Eolas Technologies Incorporated v. Adobe Systems Incorporated et al

Filing 1398

SUR-REPLY to Reply to Response to Motion re 1368 Opposed MOTION to Amend/Correct 1354 Judgment Defendants Sur-Reply in Opposition to Plaintiffs Motion to Correct Judgment Pursuant to Rules 59(e) and 60(a). filed by Amazon.com Inc., Google Inc., J.C. Penney Corporation, Inc., Yahoo! Inc., YouTube, LLC. (Attachments: # 1 Appendix to Defendants Sur-Reply)(Reines, Edward)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
TYLER DIVISION
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Plaintiffs and
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Counterdefendants,
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vs.
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Adobe Systems Inc.; Amazon.com, Inc.;
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CDW Corp.; Citigroup Inc.; The Go Daddy )
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Group, Inc.; Google Inc.; J.C. Penney
Corporation, Inc.; Staples, Inc.; Yahoo! Inc.; )
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and YouTube, LLC,
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Defendants and
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Counterclaimants.
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Eolas Technologies Incorporated and The
Regents Of The University Of California

Civil Action No. 6:09-CV-446-LED

JURY TRIAL DEMANDED

DEFENDANTS’ SUR-REPLY IN OPPOSITION TO PLAINTIFFS’ MOTION TO
CORRECT JUDGMENT PURSUANT TO RULES 59(e) AND 60(a)

INTRODUCTION
Defendants Amazon.com Inc., Google Inc., J.C. Penney Corporation, Inc., Yahoo! Inc.,
and YouTube, LLC (“Defendants”) submit this sur-reply in opposition to the motion to correct
judgment of Plaintiffs Eolas Technologies, Inc. and The Regents of the University of
California (collectively “Plaintiffs”) [Dkt. No. 1391] (“Reply”).
ARGUMENT
Plaintiffs’ Reply confirms that the parties’ dispute in this matter, though narrow, is
significant. Relying on new authorities in reply, Plaintiffs seek to have their infringement claims
dismissed as “moot,” rather than “with prejudice.” But Plaintiffs’ infringement claims have
been adjudicated on the merits based on the trial of Defendants’ affirmative defense of invalidity
and thus should be dismissed with prejudice.
The judgment in Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 556 F.3d 1294, 1295
(Fed. Cir. 2009), which Plaintiffs identify as a model judgment blessed by the Federal Circuit,
supports Defendants’—not Plaintiffs’—analysis.

That judgment expressly dismisses the

infringement claim for damages “with prejudice” based on an adjudicated defense of patent
invalidity while dismissing the prevailing accused infringer’s non-infringement declaratory
judgment claim as moot. The judgment in Revolution is attached as the Appendix to this brief,
and Defendants agree that it can and should be used as a model judgment in this case.
Plaintiffs confuse the infringement issue with Plaintiffs’ infringement claim for damages
and Defendants’ claim for a declaratory judgment of non-infringement. A claim for a
declaratory judgment of non-infringement turns on the sole issue of infringement. All parties
agree, however, that the infringement issue here—“whether Defendants’ accused products meet
each and every limitation of th[e asserted] patent claims”—is mooted by the jury’s verdict
regarding the invalidity of the asserted claims. Reply at 2. That is why all parties also agree
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that Defendants’ claim for a declaratory judgment of non-infringement should be dismissed
without prejudice as moot. In contrast, invalidity is an affirmative defense to an infringement
claim for damages. 35 U.S.C. § 282(2) (identifying invalidity as a “defense" in an action for
infringement). Thus, Plaintiffs’ infringement claim for damages is resolved, not moot, because
Defendants’ invalidity defense was indeed adjudicated on the merits by the jury’s invalidity
verdict. See 2 JAMES M. MOORE ET AL., MOORE'S FEDERAL PRACTICE, ¶ 8.07(1) (3d ed. 1997)
(“Affirmative defenses, if accepted by the court, will defeat an otherwise legitimate claim for
relief.”). Plaintiffs’ Reply ignores this fundamental distinction between the parties’ claims: a
finding of invalidity moots Defendants’ non-infringement declaratory judgment claim and
defeats Plaintiffs’ infringement claim for damages.
Plaintiffs rely on Leggett to advocate for a dismissal of their infringement claim as moot:
Plaintiffs request the Court to enter a corrected judgment that
dismisses Plaintiffs’ infringement claims based on Defendants’
invalidity affirmative defense and counterclaim—in effect, holding
those claims moot in light of the jury’s verdict. Such a judgment
is verbatim of what the Federal Circuit found appropriate in
Leggett & Platt, Inc. v. VUTEk, Inc., 537 F.3d 1349 (Fed. Cir.
2008), as discussed in Plaintiffs’ Motion at 1-2 and Exhibits 1 and
2 thereto.
Reply at 2 (emphasis supplied). In this passage, Plaintiffs appear to suggest that the Federal
Circuit in Leggett somehow ruled that a successful invalidity affirmative defense renders an
infringement claim for damages moot. It did nothing of the sort. Rather, in Leggett the district
court granted summary judgment of all claims as invalid. The district court had not disposed of
the non-infringement declaratory judgment claims as moot or otherwise adjudicated them. The
Federal Circuit observed that, until the district court resolved the unadjudicated non-infringement
declaratory judgment claims, there was no final judgment and thus no appellate
jurisdiction. Leggett & Platt, Inc. v. Vutek, Inc., 239 Fed. Appx. 602, 604 (Fed. Cir. 2007).

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In the Federal Circuit’s subsequent decision, Leggett & Platt, 537 F.3d at 1349, on which
Plaintiffs rely, the court does not even suggest that the invalidity of the claims in that case
rendered the patentee’s infringement claim for damages moot. The Federal Circuit merely
accepted jurisdiction over the case because the district court eliminated the non-infringement
declaratory judgment claim as moot. The patentee’s infringement complaint was “dismissed in
its entirety” based on the invalidity of the claims and neither the district court nor Federal Circuit
suggested that this meant that the patentee’s infringement claim for damages was dismissed as
moot. Leggett & Platt, 239 Fed. Appx. at 603. Leggett does not help resolve the parties’
remaining dispute regarding the form of judgment.
Second, Plaintiffs rely on four Federal Circuit cases to suggest that the district courts in
each may have dismissed infringement claims for damages as moot based on a successful
invalidity affirmative defense. Reply at 2. Plaintiffs’ reliance on the judgment in Revolution
Eyewear, Inc. v. Aspex Eyewear, Inc., 556 F.3d 1294, 1295 (Fed. Cir. 2009), squarely supports
Defendants. There, after finding invalidity, the district court dismissed as moot the accused
infringer’s declaratory judgment claim for non-infringement. This is unremarkable. What is
remarkable, however, is that the Revolution judgment expressly dismissed the patentee’s
affirmative infringement claim “with prejudice”—which is exactly what Defendants request
here. See Appendix (“Judgment”) ¶ 5. Plaintiffs misapply Revolution by ignoring the important
distinction between dismissing as moot an accused infringer’s declaratory judgment claim for
non-infringement (which makes sense) and dismissing as moot a patentee’s infringement claim
for damages even where, as here, the accused infringers prevailed on their affirmative defense of
invalidity (which is improper, as explained above, and which is not consistent with the holding in
Revolution).

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In MBO Labs. Inc. v. Becton, Dickinson & Co., 602 F.3d 1306, 1312 (Fed. Cir. 2010),
after finding all claims invalid, the district court denied a summary judgment motion of noninfringement as moot. The Federal Circuit did not comment on the form of the final
judgment. The court addressed the merits and affirmed the invalidation of some claims, but not
others, and remanded the case for adjudication of the claims that were improperly
invalidated.

Nothing in that decision to accept jurisdiction in MBO supports Plaintiffs’

position. The district court’s denial as moot of a non-infringement summary judgment motion is
completely consistent with Defendants’ proposal here that their non-infringement declaratory
judgment claim be dismissed without prejudice as moot and the patentee’s infringement claim
for damages be dismissed with prejudice based on the successful affirmative defense of patent
invalidity.
Plaintiffs’ citation to M. Eagles Tool Warehouse, Inc. v. Fisher Tooling Co., 439 F.3d
1335 (Fed. Cir. 2006), suffers from the same defect. In that action seeking a declaratory
judgment of invalidity, unenforceability, and non-infringement, the district court found the patent
unenforceable and held that it therefore need not rule on the accused infringer’s motion for
summary judgment on its claim for a declaratory judgment of non-infringement. M. Eagles is
fully consistent with Defendants’ position. Indeed, the district court directed that judgment be
entered in favor of the accused infringer on the patentee’s counterclaim for infringement, as to
which unenforceability—like invalidity—is an affirmative defense. M. Eagles Tool Warehouse,
Inc. v. Fisher Tooling Co., Inc., 68 F. Supp. 2d 494, 508 (D.N.J. 1999).
Plaintiffs’ reliance on Halliburton Energy Servs. v. M-I LLC, 514 F.3d 1244, 1248 (Fed.
Cir. 2008), is also unenlightening. There, the Federal Circuit affirmed the invalidity of the
claims-in-suit. There was no question as to whether the infringement claims should be

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dismissed with or without prejudice.
In the final analysis, the preclusive effect of this judgment can be evaluated based only on
the substance of what was decided in this case, not based on labels. See Kaspar Wire Works,
Inc. v. Leco Eng’g & Mach., 575 F. 2d 530, 534 (5th Cir. 1978) (recognizing that “a dismissal
with prejudice at any stage of a judicial proceeding, normally constitutes a final judgment on the
merits which bars a later suit on the same cause of action,” but looking beyond the language used
by the district court to the substance of the decision in order to determine the preclusive effect of
the prior judgment) (internal citations omitted). Nevertheless, because Plaintiffs’ infringement
claims for damages were resolved against them on the merits, those claims must be dismissed
with prejudice. Plaintiffs’ claims for damages are not moot; they have been found to lack merit.

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Dated: April 20, 2012

/s/ Edward R. Reines
Edward Reines (Bar No.135960)
[e-mail]
Jared Bobrow (Bar No. 133712)
[e-mail]
Sonal N. Mehta (Bar No. 222086)
[e-mail]
Andrew L. Perito (Bar No. 269995)
[e-mail]
Aaron Y. Huang (Bar No. 261903)
[e-mail]
WEIL, GOTSHAL & MANGES LLP
201 Redwood Shores Parkway
Redwood Shores, CA 94065
Telephone: [phone]
Facsimile: [phone]
Doug W. McClellan (Bar No. 24027488)
[e-mail]
WEIL, GOTSHAL & MANGES LLP
700 Louisiana, Suite 1600
Houston, TX 77002
Telephone: [phone]
Facsimile: [phone]
Jennifer H. Doan (Bar No. 088090050)
[e-mail]
Josha R. Thane (Bar No. 24060713)
[e-mail]
HALTOM & DOAN
6500 Summerhill Road, Suite 100
Texarkana, TX 75503
Telephone: [phone]
Facsimile: [phone]
Otis Carroll (Bar No. 3895700)
Deborah Race (Bar No. 11648700)
IRELAND, CARROLL & KELLEY, P.C.
6101 South Broadway, Suite 500
Tyler, Texas 75703
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
Attorneys for Defendants
AMAZON.COM, INC. AND YAHOO! INC.
/s/ Douglas E. Lumish (with permission)
Douglas E. Lumish (Bar No. 183863)
[e-mail]
Jeffrey G. Homrig (Bar No. 215890)
[e-mail]
Joseph H. Lee (Bar No. 248046)
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[e-mail]
Parker C. Ankrum (Bar No. 261608)
[e-mail]
KASOWITZ, BENSON, TORRES &
FRIEDMAN LLP
333 Twin Dolphin Drive
Suite 200
Redwood Shores, CA 94065
Telephone: [phone]
Facsimile: 650-453-5171
Jonathan Keith Waldrop
[e-mail]
KASOWITZ BENSON TORRES &
FRIEDMAN LLP
1360 Peachtree Street NE, Suite 1150
Atlanta, GA 30309
Telephone: [phone]
Facsimile: [phone]
Michael E. Jones (Bar No. 10929400)
[e-mail]
Allen F.Gardner (Bar No. 24043679)
[e-mail]
POTTER MINTON P.C.
110 N College , Suite 500
PO Box 359
Tyler, TX 75710-0359
Telephone: [phone]
Facsimile: [phone]
Brandon Stroy (pro hac vice)
[e-mail]
ROPES & GRAY LLP
1211 Avenue of the Americas
New York, NY 10036
Telephone: [phone]
Facsimile: [phone]
James R Batchelder (pro hac vice)
[e-mail]
Han Xu (pro hac vice)
[e-mail]
ROPES & GRAY LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199
Telephone: [phone]
Facsimile: [phone]
Mark D. Rowland (Bar No. 157862)
[e-mail]
Rebecca R. Hermes (Bar No. 252837)
[e-mail]
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Sasha Rao (Bar No. 244303)
[e-mail]
Lauren N. Robinson (Bar No. 255028)
[e-mail]
ROPES & GRAY LLP
1900 University Ave., 6th Floor
East Palo Alto, CA 94303
Telephone: [phone]
Facsimile: [phone]
Attorneys for Defendants
GOOGLE INC. and YouTube LLC
/s/ Christopher M. Joe (with permission)
Christopher M. Joe (Bar No. 00787770)
[e-mail]
Eric W. Buether (Bar No. 03316880)
[e-mail]
Brian A. Carpenter (Bar No. 03840600)
[e-mail]
Mark D. Perantie (Bar No. 24053647)
[e-mail]
Niknaz F. Bukovcan
[e-mail]
BUETHER JOE & CARPENTER, LLC
1700 Pacific Avenue, Suite 2390
Dallas, TX 75201
Telephone: [phone]
Facsimile [phone]
Attorneys for Defendant
J.C. PENNEY CORPORATION, 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 services on this the 20th day of April 2012. Local Rule CV5(a)(3)(A).
/s/ Edward R. Reines
Edward R. Reines

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