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BY ELECTRONIC FILING
The Honorable Joseph J. Farnan, Jr.
United States District Court
844 N. King Street
Wilmington, DE 19801
Re: St. Clair v. Samsung, et al., Civil Action No. 04-1436 {D. Del.;
Dear Judge F arnan:
Defendants in the above action submit this letter in support of their joint proposed
Rule l6(b) scheduling order}
As an initial matter, Defendants believe that a schedule should not be entered until
a threshold issue of standing — the subject of Defendants’ pending motion to stay this action ——
has been resolved. (See DI 30, 31, Hled May 19, 2005.) As discussed in that motion, the
threshold standing issue is whether Plaintiff St. Clair Intellectual Property Consultants, Inc. ("St.
CIair") owns the patents-in-suit, or whether the patents-in—suit are instead owned by a different
1 The Defendants in this case are Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung
Telecommunications America, L.P., Matsushita Electric Corporation of America, Victor Company of Japan,
Ltd., JVC Company of America, Nokia Corporation, Nokia, Inc., Hewlett—Packard Company and Eastman
Kodak Company.
WP3:l 1 15044.1 63900.1001
Case 1 :04—cv—01436-JJF Document 34 Filed 05/23/2005 Page 2 of 4
Youric CoNAwAY STARGATT & TAYLOR, LLP
The Honorable Joseph J. Farnan, Jr.
May 23, 2005
Page 2
company Mirage Systems, lnc. ("Mirageâ€), which employed the inventors when they did the
work allegedly underlying the patents-in-suit. Within the past two months, this ownership
dispute has itself become the subject of two separate lawsuits between St. Clair and Mirage.?
The resolution of either of those lawsuits may render this action unnecessary (or at least reduce
the number of parties and amount of associated costs), either by requiring dismissal of St. Clair’s
complaint for lack of standing if Mirage prevails, or by permitting the parties to consider settling
this case on reasonable terms if St. Clair is adjudicated the proper owner. Indeed, in its
complaint against Mirage, St. Clair acknowledges that the possibility of settlement has been
foreclosed as a result of the ownership dispute.3
Nevertheless, if the Court would prefer to enter a scheduling order at this time,
Defendants submit that their proposed schedule, which provides for an initial expedited
discovery period culminating in an early trial of the ownership issue ·—— to be followed
immediately, if warranted, by traditional patent discovery including Mar/mzan proceedings -- is
more likely to lead to the efficient resolution of this action (by verdict or settlement) than the _
scheduling order proposed by St. Clair. For easy reference we have also enclosed a summary of i `
the key dates in defendants’ proposed schedule.
First, for the same reasons stated by Defendants in their motion for stay,
Defendants believe that the threshold standing/ownership issue should be resolved before the
more complex and potentially unnecessary issues of non—infringement and patent invalidity.
Accordingly, Defendants submit that their proposed schedule, which allows the threshold
ownership/ standing issue to proceed first and be resolved on an expedited basis within seven
months is preferable to St. Clair’s proposed schedule, which fails to provide any mechanism for
the early resolution of this potentially case-dispositive issue.
Second, consistent with this Court’s Model Rule 16 Scheduling Order and the
practice of this Court, Defendants’ proposed schedule provides for a Markman hearing and
related proceedings. St. Clair, in contrast, refuses even to schedule a Markman hearing on the
ground that this Court has previously construed some of the terms that appear in some of the
claims of the patents-in—suit. Under St. Clair’s proposal, Defendants would be precluded from
2 On April l2, 2005, Mirage filed an action against St. Clair (and others) in California state court alleging that
Mirage is the rightful owner of the patents—in-suit by virtue of employment agreements signed by the named
inventors. See Mirage Systems, Inc. v. Speasl, et al., Case No. l05CV039l64 (Cal. Sup. Ct.), On May 6, 2005,
St. Clair tiled an action against Mirage in this Court alleging that St. Clair is the owner. See St. Clair
Intellectual Property Consultants v. Mirage Systems, Inc., Civil Action No. 05-273 (D. Del.) (Farnan, Ql.).
3 See St. Clair Complaint at il 119 ("The delay and failure in licensing that has resulted from the [Mirage]
Defendants’ dissemination of the allegations in Mirage’s Complaint and/or other allegations of Mirage’s claim
of ownership has caused St. Clair substantial danzages...includ[ing] at least St. Clair 's expenses and burden of
continuing litigation of defendants who would have settled but for the [Mirage] Defendants’ tortious conduct
together with lost licensing revenue in the tens of millions of dollars.") (emphasis added).
w1>3;111s04»1.1 62900.1001
Case 1:04-cv-01436-JJF Document 34 Filed 05/23/2005 Page 3 of 4
Youno CoNAwAY STARGATT & TAYLOR, LLP
The Honorable Joseph J. Farnan, Jr.
May 23, 2005
Page 3
identifying additional or different terms, or aspects of terms, for construction. Similarly,
Defendants would be prevented from raising any claim construction arguments not made in the
prior litigations. This attempt to deprive Defendants of their rights to litigate this issue is
particularly troubling in light of the pending reexamination of some patents—in—suit before the
United States Patent and Trademark Office. Whether St. Clair’s proposal is an attempt to
prevent Defendants from raising any reexamination history estoppel arguments resulting from
any amendments or arguments made by St. Clair during the reexamination is unclear. What is
clear, however, is that Defendants have a right to be heard regarding the proper construction of
any of the terms of the claims of the patents-in—suit, whether those terms have previously been
construed or not. St. Clair’s failure to schedule any Markman hearing or briefing, therefore,
represents a fatal flaw in its proposal, and warrants denial of its proposed schedule.
Finally, given that St. Clair chose to commence this action against a variety of
unrelated companies based on their sales of different products, Defendants believe that any
scheduling order adopted by the Court should be balanced and should not unilaterally favor one
party at the expense of the others. While Defendants’ proposed schedule strives for and is likely i
to achieve that balance, St. Clair’s proposal is decidedly one-sided in favor of St. Clair. For
example, as discussed above, St. Clair’s proposal fails to schedule and seeks to deprive
defendants of their rights to a Markman hearing. In addition, St. Clair seeks an extremely
aggressive and rushed schedule despite the fact that St. Clair repeatedly postponed the answer
due dates —— the last of which was filed on April 29, 2005 — by five months as part of its effort
to secure a pre-litigation settlement. St. Clair’s accelerated schedule, in effect, now seeks to
charge all Defendants with the five-month extension that St. Clair, for its own benefit, provided
to some defendants in an effort to secure a pre-litigation settlement. Given the multi-defendant
format in which St. Clair chose to commence this action, it is hardly fair for St. Clair to insist on
a rushed schedule that does not permit Defendants to prosecute their cases.
Accordingly, in light of the presently pending lawsuits between St. Clair and
Mirage contesting the very ownership of the patents—in—suit, Defendants submit that this action
should be stayed with no schedule to be entered at this time. lf, however, the Court is inclined to
enter a scheduling order at this time, Defendants respectfully submit that the Court adopt their
jointly—submitted schedule, rather than unfair and unworkable schedule proposed by St. Clair.
Respectfully yours,
J o haw
J WS/prt
Enclosures
WP3:l 1 15044.1 63900.100l
Case 1:04-cv-01436-JJF Document 34 Filed 05/23/2005 Page 4 of 4
Youuc CONAWAY STARGATT & TAYLOR, LLP
The Honorable Joseph J. Farnan, Jr.
May 23, 2005
Page 4
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WP3:1 1 15044.1 53900_1001
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