Interval Licensing LLC v. AOL, Inc. et al

Filing 257

REPLY, filed by Plaintiffs Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, TO RESPONSE to (Attachments: #1 Exhibit 1, #2 Exhibit 2)(Nelson, Justin)

EXHIBIT 1

Case 1:09-cv-00791-GMS Document 88

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

NOKIA CORPORATION,
Plaintiff,
v.
APPLE INC.,
Defendant
APPLE INC.
Counterclaim-Plaintiff,
v.
NOKIA CORPORATION and NOKIA INC.
Counterclaim-Defendants.

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C.A No. 09-791-GMS
JURY TRIAL DEMANDED

APPLE INC.'S OPPOSITION TO NOKIA'S MOTION FORA STAY

OF COUNSEL:
William F. Lee
WILMERHALE

60 State Street
Boston, MA 02109
Tel: [phone]
Mark D. Selwyn
WILMERHALE

950 Page Mill Road
Palo Alto, CA 94304
Tel: [phone]
Kenneth H. Bridges
Michael T. Pieja
WONG CABELLO

540 Cowper Street, Suite 100
Palo Alto, CA
Tel: [phone]
Dated: August 20, 2010

Richard L. Horwitz (#2246)
David E. Moore (#3983)
POTTER ANDERSON & CORROON LLP
Hercules Plaza, 6th Floor
1313 N. Market Street
Wilmington, DE 19899
Tel: [phone]
[e-mail]
[e-mail]
Attorneys for Defendant/Counterclaim-Plaintiff
Apple Inc.
979500/35035

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TABLE OF CONTENTS

I.

INTRODUCTION ............................................................................................................... 1

II.

THE NATURE AND STAGE OF THE PROCEEDINGS AND STATEMENT OF
FACTS ................................................................................................................................. 2

III.

SUMMARY OF ARGUMENT ........................................................................................... 3

IV.

ARGUMENT ....................................................................................................................... 4
A.

Nokia Misstates The Applicable Law ..................................................................... 4

B.

Staying Apple's Patent Claims Will Create Substantial Inefficiencies .................. .4
1.

Staying a portion of the overall dispute does not promote efficiency ........ .4

2.

A stay would be inefficient even if the patent claims are viewed in
isolation from the rest of the parties' disputes ............................................. 5

C.

Separating And Delaying Apple's Patent Claims Will Unfairly
Prejudice Apple ....................................................................................................... 7

D.

Staying Apple's Patent Claims Pending Re-examination Does Not Ensure Any
Benefit. .................................................................................................................... 9
1.

2.

E.

V.

The Patent Office proceedings are not designed to resolve the invalidity
issues facing this Court.............................................................................. 10
Nokia overstates the odds that the re-examinations will simplify
the case ...................................................................................................... 11

The Court Should Deny Nokia's Bid For An Unfair Tactical Advantage. In
Particular, If The Court Is Inclined To Stay Some Patent Claims, It Should
Stay All Patent Claims ........................................................................................... 15

CONCLUSION ................................................................................................................. 16

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TABLE OF AUTHORITIES

Federal Cases
Akzenta Paneele + Profile GmbH v. Unilin Flooring N C. LLC,
464 F. Supp. 2d 481 (D. Md. 2006) ........................................................................................... 12
Alloc, Inc. v. Unilin Decor N V,
C.A. No. 03-253-GMS, 2003 WL 21640372 (D. Del. July 11, 2003) ....................................... .4
Amphenol T &M Antennas, Inc. v. Centurion Int'!, Inc.,
No. 00C4298, 2001 U.S. Dist. LEXIS 13795 (E.D. Ill. Sept. 5, 2001) ................................. 8, 12
Anascape, Ltd. v. Microsoft Corp.,
475 F. Supp. 2d 612 (E.D. Tex. 2007) ................................................................................. 10,15
Bartex Research, LLC v. FedEx Corp.,
611 F. Supp. 2d 647 (E.D. Tex. 2009) ......................................................................................... 8
Centillion Data Sys., LLC v. Convergys Corp.,
No. 1:04-CV-0073-LJM-WTL, 2005 WL 2045786 (S.D. Ind. Aug. 24, 2005) ........................ 16
Cognex Corp. v. National Instruments Corp.,
c.A. No. 00-442-JJF, 2001 WL 34368283 (D. Del. June 29, 2001) ........................... ..4, 5, 8, 16
Cooper Tech. Co. v. Dudas,
536 F.3d 1330 (Fed. Cir. 2008) ................................................................................................. 10
Cooper Tech. Co. v. Thomas & Betts Corp.,
No. 2:06-CV-242, 2008 WL 906315 (E.D. Tex. Mar. 31, 2008) .......................................... 8,12
Freeman v. 3M Co.,
661 F. Supp. 886 (D. Del. 1987) ............................................................................................... 16
Fresnius USA, Inc. v. Baxter Int'!, Inc.,
582 F.3d 1288 (Fed. Cir. 2009) ................................................................................................. 15
Fujitsu Ltd. v. Nanya Tech. Corp.,
No. C. 06-6613-CW, 2007 WL 3314623 (N.D. Cal. Nov. 6, 2007) ................................... 12, 15
IMAX Corp. v. In-Three, Inc.,
385 F. Supp. 2d 1030 (C.D. Cal. 2005) ........................................................................ .4,5,8, 15
Lexington Lasercomb IP.A.G. v. GMR Products, Inc.,
442 F. Supp. 2d 1277 (S.D. Fla. 2006) ........................................................................................ 9

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Life Techs. Corp. v. Illumina, Inc.,
C.A. No. 09-706-RK, 2010 WL 2348737 (D. Del. June 7, 2010) ......................................... 9,15
Network Appliance Inc. v. Sun Microsystems Inc.,
No. 07-06053-EDL, 2008 WL 2168917 (N.D. Cal. May 23, 2008) ............................... 5, 12, 15
Nidec Corp. v. LO Innotek Co.,
No.6:07CV108, 2009 WL 3673433 (E.D. Tex. Apr. 3, 2009) ................................................ 10
02 Micro Int'l Ltd. v. Beyond Innovation Tech. Co.,
No. 2-04-CV-32 (TJW), 2008 WL 4809093 (E.D. Tex. Oct. 29, 2008) ..................................... 8
Saint-Oobain Performance Plastics Corp. v. Advanced Flexible Composites, Inc.,
436 F. Supp. 2d 252 (p. Mass. 2006) .......................................................................................... 4
Soverain Software LLC v. Amazon. com, Inc.,
356 F. Supp. 2d 660 (E.D. Tex. 2005) ......................................................................................... 9
Sf. Clair Intellectual Prop. Consultants, Inc. v. Sony Corp.,
C.A. No. 01-557-JJF, 2003 WL 25283239 (D. Del. Jan. 30,2003) ............................................ 5
Transcore, LP v. Elec. Transaction Consultants Corp.,
563 F.3d 1271 (Fed. Cir. 2009) ................................................................................................... 7
Xerox Corp. v. 3Com Corp.,
69 F. Supp. 2d 404 (W.D.N.Y. 1999) ........................................................................................ 16

Federal Statutes
35 U.S.C. § 102 ............................................................................................................................. 11
35 U.S.C. § 112 ............................................................................................................................. 11
35 U.S.C. § 301 ............................................................................................................................. 11
35 U.S.C. § 302 ............................................................................................................................. 11
35 U.S.C. § 306 ............................................................................................................................... 8
35 U.S.C. § 315(c) ......................................................................................................................... 10
Federal Regulations
37 C.F.R. §§ 1.134, 41.30-54 .......................................................................................................... 8

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I.

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INTRODUCTION
Nokia's motion to stay nine Apple patents is another tactical gambit by Nokia in a

licensing dispute between the parties that began in 2007 and has now grown to six separate legal
proceedings. At the core of the licensing dispute is whether Nokia has complied with its
obligation to offer Apple fair, reasonable, and nondiscriminatory ("FRAND") license terms to
patents that Nokia has declared essential to wireless telecommunication industry standards, and
Nokia's ongoing, unlicensed use of Apple's patented technology to recapture market share that
Nokia has lost to the Apple iPhone. (See D.l. 21, Apple's First Amended Answer ~~ 1-9 and
Counterclaims ~~ 1-12, 85-92.) Staying this case pending the completion of re-examination
proceedings would fracture and prolong the parties' dispute, create substantial discovery
inefficiencies, impede the Court's ability to sequence trial as it wishes, and likely do nothing to
simplifY the case.
In moving for a stay, Nokia mis-states the significance of the re-examination proceedings
so far. The Patent Office grants ex parte re-examination requests 92% of the time, so the mere
grant of some of Nokia's requests does not indicate that Nokia's invalidity arguments are strong.
In fact, the Patent Office has not yet ruled on three of Nokia's re-examination requests and has
denied Nokia's re-examination request for one Apple patent. As to the five re-examination
requests that the Patent Office has granted, they are weak on the merits. Thus, the likelihood that
re-examination will eliminate or narrow Apple's infringement claims is very low and, at this
point, speculative.
From the outset of the litigation Nokia has maneuvered to have its patents litigated first.
Nokia's motion to stay the trial of Apple's patents based on Nokia's re-examination requests is
the latest of these maneuvers, and should be denied. Apple respectfully suggests that the most
efficient manner of proceeding would be to have discovery continue on all patent issues, and

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sequence the trials so that the FRAND issue is resolved first. If, following the FRAND trial, the
progress of the re-examination proceedings suggests that the schedule of the patent trials should
be altered, the Court will retain that flexibility. But, ifthe Court acts now on Nokia's request
and stays Apple's patents, it will have given up that flexibility, and prevented Apple from
proceeding to trial on its patents.

II.

THE NATURE AND STAGE OF THE PROCEEDINGS AND STATEMENT OF
FACTS
On October 22, 2009, Nokia filed a complaint alleging infringement often patents. This

filing followed Apple's refusal to acquiesce to Nokia's exorbitant demands for a license to the
Nokia patents that Nokia claims are essential to wireless telecommunication industry standards.
(D.I. I.) On December 11, 2009, Apple filed counterclaims for infringement of nine Apple
patents covering a broad range oftechnology that Nokia is using across its entire product line.
Apple also filed counterclaims for breach of contract and antitrust claims arising out of Nokia's
breach of its FRAND obligations and misconduct before standards-setting organizations. (D.I.
14, as amended D.I. 21.)
The overall conflict between the parties has now expanded to claims of infringement of
nearly fifty patents. Six separate proceedings are pending in three different venues: two cases in
district court in Delaware, one case in district court in Wisconsin, and three cases in the ITC.!
In this case, the Court has set the patent infringement claims of both parties for trial on
May 21,2012. (D.I. 42, Ordered 5/3/10) A trial on Apple's FRAND contract claims will
follow, and then a third trial on Apple's antitrust claims. (Jd.) Apple has requested that the
Court schedule a trial of the FRAND issues first, and at the June 3, 2010 teleconference, the
Court indicated that it may be inclined toward this view. (D.I. 55, p. 8, "I am willing to discuss

! A chart summarizing the cases is attached as Ex. 1.
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this with a somewhat open mind - the possible need to revisit the ordering of things.") Fact
discovery is proceeding together for all the claims and ends July 15, 2011. (D.1. 42, Ordered
5/311 0)
From the outset, Nokia consistently has sought to (a) split up the overall dispute rather
than consolidate it, and (b) unfairly have Nokia's claims tried separately from,and before,
Apple's claims. For example:
• On March 8, 2010, Nokia proposed a schedule under which its claims would proceed to
trial first, and Apple's claims would proceed second. (D.!. 23, p. 7.)
• On March 18, 2010, Nokia moved to stay discovery on Apple's contract and antitrust
claims. (D.1. 28, pp. 14-1S.i
• On May 7, 2010, Nokia filed a separate patent infringement action against Apple in
Wisconsin, notwithstanding the pendency of the Delaware lawsuits (Case No. 10-CV249, Western District of Wisconsin), and later opposed Apple's motion to transfer that
case to Delaware so that it could proceed with the other Delaware cases. (Id, D.L 21.)

III.

SUMMARY OF ARGUMENT
A stay would hamstring the Court's ability to order the proceedings in response to the

actual results of the re-examinations, forfeit efficiencies in the schedule and discovery plan
already approved by the Court, unfairly prejudice Apple, and unfairly create a tactical advantage
for Nokia. Further, a stay is not likely to accomplish any benefit: the re-examination
proceedings are in their infancy-and four ofthe nine patents are not even in re-examination.
The Court should deny the stay. Alternatively, it should stay all the patent infringement
claims-Apple's and Nokia's-to keep the parties on a more equal footing and enable a speedy
trial on the FRAND contract issues that may facilitate a global resolution ofthe dispute.

At the April 9, 2010 scheduling conference (D.L 39), the Court effectively denied Nokia's
motion to stay, and Nokia then formally withdrew it. (D.L 38.)

2

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IV.

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ARGUMENT
A.

Nokia Misstates The Applicable Law.

In determining whether to grant a stay, courts generally consider three factors: (1)
whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving
party; (2) whether a stay will simplify the issues in question and trial of the case; (3) whether
discovery is complete and whether a trial date has been set. Alloc, Inc. v. Unilin Decor N V.,
C.A. No. 03-253-GMS, 2003 WL 21640372, at*2 (D. Del. July 11, 2003).
Nokia's brief wrongly argues that there is a "policy" favoring stays and that it is Apple's
burden to prove that a stay is unwarranted. (Nokia Br., pp. 7, 12.) This is not the law. Rather,
especially because the Court has already set a trial date, it is Nokia's burden to show a "clear
case of hardship or inequity" before the trial court will enter a stay. See Cognex Corp. v.
National Instruments Corp., C.A. No. 00-442-JJF, 2001 WL 34368283, at *1 (D. Del. June 29,

2001) (citing Gold v. Johns-Manville Sales Corp., 723 F.2d 1068, 1076 (3d Cir. 1983)); accord
Saint-Gobain Performance Plastics Corp. v. Advanced Flexible Composites, Inc., 436 F. Supp.

2d 252 (D. Mass. 2006) (to obtain stay pending re-examination, movant must demonstrate a
"clear case of hardship"); lMAXCorp. v. In-Three, Inc., 385 F. Supp. 2d 1030, 1032 (C.D. Cal.
2005) (same). Nokia cannot meet its burden.
B.

Staying Apple's Patent Claims Will Create Substantial Inefficiencies.
1.

Staying a portion of the overall dispute does not promote efficiency.

This is not a dispute limited to individual patents. Instead, it is an effort to resolve the
parties' dispute about their intellectual property relationship. A ruling from this Court that keeps
all the patent infringement claims between the parties together will promote efficiency and
encourage settlement, whereas fragmenting the dispute by staying only Apple's patent
infringement claims would do the opposite.

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Nokia's motion for a stay pending re-examination ignores the complexity of this dispute,
and how interconnected the issues within the dispute are. A stay pending re-examination would
isolate a portion the overall dispute, and thus harm efficiency rather than promote it. See
Network Appliance Inc. v. Sun Microsystems Inc., No. 07-06053-EDL, 2008 WL 2168917, at *3
(N.D. Cal. May 23, 2008) (denying stay where the case involved 19 patents, where the parties
were litigating two other related cases, and "so much of the case would move forward regardless
of the stay"); Cognex Corp., 2001 WL 34368283, at *2 (denying stay where there were
numerous additional claims "all of which will require a trial"); lMAX Corp., 385 F. Supp. 2d at
1032-33 (denying stay where the re-examination had potential to "eliminate only one issue out of
many"). Accord St. Clair Intellectual Prop. Consultants, Inc. v. Sony Corp.,

c.A. No. 01-557-

JJF, 2003 WL 25283239, at *2 (D. Del. Jan. 30, 2003) (denying stay where "the pending
reexamination proceeding will not do much to contribute to [the parties'] end game strategy").
2.

A stay would be inefficient even if the patent claims are viewed in
isolation from the rest of the parties' disputes.

Even if this were a case involving only patent infringement claims, a stay pending re-

I,
1

examination would not promote efficient resolution.
A stay of the Apple patents asserted in the 09-791 case would create multiple discovery
periods and multiple trials on the patent infringement claims-precisely the opposite result from
the plan theCourt approved on May 3, 2010. Further, there is significant overlap between
Nokia's patent infringement case and Apple's patent infringement case. The requested stay
would eliminate efficiencies in discovery and pretrial preparation that are created by moving
ahead with all the patent infringement claims in a coordinated manner.

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The Nokia and Apple patents involve similar technologies. For example, many Nokia
and Apple asserted patents relate generally to transmitting and receiving signals in a wireless
cellular network or to cellular telephone functionality:
•

Creating "virtual channels" between a cell phone and a base station to put the phones in a
state to allegedly transmit or receive data more efficiently. (Nokia '465 patent at
Abstract. )3

•

Adding "fill bits" to different sized blocks of data transmitted over the network so that
the blocks have an even multiple of bytes to allegedly facilitate the processing of the
transmitted data upon receipt. (Nokia '904 patent at Abstract.)

•

Allowing access requests to be transmitted from the cell phone to the base station with
shorter durations and/or higher data rates. (Nokia' 548 patent at Abstract.)

•

Transmitting polling codes from a network to a mobile station to control the timing of
reports from the mobile station to the network. (Nokia' 135 patent at Abstract.)

•

Transmitting reports of cell measurement results for multiple cells in a particular order
from a mobile station to a base station. (Nokia '672 patent at Abstract.)

•

Encoding and/or decoding speech transmitted between a cell phone and base station.
(Nokia' 178 patent at Abstract; Nokia '651 patent at Abstract, col. 1: 13-35.)

•

Ciphering radio data transmitted in a cellular network. (Nokia '727 patent at Abstract,
co!. 1:7-30,3:14-32.)

•

Protecting the integrity of communications between a mobile station and a cellular
network. (Nokia '940 patent at Abstract, col. I :9-13; Nokia '621 patent at Abstract.)

•

Reducing interference in signals transmitted over a cellular network. (Apple' I 05 patent
at Abstract, col. 1:7-20.)

•

Performing cellular telephone functions such as initiating a call connection, monitoring
call progress, and activating call features. (Apple '854 patent at col. 51:38-40,52:31-34.)
Further, there will be significant overlap of the commercial products at issue. For

example, Nokia will presumably contend that its own products practice its patents. In turn,
Apple has accused the same Nokia products of infringing Apple's patents. Discovery for these
standards-compliant Nokia products will thus be required for both Apple's patent case and
Nokia's patent case.

Copies of the parties' patents were attached to their respective pleadings. (D.l. 1 and 21.) To
avoid unnecessary volume, copies of the patents have not been included with these papers.

3

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Additionally, discovery of licensing, sales and marketing, and financial infonnation is
likely to involve the same witnesses and sources of documents. For example, a study of the
parties' license portfolios-and depositions of relevant witnesses about those portfolios-will
presumably be important to establish both FRAND terms for Nokia's patents and a reasonable
royalty for Apple's patents. Also, given the overlap of commercial products noted above, sales
and marketing infonnation will overlap as well-for example, Nokia will wish to show how it
markets products that practice its own patents, and Apple will need to analyze the sales and
marketing of those same products as part of its damages case against Nokia. Even where there is
not a specific product overlap, the general sales and marketing practices of both parties will be
relevant to both cases.
If Apple's patent case is stayed, witnesses with information and documents relevant to
bothparties' patents will have to provide patent-specific and damages-specific discovery twice.
Respectfully, that is not efficient.

C.

Separating And Delaying Apple's Patent Claims Will Unfairly Prejudice
Apple.

Unlike Apple's conceded right to a FRAND license to Nokia's claimed standardsessential patents, Nokia has no claim to be licensed to Apple's patents, and Apple thus has the
right to exclude Nokia from using Apple's patented technology. See Transcore, LP v. Elec.
Transaction Consultants Corp., 563 F.3d 1271,1275 (Fed. Cir. 2009) (the grant ofa patent
provides the patentee with the "right to exclude,,).4 Further, the parties are direct competitors in
the smartphone market. Apple has been taking market share from Nokia, and Nokia's

4 Because Nokia has declared its patents essential to wireless communication standards, it has
irrevocably committed to allowing third parties to use the patents to implement the standard, and
hence waived its right to exclude. (D.l. I, Nokia Complaint, ~ 39.)

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infringement is an unlawful attempt to recapture that market share. (D.I. 21, Apple's First
Amended Answer ~~ 6-8.)
Given Apple's right to exclude and the direct competition between it and Nokia, any
delay is inherently and substantially prejudicial to Apple, and Nokia's motion for a stay should
therefore be denied. See 02 Micro Int'l Ltd. v. Beyond Innovation Tech. Co., No. 2-04-CV-32
(TJW), 2008 WL 4809093, at *2 (E.D. Tex. Oct. 29, 2008) (denying stay as unduly prejudicial
where parties were direct competitors); Cooper Tech. Co. v. Thomas & Betts Corp., No. 2:06CV-242, 2008 WL 906315, at *1 (E.D. Tex. Mar. 31,2008) (same); Amphenol T&M Antennas,

Inc. v. Centurion Int'l, Inc., No. 00C4298, 2001 U.S. Dist. LEXIS 13795, at *7 (E.D. Ill. Sept. 5,
2001) (denying stay where patent holder was potentially losing sales to the accused infringer);

IMAX Corp., 385 F. Supp. 2d at 1033 (fact that parties were vying for market share was a reason
not to grant the stay).
The prejudice is particularly acute here because the delay would be open ended, and
dependent on Patent Office procedures beyond the Court's or Apple's control. The average
pendency of an ex parte re-examination is 25.4 months and the median pendency is 20.0 months.
(Ex. 2.) An appeal would be expected to last an additional 3.5 years and perhaps more. s The
whole re-examination process can thus be expected to take at least two years and perhaps over
six years. By that time, the district court trial and appeal should be long finished. See Cognex

Corp., 2001 WL 34368283, at *2 (denying stay where it was likely that the district court trial

5 Apple, as the owner of the reexamined patents, may appeal a rejection of patent claims to the
Board of Patent Appeals and Interferences ("BP AI"), and may appeal an unfavorable BPAI
decision to the Federal Circuit. See generally 35 U.S.C. § 306; 37 C.F.R. §§ 1.134,41.30-54.
According to the most recent statistics, the average pendency of BPAI appeals is approximately
29 months and the median disposition time for Federal Circuit appeals is 9.3 months after
docketing. (Ex. 6, from
www.uspto.gov/iplboardslbpai/stats/perfonnlfy_201 0"'performance_ measures.jsp) and
www.cafc.uscourts.govlimages/stories/the-courtlstatisticslMedianDisp Time(table)00-09. pdf.)

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would finish before Patent Office proceedings); Bartex Research, LLC v. FedEx Corp., 611 F.
Supp. 2d 647, 651 (E.D. Tex. 2009) (noting that entire length of delay could be as much as 6.5
years).
It is unfair to make Apple wait for years while Nokia, a direct competitor, continues to

use Apple's patented technology unlawfully. See Life Techs. Corp. v. Illumina, Inc., C.A. No.
09-706-RK, 2010 WL 2348737, at *2 (D. Del. June 7, 2010) (denying stay in part because of the
"additional years" of delay that the re-examination proceedings would require); Soverain

Software LLC v. Amazon. com, Inc., 356 F. Supp. 2d 660,663 (E.D. Tex. 2005) (declining to
"put[] this case indefinitely on hold"); Lexington Lasercomb IP.A. G. v. GMR Products, Inc., 442
F. Supp. 2d 1277, 1278 (S.D. Fla. 2006) (denying stay because it would "prolong [the case] for
an indefinite period of time").

D.

Staying Apple's Patent Claims Pending Re-examination Does Not Ensure
Any Benefit.

The Court should not forfeit the known benefits of the current trial schedule and
discovery plan for the speculative possibility that a stay might allow the Patent Office to simplify
the case. Cf Soverain, 356 F. Supp. 2d at 662-63 ("[T]he Court is unwilling to adopt a per se
rule that patent cases should be stayed during reexamination because some of the relevant claims
may be affected. To do so would not promote the efficient and timely resolution of patent cases,
but would invite parties to unilaterally derail timely patent case resolution by seeking
reexamination."). In this case in particular, the mere granting of the re-examination requests on
four out of nine Apple patents provides no indication as to the substantive strength or merit of
Nokia's invalidity arguments or the likelihood that the re-examination will materially alter the
claims of those patents.

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1.

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The Patent Office proceedings are not designed to resolve the invalidity
issues facing this Court.

There are two types of re-examination proceedings: ex parte or inter partes. Nokia has
sought ex parte re-examination, and therefore, even if Nokia loses completely on every argument
before the Patent Office, it will no doubt seek to return to this Court and repeat the same losing
arguments based on the same prior art.
By contrast, in an inter partes procedure, statutory estoppel provisions prevent relitigation of issues that were presented, or could have been presented, in the Patent Office. See
35 U.S.C. § 315(c) (third party is estopped from asserting in a civil action the invalidity ofa
claim finally determined to be valid and patentable during an inter partes re-examination "on any
ground which the [party1raised or could have raised during the inter partes reexamination
proceedings"). Because there is no such estoppel provision for ex parte re-examinations, such
re-examinations are less likely than inter partes re-examinations to simplify the district court
litigation. See, e.g., Anascape, Ltd. v. Microsoft Corp., 475 F. Supp. 2d 612, 616-17 (E.D. Tex.
2007) (noting same, and granting stay for patents subject to inter partes re-examination but
denying stay for patents subject to ex parte re-examination). Here, Nokia could have sought
inter partes re-examination on two of the Apple patents at issue, but chose not to do so. Having
made that choice, Nokia sought to preserve its right to re-litigate the validity issues at the
expense of simplifying the case. 6 See Anascape, 475 F. Supp. 2d at 617 (in ex parte proceeding,
"the likelihood of simplification is much less"); Nidec Corp.

JI.

LG Innotek Co., 2009, No.

6:07CYI08, WL 3673433, at *6 (E.D. Tex. Apr. 3,2009) (same).
6 Inter partes re-exam is available for patents that issue from an original application filed on or
after November 29, 1999. See Cooper Tech. Co. v. Dudas, 536 F.3d 1330, 1331 (Fed. Cir.
2008). Here, two of Apple's patents have such a filing date, namely U.S. Patent Nos. 7,383,453
(application filed August 25,2005) and 7,469,381 (application filed December 14,2007). The
'381 patent is one of the five for which the Patent Office has granted re-examination.

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Further, Patent Office review on a re-examination is limited to a narrow scope of issues,
specifically whether prior art patents or printed publications are invalidating. See 35 U.S.C. §§
301,302. Nokia can lose on those issues and still return to this Court and continue to litigate the
validity of the patents under different theories and evidence. For example, in the district court
case, but not in the re-examinations, Nokia could argue that the Apple patents are invalid under
35 U.S.C. § 112 (setting forth, inter alia, invalidity defenses based on lack of written description,
enablement, and failure to disclose best mode), or that prior art systems invalidate the patents
under 35 U.S.C. § 102 (prior use and prior sale can be a basis to invalidate a patent). Nokia has
asserted both defenses. See Ex. 3, Nokia response to Apple Interrogatory No. 12, p. 10.
In sum, the re-examination proceedings instituted by Nokia are not designed to avoid the
need for further district court litigation, and this Court should not depend on those proceedings to

2.

Nokia overstates the odds that the re-examinations will simplifY the case.

The decision by the Patent Office to grant certain of Nokia's ex parte requests for reexamination is unremarkable and in no way signals that the patents are invalid. When it grants a
request for re-examination, the Patent Office has not invalidated any patent claim, but merely has
agreed to re-examine the patent. (See, e.g., Nokia Br., Exs. 6 and 7, re-examination request and
grant for' 854 patent.) Given this low threshold, it is unsurprising that 92% of ex parte reexamination requests are granted. (See Ex. 2.)
Further, when requested by a third party such as Nokia, 25% of the re-examinations end
with all patent claims confirmed, versus only 13 % with all patent claims canceled. (Ex. 2.)
Thus, Apple's patents are twice as likely to emerge from the Patent Office proceedings
If the Court is at all inclined to grant a stay, it should condition that grant on Nokia's agreement
not to re-assert prior art that is, or could have been, of-record in the re-examinations.

7

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unchanged as they are to be canceled. Even though at least one claim changes in 62% of ex parte
re-examination proceedings (Ex. 2), this does not mean that Nokia has a 62% chance of success.
Claims are often amended in ways that do not affect the infringement case, and claims that are
substantively amended in re-examination may be claims that would not have been asserted in the
lawsuit in the first place. Given the number of Apple patents and patent claims at issue--the
nine patents collectively have 179 claims-the odds are overwhelming that a large number of
claims will survive the re-examination and return to this Court.
Thus, it cannot be presumed that what happens in the Patent Office will materially affect
the scope of Apple's infringement claims. Such a presumption would be speculative if there
were only one patent at issue. Such a presumption is wildly speculative given that there are nine
Apple patents, and that the Patent Office has already denied re-examination of one of the nine.

See Akzenta Paneele + Profile GmbHv. Unilin Flooring NC LLC, 464 F. Supp. 2d 481, 486 (D.
Md. 2006) (citing Patent Office statistics to conclude that it was "likely" that "even after
reexamination, invalidity will continue to be an issue so a stay would not preserve many
resources"); Amphenol, 2001 U.S. Dist. LEXIS 13795, at *6 (noting that re-examination could
alter the patent claims yet still "have only a minimal effect on the pending litigation"); Network

Appliance, 2008 WL 2168917, at *3 (noting that a stay in a three-patent case was "not nearly as
likely to significantly simplify this litigation" as compared to a stay in a one-patent case);

Cooper Tech., 2008 WL 906315, at * I (denying stay given that it was "likely that some of the
patent's claims will survive reexamination" and the likelihood that reexam would simplify the
case was "speculative"); Fujitsu Ltd v. Nanya Tech. Corp., No. C. 06-6613-CW, 2007 WL
3314623, at *3 (N.D. Cal. Nov. 6, 2007) (in a five-patent case, noting that there was a "0.0025
percent" chance that all the re-examined claims would be canceled).

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The likelihood that Nokia's requests for re-examination will not eliminate or narrow the
scope of Apple's patent claims is demonstrated by the Patent Office's denial of Nokia's request
for re-examination of one of the patents and the overall weakness of Nokia's invalidity
arguments for the five patents for which the Patent Office has granted the request for reexamination. For example, Nokia's re-examination request for the '854 patent is fundamentally
flawed. (See Nokia Br., Ex. 6, re-examination request for '854 patent.) Each independent claim
of the '854 patent requires an "object oriented operating system." (See '854 patent at claims I
and 13.) In granting re-examination, the Patent Office relied upon the alleged NeXTStep prior
art as teaching the claimed "object oriented operating system." (See Nokia Br., Ex. 7, Order
Granting Request for Reexamination, p. 2.) But the NeXTStep documentation teaches the use of
the Mach operating system, which is a procedural operating system. 8 The '854 patent
specifically distinguishes its claimed "object oriented operating system" from the prior art
approach of merely layering object-oriented frameworks and libraries on top of a lower-level
procedural operating system. (See '854 patent at col. 5:52-6:7.) Because the NeXTStep
documentation teaches a procedural operating system and not an "object oriented operating
system," NeXTStep is not close prior art to the '854 patent.
Similarly, Nokia's re-examination request for the' 105 patent has little chance of success
because the Patent Office granted re-examination based on one reference, the Gardner II article
(Nokia Br., Ex. 16, p. 3), that was already considered by the Patent Office during the original
prosecution of the patent. In granting Nokia's request for re-examination, the Patent Office
simply mistook this fact. (Compare '105 patent, p. 2, "References Cited" (disclosing Gardner II)

See, e.g., Ex. 5, U.S. Pat. No. 5,379,432 at col. 5:67-6:1 ("the operating system 114 represents a
limited functionality procedural operating system, such as the Mach micro-kernel ... ")
(emphasis added).
8

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with Nokia Br., Ex. 16, p. 3 (Patent Office mistakenly asserting that Gardner II was not
considered during the original application).)
Nokia's re-examination request for the '381 patent is similarly misguided. The '381
patent concerns the operation of a touch-screen on an electronic device. Summarizing in broad
terms, the' 3 81 patent discloses and claims a "bounce back" feature that informs a user when he
or she has scrolled to the edge of the document being viewed. After reaching the edge, .
continued scrolling displays an area beyond the document's edge, and the document then
"bounces back" so that this area is no longer visible. (See, e.g., '381 patent, at Figs. 8A-8Dand
cols. 29:41 to 30:10, 35:43-56, 36:13-14, and 36:31-38.) The Patent Office granted reexamination primarily in reliance upon the alleged prior art Glimpse article. (Nokia Br., Ex. 9, p.
6.) But Glimpse merely permits a user to pan from one portion of a document to another,
combined with an "undo" feature that allows the user to return to the previously viewed portion.
This is not a "bounce back" feature at all. Similarly, the Inside Out article-the second reference
that the Patent Office mainly relies upon-also fails to disclose a bounce back feature. (Jd.)
This art is hardly invalidating and is, in fact, less relevant to the' 3 81 invention than prior art that
the Patent Office considered during the original application.
Thus, Nokia's invalidity arguments are demonstrably weak, and there is no indication
from the Patent Office that the re-examinations are likely to invalidate any claims-much less a
final office action or action closing prosecution invalidating all of the claims-so as to justifY
staying Apple's entire patent case based on the Patent Office's granting of requests to reexamine
four of nine patents.

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E.

Filed 08/20/10 Page 19 of 23 PageID #: 4199

The Court Should Deny Nokia's Bid For An Unfair Tactical Advantage. In
Particular, If The Court Is Inclined To Stay Some Patent Claims, It Should
Stay All Patent Claims.

As requests for patent re-examinations continue to proliferate, courts are recognizing that
a motion to stay following a re-examination request can be a tactical maneuver rather than a
genuine effort to advance the case efficiently. Judge Newman recently observed that the
procedure of staying a case pending re-examination can be subject to "manipulation and abuse,
through the delays that are inherent in PTO activity." Fresnius USA, Inc. v. Baxter Int'!, Inc.,
582 F.3d 1288, 1305 (Fed. Cir. 2009) (Newman, J., concurring). Accord Network Appliance,
2008 WL 2168917, at *3 ("[T]here appears to be a growing concern among at least some judges
in this district that, on balance, staying a case even in its early stages pending reexamination has
not led to the just, speedy, and efficient management of the litigation, but instead has tended to
prolong it without achieving sufficient benefits in simplification to justify the delay.");

Anascape, 475 F. Supp. 2d at 615 ("[T]he court must be aware that a request for examination can
be used as a tactical tool to delay a case and impose costs, with no real expectation that any
controversy will be resolved.").
Here, Nokia is plainly seeking the stay for tactical advantage. Since March, Nokia has
repeatedly tried to advance its claims over Apple's, including by asking that all of its claims be
tried before any of Apple's, and moving to stay Apple's non-patent claims. When that failed,
Nokia filed a new patent case in a different court. If Nokia's motion is granted, Apple's patent
claims would be stayed but Nokia's would proceed. This imbalance would confer unfair tactical
advantage on Nokia and, by itself, justifies denying the stay. See Life Techs., 2010 WL 2348737,
at *3 (noting prejudice to non-movant if its patents were stayed but the patents owned by the
party moving for a stay were allowed to proceed); NetworkAppliance, 2008 WL 2168917, at *5
(N.D. Cal. May 23, 2008) (staying one party's patents but not the other party's patents would
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confer an unfair tactical advantage on the party moving for the stay); Fujitsu, 2007 WL 3314623,
at *3 ("it would be unreasonable to permit N anya to proceed on its infringement claims against
Fujitsu while staying Fujitsu's infringement proceedings against Nanya"); lMAX, 385 F. Supp.
2d at 1033 n.2 (declining movant's "generous offer" to allow its patent claims to proceed while
plaintiffs claims were stayed).9
If the Court is inclined to grant Nokia's motion, it should stay all the patent infringement
claims of the 09-791 case, including Nokia's. Cj Ex. 4, Applera Corp. v. Thermo Electron

Corp., Case No. 04-CY-1230-GMS, p. 4 (Dec. 28,2005) (after plaintiff moved to stay
defendant's counterclaim patent, the court stayed plaintiffs patent claim as well; "the court
believes that the most efficient and practical way to proceed with the litigation is to stay both
cases"). Staying all the patent infringement claims would allow the core of the case-the
FRAND issue-to proceed quickly to trial, a scenario that would provide the best chance for
resolution ofthe parties' dispute.

V.

CONCLUSION
For reasons stated above, the Court should deny Nokia's motion to stay. Alternatively,

the Court should stay both parties' patent infringement claims so that the FRAND issues may
proceed first.

9 Other cases in which the court denied a motion to stay pending re-examination upon
determining that the motion was motivated by gamesmanship include, e.g., Centillion Data Sys.,
LLC v. Convergys Corp., No. 1:04-CY-0073-LJM-WTL, 2005 WL 2045786, at *1 (S.D. Ind.
Aug. 24, 2005); Xerox Corp. v. 3Com Corp., 69 F. Supp. 2d 404, 407 (W.D.N.Y. 1999);
Freeman v. 3M Co., 661 F. Supp. 886,888 (D. Del. 1987); Cognex, 2001 WL 34368283, at *2.
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Respectfully submitted,
OF COUNSEL:

POTTER ANDERSON & CORROON LLP

William F. Lee
WILMERHALE

60 State Street
Boston, MA 02109
Tel: [phone]
Mark D. Selwyn
WILMERHALE

950 Page Mill Road
Palo Alto, CA 94304
Tel: [phone]
Kenneth H. Bridges
Michael T. Pieja

By: /s/ Richard L. Horwitz
Richard L. Horwitz (#2246)
David E. Moore (#3983)
Hercules Plaza, 6th Floor
1313 N. Market Street
Wilmington, DE 19899
Tel: [phone]
[e-mail]
[e-mail]
Attorneys for Defendant/Counterclaim-Plaintiff
Apple Inc.

WONG CABELLO

540 Cowper Street, Suite 100
Palo Alto, CA
Tel: [phone]
Dated: August 20, 2010
979500/35035

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
CERTIFICATE OF SERVICE
I, Richard L. Horwitz, hereby certify that on August 20, 20 I 0, the attached document was

electronically filed with the Clerk of the Court using CMlECF which will send notification to the
registered attorney(s) of record that the document has been filed and is available for viewing and
downloading.
I hereby certify that on August 20, 20 I 0, the attached document was electronically mailed to
the following person(s)
Jack B. Blumenfeld
Rodger D. Smith II
Morris, Nichols, Arsht & Tunnell LLP
1201 North Market Street
Wilmington, DE 19899
[e-mail]
[e-mail]

Alan L. Whitehurst
The Atlantic Building
950 F Street, NW
Washington, DC 20004-1404
alan. [e-mail]

Adam J. Biegel
Keith E. Broyles
Patrick J. Flinn
John D. Haynes
Ryan W. Koppelman
Mark A. McCarty
Peter Kontio
Alston & Bird LLP
One Atlantic Center
120 I West Peachtree Street
Atlanta, GA 30309
[e-mail]
keith. [e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
peter [e-mail]

Case 1:09-cv-00791-GMS Document 88

Filed 08/20/10 Page 23 of 23 PageID #: 4203

Isl Richard L. Horwitz
Richard 1. Horwitz
David E. Moore
POTTER ANDERSON & CORROON LLP

[phone]
[e-mail]
[e-mail]
941557/35035

2