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)

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS TYLER DIVISION ) ) ) ) ) Plaintiffs and ) Counterdefendants, ) vs. ) ) Adobe Systems Inc.; Amazon.com, Inc.; ) CDW Corp.; Citigroup Inc.; The Go Daddy ) ) Group, Inc.; Google Inc.; J.C. Penney Corporation, Inc.; Staples, Inc.; Yahoo! Inc.; ) ) and YouTube, LLC, ) ) Defendants and ) Counterclaimants. ) ) 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 1 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). 2 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). 3 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 4 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. 5 Dated: April 20, 2012 /s/ Edward R. Reines Edward Reines (Bar No.135960) edward.reines@weil.com Jared Bobrow (Bar No. 133712) jared.bobrow@weil.com Sonal N. Mehta (Bar No. 222086) sonal.mehta@weil.com Andrew L. Perito (Bar No. 269995) andrew.perito@weil.com Aaron Y. Huang (Bar No. 261903) aaron.huang@weil.com WEIL, GOTSHAL & MANGES LLP 201 Redwood Shores Parkway Redwood Shores, CA 94065 Telephone: (650) 802-3000 Facsimile: (650) 802-3100 Doug W. McClellan (Bar No. 24027488) doug.mcclellan@weil.com WEIL, GOTSHAL & MANGES LLP 700 Louisiana, Suite 1600 Houston, TX 77002 Telephone: (713) 546-5000 Facsimile: (713) 224-9511 Jennifer H. Doan (Bar No. 088090050) jdoan@haltomdoan.com Josha R. Thane (Bar No. 24060713) jthane@haltomdoan.com HALTOM & DOAN 6500 Summerhill Road, Suite 100 Texarkana, TX 75503 Telephone: (903) 255-1000 Facsimile: (903) 255-0800 Otis Carroll (Bar No. 3895700) Deborah Race (Bar No. 11648700) IRELAND, CARROLL & KELLEY, P.C. 6101 South Broadway, Suite 500 Tyler, Texas 75703 Telephone: (903) 561-1600 Facsimile: (903) 581-1071 Email: fedserv@icklaw.com Attorneys for Defendants AMAZON.COM, INC. AND YAHOO! INC. /s/ Douglas E. Lumish (with permission) Douglas E. Lumish (Bar No. 183863) dlumish@kasowitz.com Jeffrey G. Homrig (Bar No. 215890) jhomrig@kasowitz.com Joseph H. Lee (Bar No. 248046) 6 jlee@kasowitz.com Parker C. Ankrum (Bar No. 261608) pankrum@kasowitz.com KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 333 Twin Dolphin Drive Suite 200 Redwood Shores, CA 94065 Telephone: 650-453-5170 Facsimile: 650-453-5171 Jonathan Keith Waldrop jwaldrop@kasowitz.com KASOWITZ BENSON TORRES & FRIEDMAN LLP 1360 Peachtree Street NE, Suite 1150 Atlanta, GA 30309 Telephone: (404) 260-6133 Facsimile: (404) 393-0743 Michael E. Jones (Bar No. 10929400) mikejones@potterminton.com Allen F.Gardner (Bar No. 24043679) allengardner@potterminton.com POTTER MINTON P.C. 110 N College , Suite 500 PO Box 359 Tyler, TX 75710-0359 Telephone: (903) 597-8311 Facsimile: (903) 593.0846 Brandon Stroy (pro hac vice) brandon.stroy@ropesgray.com ROPES & GRAY LLP 1211 Avenue of the Americas New York, NY 10036 Telephone: (212) 596-9000 Facsimile: (212) 596-9090 James R Batchelder (pro hac vice) James.Batchelder@ropesgray.com Han Xu (pro hac vice) han.xu@ropesgray.com ROPES & GRAY LLP Prudential Tower 800 Boylston Street Boston, MA 02199 Telephone: (617) 235-4903 Facsimile: (617) 235-9873 Mark D. Rowland (Bar No. 157862) mark.rowland@ropesgray.com Rebecca R. Hermes (Bar No. 252837) rebecca.hermes@ropesgray.com 7 Sasha Rao (Bar No. 244303) sasha.rao@ropesgray.com Lauren N. Robinson (Bar No. 255028) lauren.robinson@ropesgray.com ROPES & GRAY LLP 1900 University Ave., 6th Floor East Palo Alto, CA 94303 Telephone: (650) 617-4000 Facsimile: (650) 617-4090 Attorneys for Defendants GOOGLE INC. and YouTube LLC /s/ Christopher M. Joe (with permission) Christopher M. Joe (Bar No. 00787770) chris.joe@bjciplaw.com Eric W. Buether (Bar No. 03316880) eric.buether@bjciplaw.com Brian A. Carpenter (Bar No. 03840600) brian.carpenter@bjciplaw.com Mark D. Perantie (Bar No. 24053647) mark.perantie@bjciplaw.com Niknaz F. Bukovcan niky.bukovcan@bjciplaw.com BUETHER JOE & CARPENTER, LLC 1700 Pacific Avenue, Suite 2390 Dallas, TX 75201 Telephone: (214) 466-1279 Facsimile (214) 635-1830 Attorneys for Defendant J.C. PENNEY CORPORATION, INC. 8 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 9

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