WI-LAN Inc. v. Alcatel-Lucent USA Inc. et al

Filing 319

RESPONSE to Motion re 306 MOTION to Sever and Memorandum In Support filed by WI-LAN Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Text of Proposed Order)(Weaver, David)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION

WI-LAN INC.,
Plaintiff,
v.
ALCATEL-LUCENT USA INC.; et al.
Defendants.

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Civil Action No. 6:10-cv-521-LED
JURY TRIAL DEMANDED

WI-LAN’S RESPONSE OPPOSING HTC’S SECOND MOTION TO SEVER

TABLE OF CONTENTS

1. 

The Court Has Already Ruled on this Issue. ........................................................................1 

2. 

Joinder in this Case Is Proper...............................................................................................2 
a.  The Applicable Standard for Joinder. ................................................................................2 
b.  As the Court Previously Held, Joinder Is Proper. ..............................................................3 
i.  HTC Uses the Same Qualcomm Chips as Sony Mobile. ................................................3 
ii. 

HTC’s Experts’ Positions Overlap with those of the Other Defendants. .....................4 

iii. 

The Contract Issues Are for the Court, Not the Jury. ..................................................5 

3. 

Even if Joinder Was Improper, the Court May Consolidate the Defendants. ........................5 

4. 

The Real Issue – the Trial Plan. ...........................................................................................6 
a.  A Separate Trial for HTC Is Not Needed. .........................................................................7 
b.  Wi-LAN’s Offered Alternative Trial Plan. ........................................................................7 

5. 

Conclusion. .........................................................................................................................9 

i

TABLE OF AUTHORITIES
Cases 
Acevedo v. Allsup’s Convenience Stores, Inc., 600 F.3d 516 (5th Cir. 2010) ................................2
Ams. For Fair Patent Use, LLC v. Sprint Nextel Corp., No. 2:10-cv-237-TJW, 2011 U.S. Dist.
LEXIS 2947 (E.D. Tex. Jan. 12, 2011) ....................................................................................2
CEATS, Inc. v. Continental Airlines, Inc., No. 6:10-cv-120-MHS, No. 888 (E.D. Tex. Feb. 14,
2012).......................................................................................................................................9
Eolas Technologies, Inc. v. Adobe Systems Inc., No. 6:12-cv-619-LED, No. 1264 (E.D. Tex. Jan.
20, 2012) .................................................................................................................................9
Fractus, S.A. v. Samsung Electronics, Co. Ltd., No. 6:09-cv-203-LED-JDL, No. 665 (E.D. Tex.
Mar. 3, 2011) ..........................................................................................................................9
In re EMC Corp., 677 F. 3d 1351 (Fed. Cir. 2012) .................................................................. 4, 6
Negotiated Data Solutions, Inc. v. Apple, Inc., No. 2:11-CV-390-JRG, 2012 WL 6161785 (E.D.
Tex. Dec. 11, 2012) ............................................................................................................. 4, 6
Norman IP Holdings, LLC v. Lexmark Intern., Inc., No. 6:11-CV-495 2012 WL 3307942, at *4
(E.D. Tex. Aug. 10, 2012) .......................................................................................................7
Oasis Research, LLC v. Carbonite, Inc., No. 4:10-CV-435-ALM, 2012 WL 3544881, at *6–7
(E.D. Tex. Aug. 15, 2012) .......................................................................................................7
U.S. Ethernet Innovations, LLC v. Samsung Elecs. Co., Ltd., No. 12-cv-00398-MHS-JDS, No. 48
(E.D. Tex. Feb. 6, 2013) ..........................................................................................................5
United Mine Workers of Am. v. Gibbs, 383 U.S. 715 (1966) ........................................................2

ii

Plaintiff Wi-LAN, Inc. (“Wi-LAN”) opposes HTC’s Motion to Sever (the “Second
Motion”) (Dkt. 306). For the reasons explained in this Response, as well as the Court’s previous
order (Dkt. 128) denying HTC’s first motion to sever (the “First Motion”) (Dkt. 72), Wi-LAN
respectfully requests that HTC’s Second Motion be denied.
1.

The Court Has Already Ruled on this Issue.
As detailed in the Court’s Memorandum Opinion and Order (“Order”) denying HTC’s

First Motion, Wi-LAN asserts patent infringement claims based on four related patents against
four defendant groups that make and sell products that implement certain releases of the 3rd
Generation Partnership Project (“3GPP”) standards for wireless communications. Order at 1-2.
Reading HTC’s Second Motion, one would never know that the Court has already
addressed this exact issue. HTC’s Second Motion ignores the First Motion and also the Court’s
Order, apparently choosing to pretend that the Court’s Order never happened. But it did. After
full briefing, the Court ruled against HTC, noting the following:


“All defendants . . . allegedly make, sell, or offer for sale wireless devices that
implement certain releases of the 3GPP standard. Therefore, questions of fact
involving the alleged infringement will be similar among these products.” (Order
at 3.)



“While [base stations and handsets] are generally different product types, both are
involved in wireless data transmission. . . . Both product types send and receive
data via wireless communication protocols that comply with 3GPP standards.” Id.



“Even though the product types have general differences, their accused
properties—specific communication methods—are tightly interrelated.” Id.



“The ’211 patent is a continuation of the ’326 patent, and their specifications are
nearly identical. . . . Thus, factual determinations regarding one patent are likely
to be relevant to other patents.” Id. at 4 (footnote and citations omitted).

As the Court correctly concluded:
The close relationship among the patents, the interdependence of
the accused products, and the narrow focus on a specific wireless
communication standard provides the required logical
relationship among the defendants, yielding a nucleus of both
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fact and law sufficient to warrant joinder under Rule 20. Even
so, the Court can and will consider any arguments defendants may
wish to advance for separate trials as the date of trial approaches.
Separate trials, if warranted, make more sense than severing this
multiple-defendant case into separate cases resulting in all of the
inefficiencies and potential inconsistencies that could well arise
from severing the common issues of law and fact that are
prominent in this case.
Order at 4 (emphasis added).
HTC’s Second Motion fails to address any of the Court’s findings. HTC seems to
pretend that its Second Motion is not a motion for reconsideration, but it is. Wi-LAN therefore
responds with additional information not included in response to HTC’s First Motion, but avoids
repeating Wi-LAN’s previous briefing.
2.

Joinder in this Case Is Proper.
a.

The Applicable Standard for Joinder.

The Court correctly stated the applicable standard for joinder before:
HTC first moves to sever under Rule 21, which states that “[o]n
motion or on its own, the court may at any time, on just terms, add
or drop a party.” FED. R. CIV. P. 21. In determining whether parties
should be severed under Rule 21, a court looks to Rule 20 to
determine whether the parties were misjoined. Ams. For Fair
Patent Use, LLC v. Sprint Nextel Corp., No. 2:10-cv-237-TJW,
2011 U.S. Dist. LEXIS 2947, at *5 (E.D. Tex. Jan. 12, 2011)
(citing Acevedo v. Allsup’s Convenience Stores, Inc., 600 F.3d 516,
521 (5th Cir. 2010)). Joinder under Rule 20 is proper if (1) the
claims arise out of the “same transaction occurrence, or series of
transactions or occurrences” and (2) there is a “question of law or
fact common to all defendants.” FED. R. CIV. P. 20(a)(2). “Under
the Rules, the impulse is towards entertaining the broadest possible
scope of action consistent with fairness of the parties; joinder of
claims, parties and remedies is strongly encouraged.” United Mine
Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966).
Order at 2.

2

b.

As the Court Previously Held, Joinder Is Proper.

Since the Court’s Order, the parties have moved towards trial, completing fact and expert
discovery. Besides the facts previously addressed by this Court in the briefing connected with
HTC’s First Motion are the following:


The accused handset products of HTC and Sony Mobile both use Qualcomm
chips with essentially the same software that provide some of the functionality
that is pertinent in establishing infringement.



The expert reports of the defendants on the infringement issues rely on several of
the same arguments to try to establish non-infringement.



Wi-LAN seeks a reasonable royalty measure of damages from each of the
defendants.



HTC and Alcatel-Lucent share the same expert on damages issues.



A single invalidity expert report by the same, shared expert was submitted on
behalf of all Defendants.



The contract issues presented by Sony Mobile and Ericsson are the subject of
pending cross-motions for summary judgment.

Thus, the evidence at trial involving HTC will necessarily involve a substantial overlap
with the evidence involving the other defendants.
i.

HTC Uses the Same Qualcomm Chips as Sony Mobile.

HTC and Sony Mobile use the same Qualcomm chips in most of their accused handsets.1
Among other things, these Qualcomm chips include software which generates orthogonal and
overlay codes and applies those codes. As even HTC concedes, the use of chips from the same
supplier (i.e., “identically sourced components”) provides a basis for concluding that there is a
common nucleus of fact. Second Motion at 4-5 (citing In re EMC Corp., 677 F.3d 1351, 1356
(Fed. Cir. 2012)).

1

To the extent that a few of the HTC and Sony Mobile products use different models of
Qualcomm chips, these models are still essentially identical with respect to the
functionality pertinent to establishing the infringement of the asserted claims.
3

In addition, HTC tries to distinguish Negotiated Data Solutions, Inc. v. Apple, Inc., No.
2:11–CV–390–JRG, 2012 WL 6161785, at *2 (E.D. Tex. Dec. 11, 2012) on the grounds that the
manufacturer of the chips used by HTC and Sony Mobile is not a party in the case. Second
Motion at 9. HTC suggests that Wi-LAN’s “failure” to name Qualcomm as a defendant in this
action somehow distinguishes this case from Negotiated Data Solutions. Second Motion at 9.
HTC had the same opportunity to add Qualcomm as a party, but did not do so. HTC’s argument
regarding the non-joinder of Qualcomm is a red herring.
Moreover, the EMC case upon which HTC heavily relies did not suggest that joinder was
appropriate only in cases involving a manufacturer and its customers. Instead, EMC specifically
identified the existence of “identically sourced components” as supporting a conclusion that
there is a common nucleus of fact making joinder proper. EMC, 677 F.3d at 1359. Thus, the use
of the Qualcomm chips by HTC and Sony Mobile justifies joinder of the parties even under the
EMC decision on which HTC relies. See id.; see also Report and Recommendations at 4, U.S.
Ethernet Innovations, LLC v. Samsung Elecs. Co., Ltd., No. 12-cv-00398-MHS-JDS, No. 48
(E.D. Tex. Feb. 6, 2013) (recommending denial of motion for improper joinder in case governed
by AIA provisions due to common questions of fact regarding defendants’ integration of
Samsung “System-on-Chips” in their respective products).
ii.

HTC’s Experts’ Positions Overlap with those of the Other
Defendants.

HTC shares an invalidity expert with the other defendants. This expert (Mark Lanning)
submitted one report on behalf of all the defendants. Thus, HTC’s invalidity positions are
identical to those of the other defendants.
HTC’s expert Dr. Akl submitted a report in which he opined that HTC’s accused handset
products do not infringe. Many of the opinions of non-infringement provided by Dr. Akl are
4

essentially the same as those offered by Dr. Olivier, Sony Mobile’s expert, and are essentially the
mirror-image of those offered by Drs. Wicker and Olivier regarding the accused base station
products of Ericsson and Alcatel-Lucent.

Attached as Exhibit A hereto is a chart which

summarizes the overlap of six non-infringement arguments advanced by the various defendants’
experts in their reports. As indicated by the chart, the defendants’ experts’ testimony on noninfringement issues will involve substantial overlap across product lines and as to the various
patents-in-suit.
As with the defendants’ non-infringement arguments, the defendants also share
arguments as to the reasonable royalty sought by Wi-LAN. Indeed, HTC and Alcatel-Lucent
share a single damages expert whose damages theories are essentially the same for HTC and
Alcatel-Lucent. The substantial overlap in the defendant’s’ non-infringement, invalidity, and
damages positions demonstrates that there is a common nucleus of fact and joinder is proper.
iii.

The Contract Issues Are for the Court, Not the Jury.

HTC correctly notes that Sony Mobile and Ericsson have asserted contract defenses and
counterclaims. But HTC fails to note that these issues have been submitted to the Court for
resolution through cross-motions for summary judgment.

Indeed, these defenses and

counterclaims hinge on contract construction—a legal issue for the Court. See Dkt. Nos. 171,
172, 181. Wi-LAN anticipates that the Court will rule in advance of trial and, one way or
another, these issues will not remain for trial. HTC thus exaggerates the potential prejudice to it
from the contract issues raised by Sony Mobile and Ericsson.
3.

Even if Joinder Was Improper, the Court May Consolidate the Defendants.
HTC’s myopic focus on severance misses the big picture. As the EMC case cited by

HTC expressly notes, the Court “has considerable discretion to consolidate cases for discovery
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and for trial under Rule 42 where venue is proper and there is only ‘a common question of law or
fact.’” EMC, 677 F.3d at 1360. Thus, even assuming the Court decides to grant HTC’s Second
Motion, the Court nonetheless can and should consolidate HTC’s case for trial.
In every Eastern District case citing EMC that Wi-LAN found in which a court granted
severance, the court nonetheless consolidated the severed defendant.

See Negotiated Data

Solutions, Inc. v. Apple, Inc., No. 2:11-CV-390-JRG, 2012 WL 6161785, at *2 (E.D. Tex. Dec.
11, 2012); Oasis Research, LLC v. Carbonite, Inc., No. 4:10-CV-435-ALM, 2012 WL 3544881,
at *6–7 (E.D. Tex. Aug. 15, 2012); Norman IP Holdings, LLC v. Lexmark Intern., Inc., No. 6:11CV-495 2012 WL 3307942, at *4 (E.D. Tex. Aug. 10, 2012). This practice reflects a sensible,
practical approach to resolving cases with overlapping evidence in an efficient manner.
As detailed above, a trial involving HTC will necessarily involve much of the same
evidence as the other defendants, including identical evidence on invalidity issues. Moreover, a
trial involving HTC will include a substantial overlap of factual and legal issues, such as those
involving the Qualcomm chips, the defendants’ non-infringement arguments, and the reasonable
royalty sought be Wi-LAN. Given such substantial overlap of the evidence and issues, it is not
surprising that HTC’s Second Motion ignores consolidation.
4.

The Real Issue – the Trial Plan.
In the Order denying HTC’s First Motion, the Court expressly noted that it “can and will

consider any arguments defendants may wish to advance for separate trials as the date of trial
approaches.” Order at 4. For whatever reason, HTC ignored this offer from the Court and
instead sought the same relief that the Court previously denied. Regardless of the label used by
HTC, Wi-LAN believes the only relevant issue raised by HTC’s Second Motion is determining

6

an appropriate trial plan. Indeed, the Court has requested that the parties provide trial plans by
February 25.
a.

A Separate Trial for HTC Is Not Needed.

In its Second Motion, HTC emphasizes the perceived prejudice it sees in being tried with
the other defendants. See Second Motion at 6–9. HTC exaggerates any potential for prejudice.
On this point, the silence from the other three defendants is deafening. No one else claims undue
prejudice from a trial involving all defendants. No one else seeks severance. Indeed, HTC fails
to offer any concrete details establishing prejudice.
The most efficient trial plan is to have a single trial on all issues with all parties. This
minimizes the cost to the parties, the potential for conflicting results, and avoids undue use of the
Court’s resources. Given the substantial overlap of the facts, law, and evidence on invalidity,
infringement, and even damages, no party will suffer undue prejudice.
b.

Wi-LAN’s Offered Alternative Trial Plan.

Although Wi-LAN prefers to try the case on all issues against all defendants, Wi-LAN
proposed an alternative trial plan as a way to address HTC’s concerns. 2 Attached as Exhibit B
hereto is a copy of Wi-LAN’s proposal to HTC. Wi-LAN proposed the following trial plan:
Because multiple, duplicative trials on validity would waste the
Court’s resources, increase the inconvenience to third-party
witnesses, prejudice Wi-LAN, and generally result in inefficiency,
Wi-LAN will agree to a single trial on invalidity, with Wi-LAN’s
infringement and damages claims against Defendants severed for
separate trials to follow immediately follow. Because common
2

HTC asserts that “Wi-LAN was unable to make any colorable argument that HTC was
properly joined with defendants Alcatel Lucent and Ericsson,” and “Wi-LAN’s only
proposal” was its alternative trial plan. Second Motion at 10. Wi-LAN respectfully
submits that HTC is properly joined for all the reasons noted above. Given the Court’s
Order denying HTC’s First Motion, the overlapping and common nucleus of facts, and
the broad discretion the Court enjoys for consolidation, Wi-LAN views the real issue as
selecting a fair and efficient trial plan.
7

questions of fact and law will obviously be raised with regard to
HTC and Sony Mobile, both handset manufacturers, those parties
would remain together for a second trial on infringement and
damages following the trial on validity. A final trial concerning
infringement and damages would follow, if necessary, for Ericsson
and Alcatel-Lucent, both of whom manufacture base stations.
See Exhibit B.
Wi-LAN’s proposed alternative trial plan is consistent with this Court’s approach in the
Fractus and Eolas cases. See Modified Trial Plan at 2, Fractus, S.A. v. Samsung Electronics,
Co. Ltd., 6:09-cv-203-LED-JDL, No. 665 (E.D. Tex. Mar. 3, 2011); Final Trial Plan at 1, Eolas
Technologies, Inc. v. Adobe Systems Inc., 6:12-cv-619-LED, No. 1264 (E.D. Tex. Jan. 20, 2012).
Wi-LAN’s plan also balances the relevant factors identified by the Court in CEATS, Inc. v.
Continental Airlines, Inc. See Order at 5, CEATS, Inc. v. Continental Airlines, Inc., No. 6:10-cv120-MHS, No. 888 (E.D. Tex. Feb. 14, 2012).
This case involves less defendants, patents, and claims than Fractus or Eolas, identical
components at issue in the HTC and Sony Mobile handsets, identical invalidity evidence, and
substantial overlap as to defendants’ non-infringement and damages positions. Both of WiLAN’s proposed trial plans minimize the risk of potentially conflicting results, the burden and
costs of multiple trials, and the risk of jury confusion.
Wi-LAN’s alternative proposal meets these goals better than HTC’s go-it-alone proposal.
If nothing else, HTC’s proposal means two trials on invalidity, with the resulting waste of
resources and the potential for conflicting results. Wi-LAN and the Court should not have to try
validity twice, especially when all defendants share a single expert who submitted a single
report. Further waste and potentially conflicting results will flow from HTC’s proposal due to
the substantial overlap of evidence on infringement issues. Wi-LAN’s alternative proposal
avoids duplicative trials on invalidity and also minimizes any potential for undue prejudice or
8

jury confusion. Wi-LAN’s alternative proposal groups the infringement and damages issues by
both products and asserted claims, thus minimizing any potential for conflicting results and
further minimizing the overlap of evidence at the two infringement and damages trials.
Wi-LAN prefers to proceed with one trial with all defendants on all issues. Should the
Court conclude that an alternative is necessary, however, Wi-LAN remains willing to proceed
with its proposed alternative trial plan: invalidity first, with a second trial for HTC and Sony
Mobile, followed by a third trial with Ericsson and Alcatel-Lucent.
5.

Conclusion.
For the reasons detailed above and in the Court’s Order denying HTC’s First Motion, Wi-

LAN respectfully requests that the Court DENY HTC’s Second Motion.
Dated: February 19, 2013

Respectfully submitted,

By:
Local Counsel
Johnny Ward (TX Bar No. 00794818)
Wesley Hill (TX Bar No. 24032294)
WARD & SMITH LAW FIRM
P.O. Box 1231
1127 Judson Rd., Ste. 220
Longview, TX 75606-1231
Tel: [phone]
Fax: [phone]
[e-mail]
[e-mail]

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/s/ David B. Weaver
David B. Weaver (TX Bar No. 00798576)
Lead Attorney
Avelyn M. Ross (TX Bar No. 24027817)
Ajeet P. Pai (TX Bar No. 24060376)
Syed K. Fareed (TX Bar No. 24065216)
Jeffrey T. Han (TX Bar No. 24069870)
Seth A. Lindner (TX Bar No. 24078862)
Janice Ta (TX Bar No. 24075138)
VINSON & ELKINS LLP
2801 Via Fortuna, Suite 100
Austin, TX 78746
Tel: [phone]
Fax: [phone]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]

Steven R. Borgman (TX Bar No. 02670300)
Gwendolyn J. Samora (TX Bar No. 00784899)
VINSON &ELKINS LLP
1001 Fannin Street, Suite 2500
Houston, TX 77002-6760
Tel: [phone]
Fax: [phone]
[e-mail]
[e-mail]
Chuck P. Ebertin (CA Bar No. 161374)
VINSON & ELKINS LLP
525 University Avenue, Suite 410
Palo Alto, CA 94301-1918
Tel: [phone]
Fax: [phone]
[e-mail]
Constance S. Huttner (NY Bar No. 1722024)
VINSON & ELKINS LLP
666 5th Avenue, 26th Floor
New York, NY 10103-0040
Tel: [phone]
Fax: (9l7) 849-5339
[e-mail]
[e-mail]
Attorneys for Plaintiff, Wi-LAN Inc.

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 are
deemed to have consented to electronic service. Local Rule CV-5(a)(3)(A). Pursuant to Fed. R.
Civ. P. 5(d) and Local Rule CV-5(d) and (e), all other counsel of record not deemed to have
consented to electronic service were served with a true and correct copy of the foregoing by
email and/or fax, on this the 19th day of February, 2013.

/s/ David B. Weaver
David B. Weaver
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