Eolas Technologies Incorporated v. Adobe Systems Incorporated et al

Filing 1093

RESPONSE in Opposition re 1050 MOTION FOR LEAVE TO SUPPLEMENT THEIR P.R. 3-1 INFRINGEMENT CONTENTIONS WITH RESPECT TO FRITO-LAY, INC.'S HAPPINESS.LAYS.COM filed by Frito-Lay, Inc.. (Attachments: # 1 Declaration of J. Yee, # 2 Exhibit 1, # 3 Exhibit 2, # 4 Exhibit 3, # 5 Exhibit 4, # 6 Exhibit 5, # 7 Exhibit 6, # 8 Exhibit 7, # 9 Exhibit 8, # 10 Exhibit 9, # 11 Exhibit 10, # 12 Exhibit 11, # 13 Exhibit 12, # 14 Exhibit 13, # 15 Text of Proposed Order)(McSwane, Douglas)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
Eolas Technologies Incorporated,
Plaintiff,
vs.
Adobe Systems Inc., Amazon.com, Inc.,
Apple Inc., Argosy Publishing, Inc.,
Blockbuster Inc., CDW Corp.,
Citigroup Inc., eBay Inc., Frito-Lay, Inc.,
The Go Daddy Group, Inc., Google Inc.,
J.C. Penney Company, Inc., JPMorgan
Chase & Co., New Frontier Media, Inc.,
Office Depot, Inc., Perot Systems Corp.,
Playboy Enterprises International, Inc.,
Rent-A-Center, Inc., Staples, Inc., Sun
Microsystems Inc., Texas Instruments Inc.,
Yahoo! Inc., and YouTube, LLC
Defendants.

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§ Civil Action No. 6:09-CV-00446-LED
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JURY TRIAL
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FRITO-LAY, INC.’S OPPOSITION TO EOLAS’S MOTION FOR LEAVE TO
SUPPLEMENT P.R. 3-1 INFRINGEMENT CONTENTIONS WITH RESPECT TO
FRITO-LAY, INC.’S [sic] HAPPINESS.LAYS.COM

1

Plaintiff Eolas Technologies Incorporated (“Eolas”), through its Motion for Leave to
Supplement P.R. 3-1 Infringement Contentions (“Infringement Contention”) With Respect to
Frito-Lay, Inc.’s [sic] happiness.lays.com (“Motion to Amend,” Dkt. 1050), seeks to add a new
accused product, namely a new website located at happiness.lays.com (“New Accused Product”),
in the case against Defendant Frito-Lay, Inc. (“Frito-Lay”) after the case has progressed for over
twenty-five months since it was filed, and now only three months away from trial. Eolas's
complete lack of diligence is irrefutably evidenced by its proposed Supplemental Infringement
Contentions (“Supplemental Infringement Contention”) because they are solely based on
information that has been, and still is, publicly available for at least nineteen months. There is
no excuse that Eolas could not have included the New Accused Product in its Infringement
Contention or supplemented its Infringement Contention months earlier. Eolas cannot dispute
that its failure to do so is inexcusable because public information is all Eolas needed for its
proposed Supplemental Infringement Contention. Eolas does not and cannot explain its undue
delay. Courts in this judicial district routinely refuse to condone such tardiness.
In addition, Eolas’s alleged patent rights against the New Accused Product will be
exhausted because the New Accused Product is accused of patent infringement through its use of
co-defendant Adobe Systems, Inc.’s (“Adobe”) accused Flash Player. Once the case against
Adobe is resolved, either by judgment or settlement, Eolas cannot again seek damages from
Frito-Lay. Thus, Eolas’s proposed Supplemental Infringement Contention is not important to
Eolas’ claims. On the other hand, allowing Eolas to supplement its Infringement Contention at
this late stage will cause severe prejudice against Frito-Lay. With only approximately two
months left to the final pre-trial conference, Frito-Lay will be unjustly required to complete
difficult, if not impossible, tasks anew, including providing discovery and performing non-

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infringement analysis on the New Accused Product which Eolas never identified and for which
Frito-Lay never knew it would need to prepare a defense.
There is no available continuance long enough to cure such prejudice to Frito-Lay
because more than nineteen months has passed since Eolas had served its Infringement
Contention. In addition, co-defendants would most likely oppose any continuance of the entire
action because it would prejudice their preparation for trial in this case. Neither will Eolas agree
to a continuance because it had vigorously opposed Frito-Lay’s prior motion for a separate trial
and to reset the pretrial schedule. See, Eolas’s Opposition to Frito-Lay’s Motion for Separate
Trial and to Reset Pretrial Schedule (Dkt. 898). Even if the Court orders a continuance, FritoLay still faces the tantamount task of starting anew for discovery and case preparation regarding
the New Accused Product.
Hence, as fully set forth below, Eolas’s Motion to Amend must be rejected out of hand.
I.

FACTS
Eolas filed this case on October 6, 2009, more than two years ago (Dkt. 1). The due date

for Eolas’s P.R. 3-1 Infringement Contentions was approximately twenty months ago, on March
5, 2010 (Dkt. 249). In its Infringement Contention, Eolas only identify one accused product:
www.fritolay.com. See, Dkt. 1050-2 and Exhibit 1.1

Although all webpages and content,

including source code therefor2 located at www.fritolay.com were publicly available, no other
websites that a visitor could access through links at www.fritolay.com were identified in Eolas’s
Infringement Contention. At least as early as March 15, 2010, Frito-Lay issued a press release
1

Unless otherwise noted, all exhibits referenced hereto are attached to the declaration of Jeffrey
Yee concurrently filed herewith.

2

Source code for all webpages is publicly available to any person by using the “View Source” or
“View Page Source” command through internet browsers, such as Microsoft Internet Explorer,
Apple Safari, Google Chrome, and Mozilla Firefox. See, e.g. Exhibits 2 and 3.

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regarding the official kick-off of "Happiness Exhibit," of which happiness.lays.com is a part.
Again, this information has been, and still is, publicly available. See, Exhibit 4.
After Eolas served its Infringement Contention on March 5, 2010, Eolas served five sets
of interrogatories to Frito-Lay within a period of approximately eleven months, more
specifically between May 27, 2010 and April 5, 2011. None of the interrogatories identified any
website beyond the www.fritolay.com website.3
Subsequently, the parties engaged in settlement discussion that led to a brief one-month
stay of the case (between July 7 to August 5, 2011). See, Dkts. 757 and 789. More than a month
after the stay expired, Eolas incorrectly identified a new accused webpage allegedly located at
happiness.fritolay.com on September 12, 2011 in its second set of interrogatories to Frito-Lay.
See, Dkt. 1050-6 at p. 5 of 8. Because there is no such webpage under the accused website
located at www.fritolay.com, counsel for Frito-Lay informed Eolas’s counsel on September 14,
2011 that no such webpage existed.4 Alleging that it was a typographically error, Eolas then
served an amended second set of interrogatories to Frito-Lay on September 28, 2011,5 which
identified the New Accused Product, happiness.lays.com, for the very first time. Eolas alleged in
its Motion to Amend that it first learned of the New Accused Product during the stay, which was
in July 2011. It, however, did not identify the New Accused Product for another two months
after the stay had expired.

3

See, Exhibit 5 at page 16, Exhibit 6 at page 15, Exhibit 7 at page 14, Exhibit 8 at page 14, and
Exhibit 9 at pages 4-5.

4

See, Dkt. 1050-9 at p. 2 of 7 (“During our Sep. 14 telephone conversation we stated that
[happiness.fritolay.com] was not identified in Eolas’ infringement contentions and we could not
find that website.”).

5

Eolas contends that it informed Frito-Lay of the alleged typographical error on September 23,
2011 (Dkt. 1050, Motion to Amend at 4).

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On October 14, 2011, Eolas’s counsel, without leave from the Court, sent to Frito-Lay’s
counsel for the first time copies of the infringement contention charts regarding the New
Accused Product (Dkt. 1050-11). Notably, the charts are solely based on public information6
and relate to the use of Adobe’s Flash Player.7 In addition, happiness.lays.com is not under the
domain of the currently accused fritolay.com and, therefore, end users cannot find a website
located at happiness.fritolay.com.

III.

ARGUMENT
Local Patent Rule 3-6 governs Eolas’s Motion to Amend. It provides that leave to amend

is required when a plaintiff seeks to amend or supplement its infringement contentions, and the
plaintiff must show good cause to amend. Realtime Data, LLC v. Packeteer, Inc.,
2009WL2590101, *2, Case No. 6:08cv144 (E.D.Tex. Aug. 18, 2009). There are four factors to
consider whether or not a plaintiff has shown good cause: “1) the explanation for the failure to
meet the deadline; 2) the importance of the amendments; 3) potential prejudice in allowing the
amendments; and 4) the availability of a continuance to cure such prejudice.” Id. As discussed
below, Eolas fails each factor.
(A)

Eolas Failed to Show That It Acted Diligently

Diligence is an important element of good cause that Eolas is required to establish in
seeking to amend its Infringement Contentions. O2 Micro Int’l Ltd. v. Monolithic Power
Systems, Inc., 467 F.3d 1355, 1366 (Fed.Cir. 2006) (the burden is on the party seeking to amend

6

Eolas contends that Frito-Lay did not provide discovery regarding happiness.lays.com. See Dkt.
1050, Motion to Amend at 2.

7

See, Exhibit 10. Eolas specifically identified the use of Adobe Flash Player in the infringement
contention charts.

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its contentions to establish diligence rather than on the opposing party to establish a lack of
diligence.); see also, Softvault Systems, Inc. v. Microsoft Corp., 2007WL1342554, *1, Case No.
2:06cv16 (E.D.Tex. May 4, 2007). Eolas completely fails this factor. Eolas spent a large portion
of its Motion to Amend in an attempt to cast a dark cloud over Frito-Lay’s discovery effort. Yet,
as noted above, Eolas was able to complete its proposed Supplemental Infringement Contention
based solely on public information without any discovery. Eolas provided no explanation in its
Motion to Amend as to why it did not seek to amend its Infringement Contention when the
information Eolas now relies on became public at least nineteen months ago. See, Connectel,
LLC v. Cisco Systems, Inc., 391 F.Supp2d 526, 528 (E.D.Tex. 2005) (plaintiff is expected to
rigorously analyze all publicly available information before bringing suit); Realtime Data LLC,
2009WL2590101 at *5 (waiting nine months after serving the original infringement contentions
to seek leave to amend is not a reasonable period of time).
Eolas’s conclusory assertion in its Motion to Amend that it had allegedly been diligent in
pursuing discovery and developing an infringement theory completely missed the mark because
Eolas clearly did not need any discovery from Frito-Lay to complete its proposed Supplemental
Infringement Contention. Moreover, even if Eolas was allegedly hindered by the alleged lack of
discovery from Frito-Lay regarding the New Accused Product, which it was not, Eolas has failed
to diligently raise the issue with the Court. Davis-Lynch, Inc. v. Weatherford Int’l, Inc.,
2009WL81874, *4, Case No. 6:07cv559 (E.D.Tex. Jan. 12, 2009) (to the extent that plaintiff was
hindered by a lack of discovery, it had failed to diligently raise these issues with the court.).
Neither did Eolas explain why it waited another two months to seek leave to supplement
its Infringement Contention after it allegedly “first learned of” the New Accused Product.

Well

after Eolas allegedly first learned of the New Accused Product, both Eolas and Frito-Lay filed

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several motions regarding the pre-trial and trial schedule, but Eolas never mentioned the New
Accused Product to Frito-Lay or the Court in the numerous briefs it filed with the Court. In
addition, Eolas only needed public information to complete its proposed Supplemental
Infringement Contention. The public information regarding the New Accused Product is right at
Eolas’s finger tips. No purchase is necessary. As noted above, the source code of the New
Accused Product can be obtained through the “View Source” or “View Page Source” command
of an internet browser application. See, e.g. Exhibits 2 and 3. Eolas could have obtained the
public information in literally minutes. Eolas’s lack of diligence is indisputable.
(B)

Eolas’s Proposed Supplemental Infringement Contention Is Not Important

As noted above, Eolas’s proposed Supplemental Infringement Contention accuses the use
of Adobe’s Flash Player of patent infringement. See, Exhibit 10.

Eolas’s allegation that

excluding its proposed supplement would result in duplicative litigation is a red herring.8 Eolas
has accused Adobe’s Flash Player of infringement in this case. Whether or not the New Accused
is included in the case will not change Eolas’s case against Adobe. Indeed, once the case against
Adobe is resolved, either by judgment or settlement, Eolas cannot again seek damages from
Frito-Lay regarding the use of Adobe’s Flash Player.

Moreover, excluding the New Accused

Product will not result in dismissal of Eolas’s case against Frito-Lay; and such minor exclusion
pales in comparison to the prejudice caused by Eolas’s tardiness. See, Davis-Lynch, Inc.,
2009WL81874 at *4 (exclusion of additional product would not result in dismissal of plaintiff’s
case in its entirety; and while precluding this product might prejudice plaintiff to some degree,
the prejudice was not so great as to weigh significantly against plaintiff’s lack of diligence.).
Thus, Eolas’s proposed Supplemental Infringement Contention is only peripheral.

8

See, Motion to Amend at 7.

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(C)

Frito-Lay Should Not Be Prejudiced by Eolas’s Lack of Diligence

On the other hand, allowing Eolas to supplement its Infringement Contention at this late
stage will cause severe prejudice against Frito-Lay. With only approximately two months left to
the final pre-trial conference, Frito-Lay will be unjustly required to complete difficult, if not
impossible, tasks anew, including providing discovery and performing non-infringement analysis
on the New Accused Product which Eolas never identified and for which Frito-Lay never knew it
would need to prepare a defense.
Eolas improperly attempts to shift the blame for Eolas’ lack of diligence onto Frito-Lay
by alleging that Frito-Lay somehow should have provided discovery regarding the New Accused
Product to Eolas. This is simply not the case. As further discussed below in Section IV, Eolas’s
lack of diligence is the sole cause of prejudice to Frito-Lay.
(D)

There Is No Available Continuance to Cure The Prejudice Against Frito-Lay

Ignoring its own dilatory practice, Eolas did not even discuss the possibility of an
available continuance to cure the prejudice against Frito-Lay. The truth is that the current
schedule does not permit a continuance to cure such prejudice against Frito-Lay because there is
no available continuance long enough to cure such prejudice. More than nineteen months has
passed since Eolas had served its Infringement Contentions. In addition, co-defendants would
most likely oppose any continuance of the entire action because it would prejudice their
preparation for trial in this case. Neither will Eolas agree to a continuance because it had
vigorously opposed Frito-Lay’s prior motion for a separate trial and to reset the pretrial schedule.
See, Eolas’s Opposition to Frito-Lay’s Motion for Separate Trial and to Reset Pretrial Schedule
(Dkt. 898). Even if a the Court orders a continuance, Frito-Lay still faces the tantamount task of
starting anew for discovery and case preparation regarding the New Accused Product. See e.g.,

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Realtime Data LLC, 2009WL2590101 at *9 (a continuance would cure some of the prejudice,
but even a substantial continuance would not cure enough prejudice to justify the changes
plaintiff proposed).

IV.

EOLAS’S ATTEMPTS TO MISGUIDE THE COURT
Knowing that it did not act diligently, Eolas disingenuously spent a significant portion of

its Motion to Amend to mischaracterize the New Accused Product and www.fritolay.com as
“reasonably similar products,” despite the undeniable difference that those two websites belong
to separate and distinct domains. By taking this position, Eolas improperly attempts to shift the
blame onto Frito-Lay for allegedly not providing discovery regarding the separate website
located at happiness.lays.com, a website that Eolas had never alleged was infringing.9
Eolas cited Honeywell Int’l, Inc. v. Acer America Corp., 655 F.Supp.2d 650, 656-58
(E.D.Tex. 2009) in its Motion to Amend for the proposition that discovery and supplementation
of infringement contentions to include reasonably similar products are permitted. However,
Eolas ignored the Court’s clear admonition that “this analysis should consider the diligence of
the party seeking discovery [and supplementation of infringement contentions].” Id. at 654; see
also, Softvault Systems, Inc., 2007WL1342554 at *1 (diligence is an important element of good
cause). As discussed above, Eolas clearly failed the diligence prong.
Moreover, the New Accused Product, namely happiness.lays.com, and www.fritolay.com
are two distinct websites located at different domains.

Eolas’s contention that

happiness.lays.com is part of www.fritolay.com is incorrect. Notably, if you direct your web
browser to happiness.lays.com, you will not be redirected to the fritolay.com domain. Indeed, if

9

See, Motion to Amend at 5-8.

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you direct your web browser to happiness.fritolay.com, you will receive an error message noting
that this webpage does not exist. See Exhibit 11.
Eolas’s argument that a press release regarding “Happiness Exhibit” at www.fritolay.com
would somehow prove that happiness.lays.com is part of www.fritolay.com is equally absurd.10
Press releases regarding Frito-Lay’s parent company PepsiCo, Inc. also appears at
www.fritolay.com. See e.g. Exhibit 12. Eolas certainly does not agree that www.pepsico.com is
part of www.fritolay.com as Eolas has sternly refused to include PepsiCo, Inc.’s website in its
failed settlement agreement with Frito-Lay. See Dkt. 898.
Eolas also contends that it only needed to provide specific infringement theories and
representative examples of the alleged infringement in its Infringement Contention instead of a
screenshot of each possible manifestation of the alleged infringement in a website (Motion to
Amend at 7-8, citing Orion IP, LLC v. Staples, Inc., 407 F.Supp.2d 815, 817 (E.D.Tex. 2006)).
Eolas’s contention, however, is misguided for several reasons. In Orion IP, the Court rejected
plaintiff’s attempt to include the Lexus and Scion websites into the case when its infringement
contentions only identified the Toyota websites. See, Exhibit 13 at 2-3, Orion IP, LLC v. Staples,
Inc., Case No. 2:04cv297, slip. op. (Dkt. 171) (E.D.Tex. July 7, 2005). The Court held that the
plaintiff needed not provide a screenshot of every possible instance of infringement in the
identified website. The Court, however, did not allow amendment of infringement contentions
to include the unidentified Lexus and Scion domains. Here, Eolas provided only representative
screenshots of www.fritolay.com. In addition, by definition, the Infringement Contention could
not have notified Frito-Lay that happiness.lays.com was allegedly infringing because that
website was not launched until shortly after Eolas had served its Infringement Contention.

10

See, Motion to Amend at 5.

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Pointing to its complaint, Eolas argued that it had included happiness.lays.com in the case
by alleging infringement by “web pages and content to be interactively presented in browser,
including without limitation, the web pages and content accessible via [www.fritolay.com].”11
This allegation is vague and provides no notice at all. There are numerous web pages that are
“accessible via www.fritolay.com,” for example, www.pepsico.com. As discussed above, Eolas
has specifically argued that PepsiCo, Inc. was not part of the case and should not be included in
the settlement agreement with Frito-Lay. Eolas’s shot gun approach and self-contradicting
argument should be given little weight, if any.
In sum, Eolas’s allegations regarding discovery that Frito-Lay should have provided in
connection with happiness.lays.com is nothing more than an effort to distract the attention away
from Eolas’s complete lack of diligence.

V.

CONCLUSION
Twenty-five months after the case has commenced, Eolas has no justification to add the

New Accused Product in this case when it had failed to act diligently on publicly available
information for over nineteen months, and this case is proceeding to trial in only three months.
For the reasons set forth above, Eolas’s Motion to Amend should be denied outright.

Dated: November 4, 2011

Respectfully submitted,
/s/ Douglas R. McSwane, Jr.
POTTER MINTON P.C.
Douglas R. McSwane, Jr.
[e-mail]
110 N. College Street, Suite 500

11

See Motion to Amend at 2.

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Tyler, Texas 75702
Tel: [phone]
Fax: [phone]
GREENBERG TRAURIG LLP
Jeffrey K. Joyner (admitted pro hac vice)
[e-mail]
Jeffrey F. Yee (admitted pro hac vice)
[e-mail]
2450 Colorado Avenue, Suite 400E
Santa Monica, California 90404
Telephone: [phone]
Facsimile: [phone]
Dwayne L. Mason
Texas State Bar #00787977
[e-mail]
1000 Louisiana Street, Suite 1700
Houston, Texas 77002
Tel: [phone]
Fax: [phone]
ATTORNEYS FOR DEFENDANT
FRITO-LAY, INC.

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CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was filed electronically in
compliance with Local Rule CV-5(a). As such, this document was served on all counsel who
have consented to electronic service. Local Rule CV-5(a)(3)(A) on this November 4, 2011.

/s/ Douglas R. McSwane, Jr.
Douglas R. McSwane, Jr.

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