to date (including documents and deposition transcripts). Except for modifications to specific document production deadlines in paragraph 3 below, Defendants' disclosures under P.R. 3-3 and 3-4 will be due April 26, 2010. The parties' disclosures under P.R. 4-1 will be due May 6, 2010. 2. Other Patent Rule Disclosures:

The parties shall provide the other disclosures required by the Court's Patent Rules in accordance with the deadlines set forth in said rules and the Court's Docket Control Order to be entered in this case. 3. Defendants' Production: a) Within ninety (90) days after the Status Conference, and without awaiting

a discovery request, defendants shall begin a rolling production of documents relevant to the parties' pleaded claims and defenses, including at least a substantial production of preexisting documents sufficient to describe the structure and operation of the accused instrumentalities, along with marketing materials pertaining to the accused instrumentalities; b) Within one-hundred and twenty (120) days after the Status Conference,

and subject to the prior entry of a protective order or an agreement between the parties pertaining to the inspection and production of source code, defendants shall provide for inspection and production of source code for the accused instrumentalities. If a protective order has not been entered within 120 days after the filing of this Order and at that time the parties have no agreement pertaining to the inspection and production of source code, defendants shall provide for inspection and production of source code for the accused instrumentalities within 15 days of the entry of a protective order, or from the date when there is an agreement between the parties pertaining to the inspection and production of source code, whichever is earlier. Without prejudice to plaintiff's ability to seek such code if plaintiff later establishes that such code is necessary to prepare its case, the parties 8

agree that defendants shall not be required to produce Digital Rights Management source code; c) Within one-hundred and fifty (150) days after the Status Conference, and

without awaiting a discovery request, defendants shall complete their production of documents, data compilations and tangible things in the possession, custody, or control of the defendants that are relevant to the parties pleaded claims or defenses. Specifically excluded from this category are email and source code production. The parties' agreements on the defendants' production of source code is set forth above, and the parties' agreements on the defendants' production of email is set forth below; d) Within one hundred and twenty (120) days after plaintiff provides key

words for searching that limit the amount of email to a reasonable amount, defendants shall produce email from the 1 to 4 most knowledgeable custodians concerning each accused instrumentality. Such custodians shall be identified in defendants' initial disclosures. The parties agree to cooperate in testing and modifying the key word lists to provide a reasonable number of responsive emails. This production shall be without prejudice to plaintiff's ability to request emails from specific additional individuals. 4. Damages Disclosure:

Within ninety (90) days after the Status Conference, the parties shall produce a complete computation of any category of damages claimed by any party to the action, making available for inspection and copying (See Local Rule CV-34), the documents or other evidentiary materials on which such computation is based, including materials bearing on the nature and extent of injuries suffered; and those documents and authorizations described in Local Rule CV-34. H. Proposals for limitations on discovery In addition to the disclosures required under Paragraphs 1-3 of the Discovery Order and

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under the Patent Rules, the Parties propose that discovery2 should be limited to the following: Requests for Admissions (limited to authentication) Requests for Admissions (other than authentication) EMG Unlimited - each Defendant may serve 15 requests for admission on EMG - EMG may serve 15 requests for admission on each Defendant - each Defendant may serve 7 interrogatories on EMG - EMG may serve 7 interrogatories on each Defendant For fact witnesses, including Rule 30(b)(6) and third party witnesses: - 90 hours per side (cases consolidated) - 60 hours per side (cases not consolidated) - EMG believes that the Defendants' proposal to further limit deposition time on a per party basis unduly prejudices EMG's ability to conduct needed discovery and prepare its case. Defendants Agreed - each Defendant may serve 25 requests for admission on EMG - EMG may serve 25 requests for admission on each Defendant - each Defendant may serve 15 interrogatories on EMG - EMG may serve 15 interrogatories on each Defendant For fact witnesses, including Rule 30(b)(6) and third party witnesses: - 120 hours per side (cases consolidated) - 90 hours per side (cases not consolidated) - No more than 30 hours of any one defendant and its employees. - No more than 30 hours of EMG and its employees. (if existing depositions are not counted) - No more than 40 hours of EMG and its employees. (if existing depositions are counted) - 90 hours per side (cases consolidated) - 60 hours per side (cases not consolidated) Defendants currently agree

Interrogatories

Fact Deposition Hours

Expert Deposition Hours

Testifying Experts
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One deposition of each testifying expert witness for each expert report disclosing testimony to be offered by such testifying expert witness 8 per side (cases consolidated)

EMG believes that discovery taken prior to the date of this Report should be counted with respect to the limitations on discovery discussed in this paragraph and that the limitations proposed by EMG herein are sufficient to permit all parties ample opportunity for discovery. The depositions of 2 of the inventors on the Patents-in-Suit and principal members of EMG, as well as a Rule 30(b)(6) deposition of EMG, have already been taken, and EMG has responded to interrogatories. Defendants believe that discovery taken prior to the date of this Report should not count toward the limits in this section because most defendants had no right to participate in those efforts.

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5 per side (cases not consolidated)

with EMG's proposal but may need to seek relief of Court from this limitation, based on the individual needs of the Defendants, after further discovery has occurred.

A "side" refers to EMG and Defendants, respectively. Additional requests for admission, interrogatories, and hours of deposition time may be obtained either by stipulation of the Parties or by order of the Court upon a showing of good cause consistent with Federal Rule of Civil Procedure 26(b)(2). I. Entry of Protective Order The Parties agree that a protective order should be entered. EMG has provided the Defendants with comments on a draft proposed protective order provided by Apple. A final proposed protective order has not yet been agreed upon. The Parties are meeting and conferring in an effort to narrow the issues in dispute. The Parties expect that a small number of disputes may need to be resolved by the Court. The Parties will submit a proposed protective order for the Court's consideration, identifying and briefing any disputes that remain for the Court to resolve after the Parties meet and confer, in accordance with the standard motion practice under Local Rule CV-7. J. The appointment of a Technical Advisor or Special Master The Parties do not believe that a technical advisor is needed. However, if the Court believes one would be helpful then the parties have no objection. K. Possibility of early mediation EMG and Defendants believe that mediation may be helpful in resolving this case and that it would be most effective after the Court issues its Markman order. In addition, EMG and Apple completed a mediation on December 2, 2009. L. Local Rules Relating to Attorney Misconduct EMG and Defendants are aware of Local Rules AT-1, 2 and 3 relating to attorney conduct.

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Dated: January 28, 2010

Respectfully Submitted, By: /s/ Charles Ainsworth Robert M. Parker State Bar No. 15498000 Charles Ainsworth State Bar No. 00783521 Robert Christopher Bunt State Bar No. 00787165 PARKER, BUNT & AINSWORTH, P.C. 100 E. Ferguson, Suite 1114 Tyler, TX 75702 903/531-3535 903/533-9687 E-mail: [e-mail] E-mail: [e-mail] Robert D. Becker Cal. Bar No. 160648 Shawn G. Hansen Cal. Bar No. 197033 MANATT, PHELPS & PHILLIPS, LLP 1001 Page Mill Road, Building 2 Palo Alto, CA 94304 Telephone: [phone] Facsimile: [phone] E-mail: [e-mail] E-mail: [e-mail] Stanley M. Gibson Cal. Bar No. 162329 Joshua S. Hodas, Ph.D. Cal. Bar No. 250812 JEFFER, MANGELS, BUTLER AND MARMARO, LLP 1900 Avenue of the Stars, Seventh Floor Los Angeles, CA 90067 Telephone: [phone] Facsimile: [phone] E-mail: [e-mail] E-mail: [e-mail] ATTORNEYS FOR PLAINTIFF EMG TECHNOLOGY, LLC

By: /s/ John R. Lane with permission by Charles Ainsworth

By: /s/ Russell J Genet with permission by Charles Ainsworth 12

David J. Healey Texas Bar No. 09327980 Garland T. Stephens Texas Bar No. 24053910 John R. Lane Texas Bar No. 24057985 FISH & RICHARDSON P.C. 1221 McKinney Street Suite 2800 Houston, TX 77010 Tel: [phone] Fax: [phone] Email: [e-mail] Email: [e-mail] Email: [e-mail] ATTORNEYS FOR DEFENDANTS APPLE INC. & SOUTHWEST AIRLINES CO.

Constance M. Boland NIXON PEABODY LLP 437 Madison Avenue New York, NY 10022 Tel: [phone] Fax: [phone] Email: [e-mail] Russell J Genet David C. McKone NIXON PEABODY LLP 300 S Riverside Plaza 16th Floor Chicago , IL 60606 312-425-8516 Fax: [phone] Email: [e-mail] Elizabeth L. DeRieux Texas Bar No. 05770585 S. Calvin Capshaw Texas Bar No. 03783900 Daymon Jeffrey Rambin Texas Bar No. 00791478 CAPSHAW DERIEUX LLP 1127 Judson Road, Suite 220 P.O. Box 3999 (75606-3999) Longview, Texas 75601-5157 Tel: [phone] Fax: [phone] E-mail: [e-mail] E-mail: [e-mail] E-mail: [e-mail] E-mail: [e-mail] ATTORNEYS FOR DEFENDANTS AMERICAN AIRLINES, INC. & HYATT CORPORATION

By: /s/ John M. Guaragna with permission by Charles Ainsworth John M Guaragna DLA PIPER US LLP 401 Congress Ave Suite 2500 Austin , TX 78701-3799

By: /s/ Neil J. McNabnay with permission by Charles Ainsworth Neil J McNabnay FISH &RICHARDSON P.C. 1717 Main St. Suite 5000 Dallas , TX 75201

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512/457-7000 Fax: [phone] E-mail: [e-mail] ATTORNEYS FOR DEFENDANT MARRIOTT INTERNATIONAL, INC. By: /s/ J Christopher Carraway with permission by Charles Ainsworth J Christopher Carraway Richard David McLeod Salumeh R Loesch Todd M Siegel KLARQUIST SPARKMAN LLP 121 SW Salmon Street Suite 1600 Portland , OR 97204 503-595-5300 Fax: [phone] Email: [e-mail] Email: [e-mail] Email: [e-mail] Email: [e-mail] Eric H. Findlay [e-mail] FINDLAY CRAFT, LLP 6760 Old Jacksonville Highway, Suite 101 Tyler Texas 75703 Telephone: [phone] Facsimile: [phone] ATTORNEYS FOR DEFENDANT MICROSOFT CORPORATION By: /s/ Catherine Nyarady with permission by Charles Ainsworth Catherine Nyarady John E Nathan PAUL WEISS RIFKIND WHARTON & GARRISON 1285 Avenue of the Americas New York City , NY 10019-6064 212-373-3532 Fax: [phone]

[phone] Fax: [phone] E-mail: [e-mail] ATTORNEYS FOR DEFENDANT BARNES & NOBLE, INC., & PRICELINE.COM, INC. By: /s/ Thomas E Douglass with permission by Charles Ainsworth Thomas E Douglass Pamela M Miller Jason M Schwent John M Howell THOMPSON COBURN, LLP One US Bank Plaza 27th Floor St Louis , MO 63101 314/552-6000 Fax: [phone] Email: [e-mail] Email: [e-mail] Email: [e-mail] Email: [e-mail] Herbert A Yarbrough , III Attorney at Law 100 E Ferguson, Suite 1015 Tyler , TX 75702 903/595-3111 Fax: [phone] Email: [e-mail] ATTORNEYS FOR DEFENDANT SCOTTRADE, INC. By: /s/ Anthony I Fenwick with permission by Charles Ainsworth Anthony I Fenwick Jill R Zimmerman Jesse Dyer DAVIS POLK &WARDWELL 1600 El Camino Real Menlo Park , CA 94025 650/752-2015 Fax: [phone]

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Email: [e-mail] Email: [e-mail] Michael E Jones Potter Minton PC 110 N College Suite 500 PO Box 359 Tyler , TX 75710-0359 930-597-8311 Fax: [phone] Email: [e-mail] ATTORNEYS FOR DEFENDANT ZAGAT SURVEY, LLC By: /s/ Constance M. Boland with permission by Charles Ainsworth Constance M. Boland NIXON PEABODY LLP 437 Madison Avenue New York, NY 10022 Tel: [phone] Fax: [phone] Email: [e-mail] Russell J. Genet David C. McKone NIXON PEABODY LLP 300 S Riverside Plaza 16th Floor Chicago , IL 60606 312-425-8516 Fax: [phone] Email: [e-mail] J. Thad Heartfield THE HEARTFIELD LAW FIRM 2195 Dowlen Road Beaumont, Texas 77706 409-866-3318 Fax: [phone] Email: [e-mail] ATTORNEYS FOR DEFENDANT DELL, INC.

Email: [e-mail] Email: [e-mail] Email: [e-mail] Deron R Dacus RAMEY &FLOCK 100 East Ferguson Ste 500 Tyler , TX 75702 903/597-3301 Fax: [phone] Email: [e-mail] ATTORNEYS FOR DEFENDANT COMCAST CORPORATION

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CERTIFICATE OF SERVICE I hereby certify that all counsel of record, who are deemed to have consented to electronic service, are being served this 28th day of January, 2010, with a copy of this document via the Court's CM/ECF system per Local Rule CV-5(a)(3). /s/ Charles Ainsworth CHARLES AINSWORTH

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