Free Reply Brief - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE INOVIS USA, INC., Plaintiff, v. CLASSIFIED INFORMATION, INC. and DISTANCE DIGITAL CO., LLC, Defendants. ) ) ) ) ) ) ) ) ) )

C.A. No. 07-459 (GMS)

PLAINTIFF INOVIS USA, INC.'S REPLY BRIEF IN SUPPORT OF ITS MOTION TO STAY ALL PROCEEDINGS PENDING DETERMINATION OF ITS FILED REQUEST FOR REEXAMINATION MORRIS, NICHOLS, ARSHT & TUNNELL LLP Jack B. Blumenfeld, Esquire (#1014) Julia Heaney, Esquire (#3052) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 [email protected] Attorneys for Plaintiff Inovis USA, Inc. OF COUNSEL: David J. Wolfsohn Erich M. Falke Jordan L. Jonas WOODCOCK WASHBURN LLP Cira Centre, 12th Floor 2929 Arch Street Philadelphia, PA 19104 (215) 568-3100 May 27, 2008

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TABLE OF AUTHORITIES CASES PAGE

Abbott Diabetes Care, Inc. v. Dexcom, Inc., C.A. No. 05-590-GMS, 2006 U.S. Dist. LEXIS 57469 (D. Del. Aug. 16, 2006) .....................3

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NATURE AND STAGE OF PROCEEDING Since Inovis filed its Motion To Stay All Proceedings Pending Determination Of Its Filed Request For Reexamination (D.I. 65), the PTO has ordered reexamination of the 669 Patent (Ex. D, Application data for 669 Patent from USPTO Patent Application Information Retrieval website, dated May 27, 2008). ARGUMENT In opposing Inovis' motion for a stay pending the reexamination of the 669 Patent, Classified argued on May 15 that "even a slight delay" in discovery would have "significant consequences" for Classified. (Classified's Br. at 3, D.I. 69). Yet just a few days letter, Classified requested that the Markman hearing be postponed from its originally scheduled date of June 24 until September 25, that fact discovery be extended from August 8 until November 7, 2008, and that expert discovery be extended from November 21, 2008 until January 9, 2009. (D.I. 25; D.I. 70). Classified's own request for months of more time gives the lie to the notion that Classified could possibly be prejudiced--much less "unduly prejudiced"--by a stay. Classified also seems to fault Inovis for being scrupulously prompt and candid in, first, notifying Classified of its intent to file for reexam (D.I. 65 at Ex. A) and, second, in quickly moving for a stay within two weeks of having sought reexam. Classified's argument seemed to be that there was a 4 or 5% chance that the reexamination request might not be granted, and the Court should therefore assume that this case fell into that 5% of cases in which reexam is denied, as opposed to the 95% or more of cases in which it is granted. That argument is now moot, however, because the PTO has now granted reexamination. (Ex. D). Importantly, Classified offered no argument why, if reexamination were granted by the PTO (as it now has been), this Court should not enter a stay of this case.

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Moreover, Classified's argument that a stay "would also unfairly allow Inovis to continue to delay in providing the details of its invalidity and unenforceability defenses" is specious. (Classified's Br. at 5). The only "delay" in this case has been Classified's. First, Classified delayed filing its counterclaim for patent infringement for almost seven months after Inovis filed its complaint--filing a frivolous motion to dismiss that was belatedly withdrawn. Second, Classified has changed counsel multiple times, which has entailed substantial delays to Inovis. Indeed, despite Classified's misleading self-portrait of a party propelling this case along ("Classified retained its current counsel to move forward and get its case ready for trial," Classified's Br. at 1), Classified's most recent counsel was unable to draft its opening claim construction briefs consistent with the Court's prior scheduling order, thereby necessitating a three-month delay in the Markman hearing and a three-month extension in fact discovery as well. Similarly, Classified never reconciles its contention that "even a slight delay would have significant consequences for both parties and the Court" (Classified's Br. at 3), with the fact that it delayed commencement of discovery until nine months after plaintiff filed the complaint and more than two months after Classified filed its patent infringement counterclaim, or the fact that, in the ten months since this case was filed, none of Classified's various counsel have taken a single deposition or issued a single third-party subpoena. Given Classified's own dilatory conduct in commencing discovery and its numerous requests for continuances,1 the
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Classified argues disingenuously that it "has not had an opportunity to take any depositions of Inovis' employees, due in large part to the fact that it has yet to receive any discovery from Inovis." (Classified's Br. at 5). But nothing has prevented Classified from taking depositions, and if it wanted to receive Inovis' document responses earlier, it should have served them earlier. Instead, Classified failed to serve any document requests until April 24 (D.I. 63), making the responses not due until May 30. If Classified really cared about "a month of lost time" (Classified's Br. at 7), it would not have delayed serving document requests for nine months after this case was filed and nine weeks after it had filed its infringement counterclaim. -2-

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notion that a stay could somehow prejudice it--much less unduly prejudice it--is preposterous. Indeed, at the same time that Classified is telling this Court that it is "get[ting] its case ready for trial," Classified is refusing to provide Inovis with proper infringement contentions on the theory that "[d]iscovery in this matter is still at an early stage." (Ex. E, Classified Information's Supplemental Answer to Inovis' First Set of Interrogatories at 1). At the end of the day, Classified does not, and cannot, dispute the large body of case law that teaches that, where a reexamination request has been granted, a stay is usually appropriate unless it is requested just before trial. Indeed, in the one case cited by Classified, Abbott Diabetes Care, Inc. v. Dexcom, Inc., C.A. No. 05-590-GMS, 2006 U.S. Dist. LEXIS 57469 (D. Del. Aug. 16, 2006), this Court ruled that a stay should be granted, despite the fact that the plaintiff had filed a claim for patent infringement a year before the Court's ruling, and fact discovery was set to close in five months. Here, Classified's claim for patent infringement was only filed three months ago, and there are over seven months left in fact discovery. As even Classified concedes, the likelihood that the PTO will declare invalid one or more claims of the 669 Patent is 74%. (Classified's Br. at 6). Under such circumstances, for all the reasons set forth in this Court's decision in Abbott and other cases, it makes great sense to await the PTO's determination on the significance of the prior art that was never previously considered by the examiner. Conversely, there is no sense in proceeding willy nilly with discovery, briefing, hearings, and a trial on the counterfactual assumption that the PTO will not gut, if not completely invalidate, the 669 Patent during reexamination.

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MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ Julia Heaney
Jack B. Blumenfeld (#1014) Julia Heaney (#3052) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 [email protected] Attorneys for Plaintiff Inovis USA, Inc.

OF COUNSEL: David J. Wolfsohn Erich M. Falke Jordan L. Jonas WOODCOCK WASHBURN LLP Cira Centre, 12th Floor 2929 Arch Street Philadelphia, PA 19104 (215) 568-3100 May 27, 2008
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CERTIFICATE OF SERVICE I, the undersigned, hereby certify that on May 27, 2008, I electronically filed the foregoing with the Clerk of the Court using CM/ECF which will send notification of such filing to the following: M. Duncan Grant PEPPER HAMILTON LLP

and that copies were caused to be served upon the following individuals in the manner indicated: BY ELECTRONIC MAIL M. Duncan Grant PEPPER HAMILTON LLP 1313 N. Market Street, Suite 1500 P.O. Box 1709 Wilmington, DE 19899-1709 Michael A. Lee Vineet Bhatia Stephen F. Schlather SUSMAN GODFREY LLP 1000 Louisiana, Suit 5100 Houston, TX 77002-5096

/s/ Julia Heaney
Julia Heaney (#3052) [email protected]

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EXHIBIT D

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EXHIBIT E

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