No. 2017-129 UNITED STATES COURT OF APPEALS FOR THE … · 2017-08-11 · No. 2017-129 . UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT . IN RE CRAY INC., Petitioner. On Petition

No. 2017-129

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

IN RE CRAY INC.,

Petitioner.

On Petition for Writ of Mandamus to the

United States District Court for the Eastern District of Texas No. 2:15-CV-1554

Hon. Rodney Gilstrap, United States District Judge

REPLY IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS

David K. Tellekson Bryan A. Kohm Melanie L. Mayer FENWICK & WEST LLP FENWICK & WEST LLP 555 California Street, 12th Floor 1191 Second Avenue, 10th Floor San Francisco, CA 94104 Seattle, WA 98101 (206) 389-4510

(415) 875-2300

Michael C. Smith (admission pending) SIEBMAN, BURG, PHILLIPS & SMITH LLP 113 East Austin Street Marshall, TX 75671 (903) 938-8900

Counsel for Petitioner Cray Inc.

Case: 17-129 Document: 42-1 Page: 1 Filed: 08/08/2017 (1 of 127)

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TABLE OF CONTENTS

Page

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

I. THE DISTRICT COURT’S DECISION THAT VENUE IS PROPER IS CONTRARY TO THE STATUTORY TEXT AND CONFLICTS WITH PRECEDENT. ........................................................................................................ 2

A. The District Court’s Erroneous Holding that Section 1400(b) Does Not Require a Physical Presence Conflicts with the Language of the Statute. ................................................................................................... 2

B. The District Court’s Disregard for the Word “Place” Permeates Its Misapplication of Cordis. ........................................................................... 4

C. Raytheon’s Additional “Facts,” Not Relied on by the District Court or Supported with Evidence, Do Not Show that Venue Is Proper. ................. 9

II. CRAY HAS MET THE STANDARD REQUIRED FOR A WRIT OF MANDAMUS TO ISSUE. ...................................................................................11

III. THE COURT HAS JURISDICTION TO ADDRESS THE PROPER STANDARD UNDER SECTION 1400(b) AND TO REJECT THE DISTRICT COURT’S FOUR-PART TEST. .......................................................12

IV. CRAY HAS ALWAYS CHALLENGED VENUE. .....................................14

V. THE COURT SHOULD DIRECT TRANSFER TO THE WESTERN DISTRICT OF WISCONSIN AS THE MOST CONVENIENT VENUE. .........15

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


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TABLE OF CONTENTS

Page(s)

CASES

Am. Cyanamid Co. v. Nopco Chem. Co., 388 F.2d 818 (4th Cir. 1968) ............................................................................ 7, 9

Atl. Cleaners & Dyers, Inc. v. United States, 286 U.S. 427 (1932) .............................................................................................. 3

Bilski v. Kappos, 561 U.S. 593 (2010) .............................................................................................. 2

Gen. Radio Co. v. Superior Elec. Co., 293 F.2d 949 (1st Cir. 1961) ................................................................................. 7

Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182 (7th Cir. 1969) .............................................................................. 9

In re Cordis, 769 F.2d 733 (Fed. Cir. 1985) .....................................................................passim

In re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012) .......................................................................... 11

In re Spalding Sports Worldwide, Inc., 203 F.3d 800 (Fed. Cir. 2000) ............................................................................ 12

In re Toyota Motor Corp., 747 F.3d 1338 (Fed. Cir. 2014) .......................................................................... 15

In re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008) .............................................................................. 16

Lace v. Lace, No. 89-cv-414, 1989 WL 103364 (N.D. Ill. Aug. 28, 1989) ................................ 8

McKnight, Inc. v. United Indus. Corp., No. 16-cv-2534, Dkt. No. 40 (W.D. Tenn. July 7, 2017) ................................... 12


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Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) .......................................................................................... 3

Realtime Data, LLC v. Exinda, Inc., No. 17-cv-124, Dkt. No. 33 (E.D. Tex. Aug. 1, 2017) ....................................... 12

Samsung Elecs. Co. v. Rambus, Inc., 523 F.3d 1374 (Fed. Cir. 2008) .......................................................................... 13

Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) ........................................................................................ 13

Univ. of Ill. Found. v. Channel Master Corp., 382 F.2d 514 (7th Cir. 1967) ................................................................................ 8

W.S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723 (1915) .............................................................................................. 7

Wi-LAN, Inc. v. Lenovo (United States), Inc., No. 17-cv-365, 2017 WL 3194692 (S.D. Cal. July 27, 2017) ............................ 12

STATUTES

15 U.S.C. § 7706(f)(7)(B) .......................................................................................... 3

21 U.S.C. § 460(c) ..................................................................................................... 3

21 U.S.C. § 642(a) ..................................................................................................... 3

35 U.S.C. § 1400(b) ..................................................................................... 1, 2, 5, 12

35 U.S.C. § 1404(a) ................................................................................................. 15

42 U.S.C. § 1320d-5(d)(6)(B) .................................................................................... 3

43 U.S.C. § 1613(c)(1) ............................................................................................... 3

OTHER AUTHORITIES

Chisum on Patents § 21.02(2)(g) ............................................................................... 9


1

INTRODUCTION

Cray lacks a “regular and established place of business” in the Eastern

District of Texas. The district court’s holding to the contrary cannot be reconciled

with the language of the statute or this Court’s decision in Cordis.

Section 1400(b) requires that the defendant have a “regular and established

place of business.” Cordis, for its part, holds that a company cannot escape venue

in a district by replacing traditional offices and storefronts with informal ones. It

does not hold that a “regular and established place of business” exists where a

defendant has no physical presence in the district. And it does not stand for the

proposition that activities occurring outside the district support venue in the

district. The district court erred in holding otherwise. Under its approach,

administrative support in Minnesota, customers in New York, and marketing

materials on the Internet together constitute a “regular and established place of

business” in Athens, Texas. The statute, Cordis, and the purpose of the venue

requirement preclude the district court’s approach.

The present circumstances compel a writ of mandamus. Absent a writ, Cray

is forced to conduct three separate trials in an improper venue, only to have to later

repeat them in the proper forum. This Court has recognized that a writ is

appropriate to address patently erroneous decisions on venue. Without this Court’s

intervention now, other courts are primed to repeat the district court’s error. This


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case should be transferred to the Western District of Wisconsin, the sole location

possessing subpoena power over the most important witness in this case.

I. THE DISTRICT COURT’S DECISION THAT VENUE IS PROPER IS CONTRARY TO THE STATUTORY TEXT AND CONFLICTS WITH PRECEDENT.

A. The District Court’s Erroneous Holding that Section 1400(b) Does Not Require a Physical Presence Conflicts with the Language of the Statute.

Section 1400(b) requires a defendant to have a “regular and established

place of business” for venue to lie. The district court did not say what “place”

means in its view of the statute. But generally, it held that venue can be found

where a defendant has no physical presence in the district. Appx72, Appx80. And

specifically as to Cray, it held that an aggregation of nationwide and virtual

contacts could be Cray’s “regular and established place of business” in the Eastern

District of Texas. Appx74–75. These holdings conflict with § 1400(b)’s express

language and read “place” out of the statute. See Dkt. No. 2 (“Pet.”) at 13–17.

Raytheon does not offer its own meaning for “place.” Instead, it argues the

word “physical” is not present, and therefore should not be read into the statute.

Dkt. No. 33 (“Resp.”) at 23. This miscasts the issue. “In patent law, as in all

statutory construction, [u]nless otherwise defined, words will be interpreted as

taking their ordinary, contemporary, common meaning.” Bilski v. Kappos, 561

U.S. 593, 603 (2010) (alteration in original) (citation and internal quotation marks


3

omitted)); see also Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct.

1749, 1756 (2014) (repeating canon and using 1934 dictionary to interpret words in

statute enacted in 1952). The Court must attribute some meaning to “place,” and

that meaning includes a physical presence. See Dkt. No. 29, Gilead Br. at 6 (citing

Webster’s New International Dictionary (2nd ed. 1934) (Appx715–17) (A “place”

is “[a] building, part of a building, or other spot, set apart for a special purpose; as,

a place of worship, of amusement.”)).

In a similar vein, Raytheon points to two statutes that refer to a “physical

place of business.” Resp. at 24 (citing 42 U.S.C. § 1320d-5(d)(6)(B) and 15

U.S.C. § 7706(f)(7)(B)). These statutes, enacted in 2003 and 2009, explain

nothing about the contemporaneous meaning of “place of business” in the patent

venue statute. Neither provision is part of the same act of Congress. See Atl.

Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433 (1932) (identical words

used in the same act are presumed to have the same meaning). Myriad other uses

of “place of business” in the U.S. Code clearly denote a physical location.1

1 E.g., 43 U.S.C. § 1613(c)(1) (requiring conveyance of title of a particular tract “as a primary place of business” or for other uses); 21 U.S.C. § 460(c) (requiring registration of “the address” for each “place of business” where poultry is raised); 21 U.S.C. § 642(a) (requiring access to “places of business” to “examine the facilities, inventory, and records thereof”).


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Nothing in the patent venue statute suggests that a “place of business” can be

something other than a “place,” and the Court should not endorse the district

court’s erroneous holding to the contrary.

B. The District Court’s Disregard for the Word “Place” Permeates Its Misapplication of Cordis.

The district court’s holding in this case cannot be rationalized as an

application of Cordis. In Cordis, the defendant contended that the fact that it did

not rent or own an office in Minnesota “absolutely preclude[d]” a finding that it

had a regular and established place of business there. In re Cordis, 769 F.2d 733,

736 (Fed. Cir. 1985). The Court’s holding squarely addressed that claim and went

no further:

[T]he appropriate inquiry is whether the corporate defendant does its business in that district through a permanent and continuous presence there and not as Cordis argues, whether it has a fixed physical presence in the sense of a formal office or store.

Id. at 737 (emphases added). This holding stands only for the narrow proposition

that a particular type of “physical presence” in the district is not required—that is,

a “fixed” one in the sense of a formal office or store. The Court did not hold more

broadly that venue lies where a defendant has a “permanent and continuous

presence” of any kind. See Resp. at 12. Nor did it hold that a “place of business”

does not require a physical location. Id. at 25. By disregarding the final phrase of

this holding, the district court misconstrued Cordis to mean that no physical


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location is required. As discussed above, that conclusion was contrary to the

express language of § 1400(b).

Accordingly, the district court did not apply the law as articulated in Cordis.

Instead, the district court applied its own view that “a fixed physical location in the

district is not a prerequisite to proper venue” and that venue could be found “even

where the defendant lacked a physical presence in the district.” Appx80, Appx72;

see also Appx79 (lack of a physical building “not dispositive”).

The district court’s vitiation of the “place” requirement led it to focus on

activities occurring outside the district. In Cordis, the defendant used the facilities

of others in the district that it needed to conduct business there. Its salespersons

did not simply work from home. In re Cordis, 769 F.2d at 735. Cordis used their

homes as distribution and sales centers—storing and distributing products and

literature to local customers. Id. It used the facilities of a local service to provide

administrative support in the district—answering phones, offering a local address,

and handling the receipt and sending of packages. Id. Although Cordis lacked a

fixed physical presence in the form of a formal office, it used facilities belonging

to others to perform the same functions.

Cray made no use of others’ facilities to conduct business in the Eastern

District of Texas. It did not use Harless’ home as a distribution and sales center;

no evidence exists that any products or related literature were ever stored there or


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that any meetings or demonstrations were held there (indeed, Cray has no

customers anywhere in the district). Nor did Cray retain a local administrative

office to support Harless; its administrative office was located in Minnesota. The

district court simply held Cray had a place of business there that included

administrative support staff in Minnesota, customers in New York and Houston,

and marketing materials on an Internet website. Appx74–75. It thus lacked a

rational and substantial basis to conclude that these facts evidence Cray’s “regular

and established place of business” in that district.

The district court’s error cannot be resolved simply by observing that

Harless’ personal residence is itself a physical location. Resp. at 22. None of the

activities identified by the district court evidence an effort by Cray to establish a

place of business at Harless’ home. Cray took no part in the selection of Harless’

home and did not use his home as its own facility. Had Harless moved from

Texas, which he was free to do under his work-from-home arrangement, there

would be no need for Cray to replace his home with an office or other facility in

the Eastern District of Texas. See Appx365 ¶5; Appx369–70 ¶¶3, 5–6. By

contrast, had the Cordis salespeople left Minnesota, Cordis would have lost the

structure through which it conducted local business. Harless’ chosen home thus

cannot be deemed Cray’s “regular and established place of business” simply


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because he performs part of his job duties there. See Am. Cyanamid Co. v. Nopco

Chem. Co., 388 F.2d 818 (4th Cir. 1968).

Raytheon does not meaningfully distinguish any of the other cases that hold

similarly. It repeats the district court’s reasoning that the employee in W.S. Tyler

Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723 (1915) worked for two companies

that shared the office. Appx75. But here, Cray did not own or lease any office, not

even a shared one, and it did not pay for Harless’ home.2,3 Appx364–65 ¶3;

Appx370 ¶¶4–5. Raytheon also argues that the district court found that Harless

made offers for sale on behalf of Cray from his home, whereas the salesperson in

W.S. Tyler only had authority “to solicit orders and forward them when received to

the home office for execution.” Resp. at 13. Irrespective of how Raytheon

characterizes the sales, just as in W.S. Tyler, here Harless solicited orders and

forwarded them to Cray’s home office. Appx374–75 ¶¶3–5. Further, while the

W.S. Tyler salesman had a single sale in the district, Harless made no sales in the

district. W.S. Tyler, 236 U.S. at 725; Appx369–70 ¶3.

2 Raytheon’s suggestion that Cray must have paid Harless enough salary “to induce him” to work from home (Resp. at 19) is not supported by any evidence. 3 Other courts have rejected the shared office fact as irrelevant “since it is what the salesman does that is determinative [of whether the office is the employer’s place of business], not whether he may do the same thing for someone else.” Gen. Radio Co. v. Superior Elec. Co., 293 F.2d 949, 952 (1st Cir. 1961).


8

Raytheon’s failure to distinguish Univ. of Ill. Found. v. Channel Master

Corp., 382 F.2d 514 (7th Cir. 1967) is particularly instructive, as Cordis embraced

that decision as correctly decided.4 Just like the salesperson in Channel Master,

Harless did not store any product in his home, supply any customers, or conduct

product demonstrations in the district, but did solicit sales (from customers outside

the district), use his personal phone for work, and receive reimbursement for

expenses. These similarities should lead this Court to the same conclusion the

Seventh Circuit reached: that the employee’s home could not “by any stretch of

the imagination” qualify as the employer’s regular and established place of

business. Channel Master, 382 F.2d at 516. Raytheon suggests the Court should

instead distinguish Channel Master by holding that Harless’ ability to point

customers to Cray marketing documents on the Internet is the functional equivalent

of supplying supercomputers from his home. Resp. at 14. Further, it suggests the

Court should infer on appeal that Harless’ account support in New York and

elsewhere outside the district entailed product demonstrations in the district, even

4 A number of courts have observed that this Court decided Cordis so as to avoid a conflict with Channel Master. See, e.g., Lace v. Lace, No. 89-cv-414, 1989 WL 103364, at *2 (N.D. Ill. Aug. 28, 1989) (Appx475–79) (“Cordis distinguished [Channel Master] on its facts without expressing any disagreement with that decision.”).


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though the district court made no such finding below and no record evidence

supports it. Id. Neither suggestion is well-taken.5

C. Raytheon’s Additional “Facts,” Not Relied on by the District Court or Supported with Evidence, Do Not Show that Venue Is Proper.

Raytheon uses additional “facts” that the district court did not find, and for

which there is no record support, in an attempt to bolster the district court’s ruling:

• Troy Testa. Cray employed Troy Testa for less than a year from April 2010

to March 2011. Appx455 ¶3. His employment concluded years before

Raytheon filed its complaint. Appx455 ¶3. Accordingly, his activities are

irrelevant to the existence of a regular and established place of business of

Cray under any applicable standard. See 8-21 Chisum on Patents

§ 21.02(2)(g) (Appx718–20). The district court correctly did not rely on

Testa or any purported lack of discovery about him in its analysis. Even if it

had, the location of Testa’s home would not impact the analysis, as during

his brief employment he served in a similar role as Harless.

5 Raytheon attempts to distinguish American Cyanamid, 388 F.2d 818, on the basis that the in-district employee purportedly made no sales. Resp. at 15. That is not a point of distinction, as Harless made no sales in the district, but further the case contains no such finding. And Grantham v. Challenge-Cook Bros., Inc. concerned more than just the “non-exclusive distributor” discussed by Raytheon. 420 F.2d 1182 (7th Cir. 1969). It also considered the home office of the defendant’s regional manager who lived in the district, holding that it was not the defendant’s regular and established place of business. Id. at 1185–86.


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• Harless’ personal LinkedIn page. Raytheon notes that Harless listed on his

social networking profile that he was a Cray sales representative located in

Athens. Resp. at 16. In fact, the profile variously lists his location as

Dallas/Ft. Worth, Houston, and Athens, as well as positions that Harless

previously held for other companies. Appx252–55. Harless’ posting of his

resume on a personal social networking page is not an advertisement of a

business location by Cray. Notably, the district court did not rely on this

evidence or conclude that it was an advertisement of Cray.

• Customers in the district. Raytheon’s only cited “evidence” of business in

the district is that Cray sold an XC40 system to TACC outside the district in

Austin. Resp. at 18; Appx365 ¶¶4–5; Appx356. Cray does not control what

users can access the system over a network. Appx365 ¶5. And there is no

evidence in the record that any user in the district ever actually accessed the

system. The district court did not rely on this sale to support its holding on

“regular and established place of business.”

• Support services, presentations, and consultation in the district. Harless’

customers were located outside of the district. The district court made no

finding that Harless provided these services in the district beyond the fact

that his job duties generally included account development and management.

Appx75. Nor is there evidence to support such a finding.


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• $345 million in revenue from sales. Cray had no sales in the district.

While Raytheon argues that Harless made offers for sale from his home

office (Resp. at 21), the evidence demonstrates that any formal offers

capable of acceptance had to come from Cray offices in Minnesota or Seattle

and bore the addresses of those offices.6 Appx374–75 ¶¶3–4; Appx575.

II. CRAY HAS MET THE STANDARD REQUIRED FOR A WRIT OF MANDAMUS TO ISSUE.

Given the above, Cray has met the requirements for issuance of a writ. “It is

well established that mandamus is available to contest a patently erroneous error in

an order denying transfer of venue.” In re EMC Corp., 677 F.3d 1351, 1353 (Fed.

Cir. 2012). The plain language of the statute and this Court’s Cordis decision

confirm that a “regular and established place of business” must be a place from

which the defendant conducts business in the district. No rational and substantial

legal argument supports the district court’s view that a “place of business” requires

6 The district court did not rely on a finding that Harless made offers for sale from his home to support its holding on “regular and established place of business.” See Resp. at 21. It only noted that one proposal and one quote included Harless’ name and office telephone number. Appx74. But this does not mean Harless made an offer from his home. Indeed, the quote specifically identifies the document as originating from Cray’s Seattle office. Appx575. Cray’s offers are made only after Cray’s pricing and configuration team evaluates the components needed to satisfy the customer’s specifications and the delivery team approves the proposed schedule for building and installation. Appx374–75 ¶3. These teams are located in Cray’s Minnesota and Seattle offices. Id.


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no physical presence and can be cobbled together from the nationwide contacts of

a single work-from-home employee.

Without a writ to correct this error now, Cray has no adequate remedy

because it will need to conduct three separate trials in an improper venue before a

full appeal. As discussed in the petition, a reasoned opinion supporting the writ

would also guide the lower courts on an important, unsettled issue. See In re

Spalding Sports Worldwide, Inc., 203 F.3d 800, 804 (Fed. Cir. 2000). At least two

courts have now expressly adopted the district court’s approach. See McKnight,

Inc. v. United Indus. Corp., No. 16-cv-2534, Dkt. No. 40 (W.D. Tenn. July 7,

2017) (Appx479–82); Wi-LAN, Inc. v. Lenovo (United States), Inc., No. 17-cv-365,

2017 WL 3194692, at *3 (S.D. Cal. July 27, 2017) (Appx711–14). And others

have adopted its holding that a regular and established place of business need not

be a physical “place” in the district at all. See Realtime Data, LLC v. Exinda, Inc.,

No. 17-cv-124, Dkt. No. 33 at 4 (E.D. Tex. Aug. 1, 2017) (Appx706–10). This

Court should act now to correct the district court’s error and clarify the law for

courts currently grappling with this question.

III. THE COURT HAS JURISDICTION TO ADDRESS THE PROPER STANDARD UNDER SECTION 1400(b) AND TO REJECT THE DISTRICT COURT’S FOUR-PART TEST.

Raytheon suggests that the Court lacks Article III jurisdiction to even

consider whether the district court’s four-part test correctly applies the statute. See


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Resp. at 3, 13 n.2, 26–28. But Cray’s transfer motion presents a concrete dispute

between the parties, and the proper standard for deciding where a defendant has a

“regular and established place of business” is the precise legal question before the

Court. See Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1556 (2016), as revised (May

24, 2016) (“The basic inquiry is whether the conflicting contentions of the parties

present a real, substantial controversy between parties having adverse legal

interests. . . .”) (quoting Babbitt v. Farm Workers, 442 U.S. 289, 297–98 (1979).

The four-part test is inextricably intertwined with this contested legal issue. Cray’s

petition asks the Court to reject the district court’s holding that no physical

presence in the district is required, and its improper reliance on activities outside

the district to show a regular and established place of business in a district. Those

errors are equally present in the district court’s application of Cordis and its four-

part test.

Even if the Court believed the district court’s guidance was an “advisory

opinion,” however, the proper course would still be to vacate it. See Samsung

Elecs. Co. v. Rambus, Inc., 523 F.3d 1374, 1380 (Fed. Cir. 2008) (“Because the

district court’s writing is an impermissible advisory opinion, this court vacates that

advisory opinion as issued without jurisdiction.”). The Court should act here to

clarify the proper standard for determining a “regular and established place of

business,” which necessarily will speak to the validity of the four-part test.


14

IV. CRAY HAS ALWAYS CHALLENGED VENUE.

Raytheon incorrectly suggests that Cray was dilatory in challenging venue,

stating that Cray filed a motion contesting venue a “mere three months before”

trial. Resp. at 8. Cray challenged venue in this case since its inception. Rather

than answer, Cray filed a motion to dismiss for improper venue, arguing both that

Cray did not “reside” in the Eastern District of Texas (under the Supreme Court’s

Fourco decision) and that it did not have a “regular and established place of

business” there. See Appx229–31, Appx235. Because courts in the Eastern

District of Texas decline to stay cases pending motions to dismiss, the final order

(denying Cray’s original motion based on a conclusion that Cray “resided” in the

district) was not entered until September 2016, shortly before the conclusion of the

discovery period. Appx319–320. Cray maintained its objection to venue in its

answer, asserted an affirmative defense of improper venue, and raised its objection

in subsequent filings, including in the joint pretrial order. Appx624 ¶4; Appx648

¶110; Appx685–86.

Cray renewed its venue motion only ten days after the Supreme Court’s

decision in TC Heartland eliminated the basis for the district court’s earlier ruling

on residence. Appx335–49. The district court has also sua sponte stayed the case

pending this Court’s resolution of the petition, so neither party will suffer prejudice

from the Court’s consideration of the issue presented. See Appx705.


15

V. THE COURT SHOULD DIRECT TRANSFER TO THE WESTERN DISTRICT OF WISCONSIN AS THE MOST CONVENIENT VENUE.

The Court should direct the district court to transfer this case to the Western

District of Wisconsin on remand. James Ballew, a former Raytheon employee and

the lead named inventor on two asserted patents, resides in Wisconsin. Appx347;

Appx353 ¶3. He has testified that the patents that name him do not describe his

actual inventions, and instead claim aspects of Cray’s own prior art systems.

Appx347; Appx721–27 at 100:20–101:9, 158:16–159:20, 164:13–165:5. Ballew is

unable to travel to Texas, but could attend in the Western District of Wisconsin.

See Appx358.

Raytheon does not contest that it could have brought the case in Wisconsin;

it argues only that another Texas district would be more convenient under

§ 1404(a). Resp. at 28–29. But the non-party witnesses it identifies are not in

Texas, not subject to the subpoena power of the Western District of Texas, and

would travel a comparable distance to either Texas or Wisconsin. See, e.g.,

Appx509–11 ¶¶12–13 (identifying witnesses in Salt Lake City, St. Louis, Daytona

Beach, Vail, Albuquerque, and Vancouver, British Columbia). The parties will

compel their employee witnesses to appear. Resp. at 29. The Western District of

Wisconsin is the only district that can compel Ballew to attend trial and that should

result in transfer there, as transfer to any other district will prejudice the

presentation of Cray’s defenses. See In re Toyota Motor Corp., 747 F.3d 1338,


16

1340–1341 (Fed. Cir. 2014) (issuing writ of mandamus directing transfer to district

where witnesses subject to subpoena); In re Volkswagen of Am., Inc., 545 F.3d

304, 316 (5th Cir. 2008) (court should transfer to a venue with absolute subpoena

power).

CONCLUSION

For the foregoing reasons, this Court should grant Cray’s petition for writ of

mandamus and direct the district court to transfer this case to the Western District

of Wisconsin.


17

Dated: August 8, 2017 Respectfully submitted,

By:/s/David K. Tellekson David K. Tellekson

Bryan A. Kohm [email protected] FENWICK & WEST LLP 555 California Street, 12th Floor San Francisco, CA 94104 Telephone: (415) 875-2300

David K. Tellekson [email protected] Melanie L. Mayer [email protected] FENWICK & WEST LLP

1191 Second Avenue, 10th Floor Seattle, WA 98101 Telephone: (206) 389-4510

Michael C. Smith (admission pending) [email protected] SIEBMAN, BURG, PHILLIPS & SMITH LLP 113 East Austin Street Marshall, TX 75671 Telephone: (903) 938-8900

Counsel for Petitioner CRAY INC.


mailto:[email protected]

CERTIFICATE OF SERVICE

I hereby certify that on August 8, 2017, I electronically transmitted this

REPLY IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS. I

further certify that the following counsel of record for Respondent are being served

with a copy of this as follows:

Thomas J. Filarski Daniel S. Stringfield STEPTOE & JOHNSON LLP 115 South LaSalle St., Ste. 3100 Chicago, IL 60603 Counsel for Respondent

[ ] By United States Mail [ ] By Legal Messenger [X] By Electronic CM/ECF [ ] By Overnight Express Mail [ ] By Facsimile [X] By Email [email protected] [email protected]

Robert F. Kappers Matthew M. Zuziak STEPTOE & JOHNSON LLP 115 South LaSalle St., Ste. 3100 Chicago, IL 60603 Counsel for Respondent

[ ] By United States Mail [ ] By Legal Messenger [ ] By Electronic CM/ECF [ ] By Overnight Express Mail [ ] By Facsimile [X] By Email [email protected] [email protected]

Fang Bu Christopher M. Re STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, NW Washington, DC 20036 Counsel for Respondent






Stephanie L. Roberts STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, NW Washington, DC 20036 Counsel for Respondent

[ ] By United States Mail [ ] By Legal Messenger [ ] By Electronic CM/ECF [ ] By Overnight Express Mail [ ] By Facsimile [X] By Email [email protected]

John J. Molenda STEPTOE & JOHNSON LLP 1114 Avenue of the Americas New York, NY 10036 Counsel for Respondent

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Robert Greenfeld STEPTOE & JOHNSON LLP 1114 Avenue of the Americas New York, NY 10036 Counsel for Respondent


Sanjeet K. Dutta STEPTOE & JOHNSON LLP 1891 Page Mill Road, Ste. 200 Palo Alto, CA 94304 Counsel for Respondent


William E. Davis, III Edward Chin THE DAVIS FIRM P.C. 213 N. Fredonia Street, Ste. 230 Longview TX 75601 Counsel for Respondent




I further certify that this Reply In Support of Petition for Writ of Mandamus

is being electronically sent and served via hand delivery to the courtroom deputy

to:

The Honorable Rodney Gilstrap Sam B. Hall, Jr. Federal Building and United States Courthouse 100 East Houston Street Marshall, TX 75670 Dated: August 8, 2017 By:/s/David K. Tellekson

David K. Tellekson

FENWICK & WEST LLP Counsel for Petitioner CRAY, INC.


CERTIFICATE OF COMPLIANCE WITH RULE 21(c)

This brief complies with the type-volume limitation of Federal Circuit Rule

21(c). The brief contains 3867 words, excluding the parts of the brief exempted by

Federal Rule of Appellate Procedure 32(a)(7)(B)(iii) and Federal Circuit Rule

32(b).

This brief complies with requirements of Federal Rule of Appellate

Procedure 32(c)(2). This brief has been prepared in a proportionally spaced

typeface using Microsoft Office Word Version 2013 in 14-point Times New

Roman.

Dated: August 8, 2017 Respectfully submitted,

By:/s/David K. Tellekson David K. Tellekson

Bryan A. Kohm [email protected] FENWICK & WEST LLP 555 California Street, 12th Floor San Francisco, CA 94104 Telephone: (415) 875-2300 Michael C. Smith (admission pending) [email protected] SIEBMAN, BURG, PHILLIPS & SMITH LLP 113 East Austin Street Marshall, TX 75671 Telephone: (903) 938-8900 Counsel for Petitioner CRAY INC.

David K. Tellekson [email protected] Melanie L. Mayer [email protected] FENWICK & WEST LLP 1191 Second Avenue, 10th Floor Seattle, WA 98101 Telephone: (206) 389-4510



No. 2017-129

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

IN RE CRAY INC.,

Petitioner.

On Petition for Writ of Mandamus to the

United States District Court for the Eastern District of Texas No. 2:15-CV-1554

Hon. Rodney Gilstrap, United States District Judge

PUBLIC APPENDIX TO REPLY IN SUPPORT OF

PETITION FOR WRIT OF MANDAMUS

David K. Tellekson Bryan A. Kohm Melanie L. Mayer FENWICK & WEST LLP FENWICK & WEST LLP 555 California Street, 12th Floor 1191 Second Avenue, 10th Floor San Francisco, CA 94104 Seattle, WA 98101 (206) 389-4510

(415) 875-2300

Michael C. Smith (admission pending) SIEBMAN, BURG, PHILLIPS & SMITH LLP 113 East Austin Street Marshall, TX 75671 (903) 938-8900

Counsel for Petitioner Cray Inc.


TABLE OF CONTENTS

i

File Date Docket

No. Description Appx. No.

10/7/2016 99 Defendant Cray Inc.’s Answer and Counterclaims to Complaint for Patent Infringement

Appx624

1/13/2017 206 Joint Final Pretrial Order Appx683 7/18/2017 315 Order for Stay Appx705

Realtime Data, LLC v. Exinda Inc., No. 17-cv-124, Dkt. No. 33 (E.D. Tex. Aug. 1, 2017)

Appx706

Wi-LAN, Inc. v. Lenovo (United States), Inc., No. 17-cv-365, 2017 WL 3194692 (S.D. Cal. July 27, 2017)

Appx711

Webster’s New International Dictionary (2nd ed. 1934)

Appx715

8-21 Chisum on Patents § 21.02(2)(g) (Excerpted copy)

Appx718


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

MARSHALL DIVISION RAYTHEON COMPANY,

Plaintiff,

v.

CRAY, INC.,

Defendant.

Civil Action No. 2:15-CV-1554-JRG-RSP

JURY TRIAL DEMANDED

DEFENDANT CRAY INC.’S ANSWER AND COUNTERCLAIMS TO

COMPLAINT FOR PATENT INFRINGEMENT

Defendant Cray Inc. (“Cray”) hereby responds to the Complaint for Patent Infringement

(“Complaint”) of Plaintiff Raytheon Company (“Raytheon”) as follows:

I. ANSWER

THE PARTIES

1. Cray lacks knowledge or information sufficient to form a belief about the truth of

the allegations of paragraph 1, and therefore denies the allegations of the paragraph.

2. Cray admits the allegations of paragraph 2.

JURISDICTION AND VENUE

3. Cray admits that the Complaint purports to state a cause of action under the patent

laws of the United States, and that this Court has subject matter jurisdiction over such actions

under 28 U.S.C. §§ 1331 and 1338(a). Cray denies the remaining allegations of paragraph 3.

4. Cray denies the allegations of paragraph 4.


6. Cray admits that in 2000, it registered with the Texas Secretary of State to

transact business within the state; that such registration has remained active from 2000 through

Case 2:15-cv-01554-JRG-RSP Document 99 Filed 10/07/16 Page 1 of 59 PageID #: 4728

Appx624


2

the present; that it maintains facilities in Houston, Texas and Austin, Texas; that its former

employee Douglas Harless resided in Athens, Texas; and that one of its customers is the Texas

Advanced Computing Center (“TACC”) located at the University of Texas–Austin. Cray denies

the remaining allegations of paragraph 6.

7. Cray admits that it sold an XC40 system to TACC at the University of Texas–

Austin. The remaining allegations of paragraph 7 are too ambiguous for Cray to provide a

response and/or Cray lacks knowledge or information sufficient to form a belief about their truth,

and Cray accordingly denies them.



COUNT I (U.S. Patent No. 7,475,274)

10. In response to paragraph 10, Cray incorporates by reference its responses to

paragraphs 1-9, as if fully restated herein.

11. Cray admits that Exhibit A to the Complaint purports to be a copy of U.S. Patent

No. 7,475,274 (“the ’274 patent”), and that copy bears the title “Fault Tolerance and Recovery in

a High-Performance Computing (HPC) System” and indicates a “Date of Patent” of January 6,

2009. Cray lacks knowledge or information sufficient to form a belief about the truth of the

remaining allegations of paragraph 11, and accordingly denies them.



13. Cray admits that it was informed of the ’274 patent during a June 18, 2015

meeting with Charles R. Neuenschwander of the International Patent Licensing Company, and

denies the remaining allegations of paragraph 13.


Appx625


3





COUNT II (U.S. Patent No. 8,190,714)



19. Cray admits that Exhibit B to the Complaint purports to be a copy of U.S. Patent

No. 8,190,714 (“the ’714 patent”), and that copy bears the title “System and Method for

Computer Cluster Virtualization Using Dynamic Boot Images and Virtual Disk” and indicates a

“Date of Patent” of May 29, 2012. Cray lacks knowledge or information sufficient to form a

belief about the truth of the remaining allegations of paragraph 19, and accordingly denies them.











Appx626


4

COUNT III (U.S. Patent No. 8,335,909)



27. Cray admits that Exhibit C to the Complaint purports to be a copy of U.S. Patent

No. 8,335,909 (“the ’909 patent”), and that copy bears the title “Coupling Processors to Each

Other for High Performance Computing (HPC)” and indicates a “Date of Patent” of December

18, 2012. Cray lacks knowledge or information sufficient to form a belief about the truth of the

remaining allegations of paragraph 27, and accordingly denies them.










COUNT IV (U.S. Patent No. 9,037,833)



35. Cray admits that Exhibit D to the Complaint purports to be a copy of U.S. Patent

No. 9,037,833 (“the ’833 patent”), and that copy bears the title “High Performance Computing

(HPC) Node Having a Plurality of Switch Coupled Processors” and indicates a “Date of Patent”


Appx627


5

of May 19, 2015. Cray lacks knowledge or information sufficient to form a belief about the truth

of the remaining allegations of paragraph 35, and accordingly denies them.










RESPONSE TO RAYTHEON’S PRAYER FOR RELIEF

42. Cray denies that Raytheon is entitled to any relief in this action.

II. AFFIRMATIVE DEFENSES

FIRST DEFENSE: NON-INFRINGEMENT

43. Cray has not infringed and does not infringe, directly or indirectly, contributorily

or by inducement, any claim of the ’274 patent, the ’714 patent, the ’909 patent, and/or the ’833

patent (collectively, “the patents-in-suit”), either literally or under the doctrine of equivalents, or

in any other manner.

SECOND DEFENSE: INVALIDITY

44. The claims of the patents-in-suit are invalid for failing to meet one or more of the

requisite conditions of patentability specified in Title 35, U.S.C., or the rules, regulations, and

laws related thereto, including, without limitation, in 35 U.S.C. §§ 101, 102, 103, and 112, as


Appx628


6

well as the judicial doctrine of double patenting. Cray hereby incorporates by reference its Initial

Invalidity Contentions, which Cray served on February 12, 2016 pursuant to Eastern District of

Texas Patent Rules 3-3 and 3-4, and its Preliminary Non-infringement and Invalidity

Contentions, which Cray served on March 4, 2016 pursuant to Western District of Washington

Local Patent Rules 121 and 122.

THIRD DEFENSE: PROSECUTION HISTORY ESTOPPEL

45. By reason of the prior art and/or statements and representations made to and by

the United States Patent and Trademark Office during the prosecution of the applications that led

to the issuance of the patents-in-suit, the patents-in-suit are so limited that none of the claims can

be construed as covering any activity or product of Cray.

FOURTH DEFENSE: LIMITATION ON DAMAGES

46. Raytheon’s claim for damages is barred, in whole or in part, by 35 U.S.C. § 287

and/or Raytheon’s failure to adequately plead notice thereunder.

FIFTH DEFENSE: LIMITATION ON RECOVERY OF COSTS

47. Pursuant to 35 U.S.C. § 288, Raytheon is barred from recovery of costs.

SIXTH DEFENSE: NO INJUNCTIVE RELIEF

48. Raytheon cannot satisfy the requirements applicable to its request for injunctive

relief, in any form.

SEVENTH DEFENSE: NO WILLFUL INFRINGEMENT

49. Raytheon cannot satisfy the requirements applicable to any claim for willful

infringement.


Appx629


7

EIGHTH DEFENSE: LACHES

50. Raytheon’s claims against Cray are barred, in whole or in part, under the doctrine

of laches.

NINTH DEFENSE: WAIVER, ESTOPPEL, AND/OR UNCLEAN HANDS

51. Raytheon is barred or limited from recovering damages from Cray, in whole or in

part, under principles of equity, including waiver, estoppel, and/or unclean hands.

52. In approximately September 2002, Cray entered into a contract with Sandia

National Laboratories (“Sandia”) for the Red Storm Computing Development Program, which

was a project for Sandia to create an HPC system referred to as “Red Storm.” The Red Storm

system was intended to replace another HPC system residing at Sandia known as “ASCI Red.”

As stated on its website, “Sandia National Laboratories is operated and managed by Sandia

Corporation, a wholly owned subsidiary of Lockheed Martin Corporation. Sandia Corporation

operates Sandia National Laboratories as a contractor for the U.S. Department of Energy’s

National Nuclear Security Administration (NNSA) and supports numerous federal, state, and

local government agencies, companies, and organizations.”

53. During the development of the Red Storm system, as well as during the pre-

contract bidding process, Cray submitted to Sandia and its designated representatives

confidential and proprietary information of Cray relating to, among other things, the design and

operation of the proposed Red Storm system, as well as Cray’s SeaStar interconnect chip. Such

representatives included one or more oversight committee(s) (singly or jointly “Oversight

Committee”). The Oversight Committee was responsible for validating and challenging Cray’s

design of Red Storm.

54. James Ballew (“Ballew”)—a named inventor on the ’909 and ’833 patents—was


Appx630


8

an external member of Sandia’s Oversight Committee. In his role as a member of the Oversight

Committee, Cray disclosed to Ballew, and Ballew otherwise learned of, confidential and

proprietary details concerning its design of the Red Storm system. Such information included

technical details concerning the interconnect of the Red Storm system, as well as the

composition of the compute nodes of the system.

55. For example, prior to the award of the Red Storm contract, Cray submitted a

detailed proposal regarding its proposed design for the Red Storm system. Following the award

of the contract, Cray submitted detailed specifications of the Red Storm system, as well as

progress reports, to the Oversight Committee, including Ballew.

56. Through his role on the Oversight Committee, Ballew worked and interacted with

the Cray employees primarily responsible for the SeaStar interconnect design that was

incorporated into the Red Storm system.

57. During his participation on the Oversight Committee, Ballew was an employee of

Raytheon. Emails sent and received by Ballew in his role as a member of the Oversight

Committee used a “raytheon.com” email address.

58. On November 18, 2003, Cray entered into a non-disclosure agreement with

Raytheon (“the 2003 NDA”). Under the terms of the 2003 NDA, Cray was to disclose

confidential and proprietary information “relating to Cray’s current and future products and

product plans for the purpose of User evaluating the potential purchase or license of Cray

products.” Upon information and belief, Cray disclosed confidential and proprietary information

concerning the Red Storm system and associated SeaStar interconnect chip.

59. On February 19, 2004, Cray entered into another non-disclosure agreement with

Raytheon (“the February 19 NDA”). The February 19 NDA specifies that Cray was to disclose


Appx631


9

its proprietary information to Raytheon for Raytheon’s evaluation.

60. On February 20, 2004, Cray entered into a non-disclosure agreement with

Raytheon Intelligence and Information Systems, a division of Raytheon (“the February 20

NDA”). Upon information and belief, Raytheon Intelligence and Information Systems was an

agent of Raytheon. Pursuant to the agreement, Cray was to disclose to Raytheon “Confidential

Information” regarding “Cray’s Red Storm system and related information for the purpose of

evaluation by Raytheon of the suitability of the Red Storm system for Raytheon’s use.”

61. During the development of the Red Storm system, Cray disclosed extensive

confidential and proprietary information to Raytheon, both to Ballew and others at Raytheon.

Upon information and belief, Ballew began receiving Cray’s confidential and proprietary

information concerning the Red Storm system in 2001. Cray’s disclosures to Raytheon

regarding its design for the Red Storm system continued through and beyond April 15, 2004—

the date on which U.S. Patent Application No. 10/824,874 (“the ’874 application”), which was

the patent application leading to the ’909 and ’833 patents, was filed by Ballew and Raytheon.

62. The ’874 application contains technical information similar or identical to

information disclosed to Ballew and Raytheon concerning the Red Storm system. Ballew and

others at Raytheon intentionally acquired a substantial portion of this information from Cray.

63. During the time that Ballew and Raytheon were receiving confidential and

proprietary information regarding the Red Storm system, they concealed their intent to

misappropriate Cray’s confidential and proprietary information for the purpose of the filing the

’874 application. Ballew and Raytheon also concealed from Cray that they intended to design

and make HPC systems, to file patent applications, and to try and extract royalties for patents

issued from said applications.


Appx632


10

64. On April 15, 2004, Raytheon filed the ’874 application naming James D. Ballew,

Gary R. Early, and Shannon V. Davidson as inventors. Together with the application, Raytheon

filed oaths of inventorship by Messrs. Ballew, Early, and Davidson. The oaths of inventorship

stated as follows: “I am an original, first, and joint inventor of the subject matter which is

claimed and for which a patent is sought on the invention entitled HIGH PERFORMANCE

COMPUTING SYSTEM AND METHOD, filed on April 15, 2004, as U.S. Application No.

10/824,874.”

65. On November 19, 2004, Raytheon filed an “Amendment and Petition for

Correction of Inventorship in a Patent Application Under 37 C.F.R. § 1.48” withdrawing

Shannon V. Davidson as a named inventor on the ’874 application.

66. As set forth above, well before the ’874 application was filed, Ballew served on

the Oversight Committee for the Red Storm system. Through his role on the Oversight

Committee for the Red Storm system, Ballew obtained confidential and proprietary information

concerning the Red Storm system, including Cray’s SeaStar interconnect.

67. Upon information and belief, at least Ballew used the confidential and proprietary

information concerning the Red Storm system and SeaStar interconnect in describing the alleged

inventions contained in the ’874 application and the ’909 patent. Upon information and belief, at

least Ballew falsely stated in the oath of inventorship filed on April 15, 2004 that he was an

inventor of the inventions of the ’874 application.

68. Raytheon and the inventors also maintained an obligation to disclose all material

prior art known to them during the prosecution of the ’874 application. Messrs. Ballew and

Early recognized this obligation in the oaths of inventorship filed on April 15, 2004 by stating

the following: “I have reviewed and understand the contents of the above-identified


Appx633


11

specification, including the claims; and I acknowledge my duty to disclose to the U.S. Patent and

Trademark Office all information known to me to be material to patentability as defined in 37

C.F.R. § 1.56. I acknowledge the duty to disclose to the U.S. Patent and Trademark Office all

information known to me to be material to patentability as defined in 37 C.F.R. § 1.56.”

69. Raytheon and Ballew knowingly failed to disclose prior art material to the

patentability of the claims ultimately issued in the ’909 patent.

70. Raytheon filed Information Disclosure Statements (“IDS”) on April 15, 2004;

August 1, 2005; August 15, 2005; October 10, 2005; March 8, 2006; May 8, 2006; October 13,

2006; November 13, 2006; December 29, 2006; March 2, 2007; March 26, 2007; May 18, 2007;

January 9, 2008; January 30, 2008; March 14, 2008; March 26, 2008; October 10, 2008;

February 9, 2009; March 19, 2009; March 31, 2009; May 5, 2009; July 14, 2009; October 19,

2009; October 20, 2009; March 24, 2010; May 5, 2010; May 20, 2010; July 15, 2010; August 25,

2010; November 16, 2010; December 20, 2010; January 18, 2011; January 26, 2011; April 15,

2011; April 29, 2011; August 5, 2011; September 2, 2011; November 22, 2011; and March 27,

2012. Despite having knowledge of Cray’s Red Storm system, including Cray’s SeaStar

interconnect chip, Raytheon and Ballew failed to disclose information concerning the Red Storm

system, including Cray’s SeaStar interconnect chip, to the USPTO.

71. Particularly given the arguments made by Raytheon to traverse office actions

rejecting claims based on prior art references, Cray’s Red Storm system, including Cray’s

SeaStar interconnect chip, constitutes material prior art. For example, in an office action dated

July 11, 2008, the Examiner rejected the pending claims in light of Karpoff, U.S. Patent

Application No. US 2001/0049740 A1.

72. On January 12, 2009, Raytheon filed a response to the July 11, 2008 office action.


Appx634


12

That response, however, was not fully responsive, and per a notice dated April 28, 2009, the

Examiner instructed Raytheon to file a compliant response.

73. On May 28, 2009, Raytheon filed its revised response to the July 11, 2008 office

action. In that response, Raytheon amended the pending claims, including the pending

independent claims. For example, Raytheon amended pending claim 9 as follows:

9. (Currently Amended) A system comprising a plurality of interconnected nodes, each node comprising:

a first motherboard; a switch comprising eight or more ports, the switch integrated on the motherboard and operable to interconnect at least a subset of the plurality of nodes; and at least two processors, each processor communicably coupled to the integrated switch and integrated on the motherboard. at least two first processors integrated onto the first motherboard and operable to communicate with each other via a direct link between them: and a first switch integrated onto the first motherboard, the first processors communicably coupled to the first switch, the first switch operable to communicably couple the first processors to at least six second motherboards that each comprise at least two second processors integrated onto the second motherboard and a second switch integrated onto the second motherboard operable to communicably couple the second processors to the first motherboard and at least five third motherboards that each comprise at least two third processors integrated onto the third motherboard and a third switch integrated onto the third motherboard; the first processors operable to communicate with particular second processors on a particular second motherboard via the first switch and the second switch on the particular second motherboard; the first processors operable to communicate with particular third processors on a particular third motherboard via the first switch, a particular second switch on a particular second motherboard between the first motherboard and the particular third motherboard, and the third switch on the particular third motherboard without communicating via either second processor on the particular second motherboard.

74. The other pending independent claims contained substantially similar limitations.


Appx635


13

75. In its Remarks in response to the Examiner’s obviousness rejection under 35

U.S.C. § 103, Raytheon argued that the pending claims were patentable over the prior art

because the “cited references fail to teach, suggest, or disclose ‘the first processors operable to

communicate with particular third processors on a particular third motherboard via the first

switch, a particular second switch on a particular second motherboard between the first

motherboard and the particular third motherboard, and the third switch on the particular third

motherboard.’” Raytheon also argued that the prior art references “fail to teach, suggest, or

disclose a ‘first motherboard,’ a ‘second motherboard,’ or a ‘third motherboard.’”

76. Raytheon and Ballew knowingly failed to disclose to the Examiner that this

configuration was wrongfully taken from Cray and/or Sandia in connection with the Red Storm

project. Raytheon and Ballew also knowingly failed to disclose to the Examiner the Red Storm

system, including the SeaStar interconnect, which substantially predated the filing date for the

’874 application. Ballew and Raytheon possessed detailed knowledge concerning the design of

Cray’s Red Storm system and SeaStar interconnect. Had Raytheon and Ballew disclosed the

Red Storm project to the USPTO, the Examiner would have recognized that the statement in

paragraph 75 above was false.

77. In its present dispute with Cray, the systems that Raytheon now accuses of

infringement build upon the Red Storm system and SeaStar interconnect. With respect to the

arguments Raytheon made to the Examiner identified above, the Red Storm system and SeaStar

interconnect do not materially differ from certain of the products Raytheon now accuses of

infringement. As such, Cray’s prior art Red Storm system and SeaStar interconnect constitute

material prior art.

78. In the same May 28, 2009 response, Raytheon also took issue with the


Appx636


14

Examiner’s assertion that “integrating all of the elements onto a motherboard is well known.”

Raytheon opposed that conclusion and criticized the Examiner for failing to identify any prior art

of record to support the statement. With respect to the integration of elements on a motherboard,

certain of the systems that Raytheon now accuses of infringement do not materially differ from

the Red Storm system and SeaStar interconnect. Raytheon and Ballew, however, failed to

disclose that system to the Examiner, and as a result the Examiner was unable to recognize that

this statement was false.

79. Raytheon further argued that the prior art “fails to teach, suggest, or disclose ‘the

first processors’ integrated onto the first motherboard being ‘operable to communicate with

particular third processors on a particular third motherboard via the first switch’ integrated onto

the first motherboard.” With respect to this configuration, certain of the systems that Raytheon

now accuses of infringement do not materially differ from the Red Storm system and SeaStar

interconnect. Raytheon and Ballew, however, concealed that system from the Examiner, which

again kept the examiner from recognizing that this statement was false.

80. Raytheon further argued that the prior art “fails to teach, suggest, or disclose ‘a

particular second switch on a particular second motherboard between the first motherboard and

the particular third motherboard.’” With respect to this configuration, certain of the systems that

Raytheon now accuses of infringement do not materially differ from the Red Storm system and

SeaStar interconnect. Raytheon and Ballew, however, concealed that system from the Examiner,

which again kept the Examiner from recognizing that this statement was false.

81. Raytheon’s and Ballew’s knowledge of the Red Storm system and its materiality

with respect to the ’874 application is apparent from Raytheon’s own documents. For example,

a September 6, 2007 presentation by Raytheon (“the September 6 presentation”) purports to


Appx637


15

describe the technologies claimed in the patents-in-suit. The September 6 presentation expressly

describes Raytheon’s alleged invention as mimicking the Red Storm system, among other prior

art systems:

See RAY_CRAY00030928. In particular, Raytheon advertised that its alleged inventions were

valuable because of “features only available now on expensive proprietary systems like IBM’s

BlueGene and Cray’s Red Storm.” Id. (emphasis in original). The September 6 presentation

further states that the patents-in-suit would enable a licensee to “[g]ain an edge on HP, IBM,

Dell, Cray, and Sun with open source features that duplicate some of their proprietary

features: 3D Torus, Virtual Cluster Manager.” Id. (emphasis in original and emphasis

added).


Appx638


16

82. As evidenced in at least the September 6 presentation, the patents-in-suit were

Raytheon’s attempt to mimic the features of Cray’s proprietary Red Storm system:

See RAY_CRAY00030933. Indeed, Raytheon and/or Ballew described the alleged inventions as

offering “Red Storm-like functionality” to licensees. Id. (emphasis added).

83. In another presentation dated October 2007 (“the October 2007 presentation”),

Raytheon again likened its invention to Red Storm while touting the potential for its patents to

“block[] competitors” from launching competing products:


Appx639


17

See RAY_CRAY00030959. In the October 2007 presentation, Raytheon and/or Ballew further

compared the elements of the alleged invention directly to the Red Storm system and the IBM

BlueGene system:


Appx640


18

See RAY_CRAY00030961. Raytheon’s presentation demonstrates that the only alleged

differences between the prior art—including the Red Storm system—and Raytheon’s alleged

invention relate to software or other functionality which is not claimed by the ’909 patent.

84. Raytheon’s presentations confirm that Raytheon and/or Ballew were aware of the

Red Storm system during prosecution of the ’874 application. Indeed, the presentations show

that Raytheon attempted to market its alleged invention by likening its features to those of the

Red Storm system. Despite this knowledge, and despite Raytheon’s express mimicking of

features developed by Cray, Raytheon and/or Ballew concealed the Red Storm system from the

Examiner. On information and belief, this concealment was intentional and done with the intent

of misleading the Examiner with respect to the state of the prior art, which Raytheon was


Appx641


19

simultaneously advertising to third parties. This information was material to patentability at least

because disclosure of the Red Storm system would have undermined the arguments made by

Raytheon in traversing rejections by the Examiner. Indeed, but for Raytheon’s and Ballew’s

intentional concealment of the Red Storm system, the claims of the ’909 patent would not have

issued.

85. Upon information and belief, Raytheon and Ballew were also aware of the ASCI

Red system. Upon information and belief, Raytheon’s and Ballew’s awareness resulted at least

from Ballew’s role on the Oversight Committee, which was tasked with evaluating Red Storm—

the replacement for Sandia’s ASCI Red system. The ASCI Red system was introduced in

approximately 1996.

86. The ASCI Red system comprised multiple motherboards, including a first

motherboard, second motherboard, and third motherboard. Each motherboard comprised

multiple processors and switching elements integrated onto the motherboard. In addition, a

processor on the first motherboard could communicate with a processor on the third motherboard

via the switching elements associated with each processor.

87. Upon information and belief, Raytheon and Ballew intentionally withheld

materials concerning the ASCI Red system from the Examiner. The ASCI Red system

constitutes material prior art at least because disclosure of the system would have undermined

Raytheon’s arguments identified above, and would have enabled the Examiner to reject the

claims of the ’874 application either as anticipated or obvious in light of the ASCI Red system.

88. Upon information and belief, Raytheon and Ballew were also aware of Cray’s

T3E system. Upon information and belief, Raytheon and Ballew were aware of the T3E through

their interactions with Cray. The T3E system was introduced in approximately 1995, almost a


Appx642


20

decade before Raytheon and Ballew filed the ’874 application. The T3E system was widely

known throughout the HPC industry, as evidenced by the significant number of publications

relating to the system.

89. The T3E system comprised multiple motherboards, including a first motherboard,

second motherboard, and third motherboard. Each motherboard comprised multiple processors

and switching elements integrated onto the motherboard. In addition, a processor on the first

motherboard could communicate with a processor on the third motherboard via the switching

elements associated with each processor.


materials concerning the T3E system from the Examiner. The T3E system constitutes material

prior art at least because disclosure of the system would have undermined or proven false


claims of the ’874 application either as anticipated or obvious in light of the T3E system.

91. Upon information and belief, Raytheon and Ballew intentionally withheld all of

the above information concerning Cray’s prior art systems from the Examiner with the intent of

misleading the Examiner with respect to the state of the prior art. That information was material

to patentability at least because disclosure of Cray’s prior art would have undermined or proven

false the arguments made by Raytheon in traversing rejections by the Examiner. Indeed, but for

Raytheon’s and Ballew’s intentional concealment of the prior art, the claims of the ’909 patent

would not have issued.

92. The ’833 patent is likewise rendered unenforceable in light of the unclean hands

of Raytheon and Ballew during the prosecution of the parent ’874 application, as described

above.


Appx643


21

93. In addition, Raytheon and Ballew acted with unclean hands during the

prosecution of U.S. Patent Application No. 13/712,451 (“the ’451 application”), filed on

December 12, 2012, which led to the issuance of the ’833 patent. The ’451 application named

James D. Ballew and Gary R. Early as inventors.

94. On July 8, 2013, Messrs. Ballew and Early stated the following: “I believe I am

the original inventor or an original joint inventor of a claimed invention in the above-identified

application.”






information concerning the Red Storm system and SeaStar interconnect in conceiving the alleged

inventions contained in the ’451 application and ’833 patent. Upon information and belief, at

least Ballew falsely stated in the oath of inventorship filed on July 8, 2013 that he was an

inventor of the alleged inventions of the ’451 application.



Early recognized this obligation in the oaths of inventorship filed on July 8, 2013 by stating the

following: “I acknowledge the duty to disclose to the United States Patent Office all information

known to me to be material to the patentability of the above-identified application.”




Appx644


22

99. Raytheon filed IDSs on January 24, 2014 and August 14, 2014. Despite having

knowledge of Cray’s Red Storm system, including Cray’s SeaStar interconnect chip, Raytheon

and Ballew failed to disclose information concerning the Red Storm system, including Cray’s

SeaStar interconnect chip, to the USPTO.




December 19, 2013, the Examiner rejected the pending claims of the ’451 application. In its

response filed on March 19, 2014, Raytheon argued that the pending claims of the ’451

application were patentable over the prior art because “each of the n > 8 interconnected nodes

has its own switch to facilitate message passing between nodes without additional devices

therebetween.”













Appx645


23



material prior art.

103. As set forth above with respect to the ’874 application, Raytheon’s intent and

knowledge regarding the materiality of Red Storm are evident at least from Ballew’s role on the

Oversight Committee, Raytheon’s September 6 presentation, and Raytheon’s October 2007

presentation.


Red Storm system for years before the ’451 application was filed. Indeed, the presentations

show that Raytheon attempted to market its alleged invention by likening its features to those of

the Red Storm system. Despite this knowledge, and despite Raytheon’s express mimicking of



of misleading the Examiner with respect to the state of the prior art. This information was

material to patentability at least because disclosure of the Red Storm system would have

undermined the arguments made by Raytheon in traversing rejections by the Examiner. Indeed,

but for Raytheon’s and Ballew’s intentional concealment of the Red Storm system, the claims of

the ’833 patent would not have issued.

105. As set forth above, upon information and belief, Raytheon and Ballew were also

aware of the ASCI Red system during prosecution of the ’451 application. Despite this

knowledge and the materiality of the ASCI Red system, upon information and belief, Raytheon

and Ballew intentionally withheld all of the above information concerning this prior art system

from the Examiner with the intent of misleading the Examiner with respect to the state of the


Appx646


24

prior art. The ASCI Red system constitutes material prior art at least because disclosure of the

system would have undermined Raytheon’s arguments identified above, and would have enabled

the Examiner to reject the claims of the ’451 application either as anticipated or obvious in light

of the ASCI Red system..

106. As set forth above, upon information and belief, Raytheon and Ballew were also

aware of Cray’s T3E system during prosecution of the ’451 application. Despite this knowledge

and the materiality of the T3E system, upon information and belief, Raytheon and Ballew

intentionally withheld all of the above information concerning Cray’s prior art systems from the

Examiner with the intent of misleading the Examiner with respect to the state of the prior art.

The T3E system constitutes material prior art at least because disclosure of the system would

have undermined or proven false Raytheon’s arguments identified above, and would have

enabled the Examiner to reject the claims of the ’451 application either as anticipated or obvious

in light of the T3E system.

107. The specific examples of unclean hands described above are intended to be

exemplary only. Upon information and belief, Raytheon and Ballew committed additional acts

evidencing unclean hands during the prosecution of the ’874 application and the ’451

application.

108. In light of Raytheon’s and Ballew’s unclean hands described above, the claims of

the ’909 patent, the ’833 patent, and all related patents are unenforceable.

TENTH DEFENSE: FAILURE TO STATE A CLAIM

109. The Complaint, and each and every purported claim for relief therein, fails to state

a claim for relief against Cray.


Appx647


25

ELEVENTH DEFENSE: IMPROPER VENUE

110. Cray denies that venue is proper in this judicial district under 28 U.S.C.

§ 1400(b). Cray incorporates by reference the bases for improper venue as stated in its Motion to

Dismiss or Transfer for Improper Venue or, in the Alternative, to Dismiss or Transfer the Action

Under the First-to-File Rule, as filed with this Court on November 25, 2015 (Dkt. No. 21), as

well all other papers in support of that motion (Dkt. Nos. 21-1, 21-2, 25, 25-1, 50, 52, 69).

TWELFTH DEFENSE: LICENSES TO PATENTS-IN-SUIT

111. Raytheon is barred or limited from recovering damages from Cray and/or from

obtaining an injunction against Cray, in whole or in part, by any licenses that Cray has to any of

the patents-in-suit.

THIRTEENTH DEFENSE: OWNERSHIP OF PATENTS-IN-SUIT


obtaining an injunction against Cray, in whole or in part, based on any patent-in-suit to which it

does not have proper title.

FOURTEENTH DEFENSE: USE OR MANUFACTURE BY OR FOR THE UNITED STATES


obtaining an injunction against Cray pursuant to 28 U.S.C. § 1498, which limits Raytheon’s

remedy, in whole or in part, to an action against the United States in the United States Court of

Federal Claims.

RESERVATION OF ADDITIONAL AFFIRMATIVE DEFENSES

114. Cray reserves the right to assert additional affirmative defenses in the event that

discovery or other analysis indicates that additional affirmative defenses are appropriate.


Appx648


26

III. CRAY’S COUNTERCLAIMS AGAINST RAYTHEON

1. In addition to its affirmative defenses, Cray further asserts the following

counterclaims against Raytheon.

THE PARTIES

2. Cray is a corporation organized and existing under the laws of the State of

Washington with its principal place of business at 901 Fifth Avenue, Suite 1000, Seattle, WA

98164. Cray is a worldwide leader in advanced supercomputing, with extensive experience in

analyzing and developing computing, big data storage, and analytic solutions for a wide range of

needs.

3. On information and belief, Raytheon is a corporation organized and existing

under the laws of the State of Delaware, with its principal place of business at 870 Winter Street,

Waltham, MA 02451.

JURISDICTION AND VENUE

4. Cray’s counterclaims against Raytheon are pursuant to the Patent Laws of the

United States, Title 35 of the United States Code and Federal Rule of Civil Procedure 13, with a

specific remedy sought based upon the laws authorizing actions for declaratory judgment in the

courts of the United States, 28 U.S.C. §§ 2201 and 2202.

5. This Court has jurisdiction over these counterclaims pursuant to 28 U.S.C.

§§ 1331 and 1338(a), 2201(a), and 2202.

6. This Court has personal jurisdiction over Raytheon at least by virtue of

Raytheon’s filing suit in this Court.

7. To the extent venue in this District is proper for Raytheon’s underlying patent

action, venue for Cray’s counterclaims is also proper in this District.


Appx649


27

8. An actual controversy exists between Cray and Raytheon by virtue of the

allegations of Raytheon’s Complaint in this action and Cray’s Answer—i.e., as to whether the

patents-in-suit are invalid and not infringed by Cray’s products and/or services.

BACKGROUND

9. Cray’s history extends back to 1972, when the legendary Seymour Cray, the

“father of supercomputing,” founded Cray Research, Inc. Since that time, Cray Research and its

successors through Cray Inc. have been leaders in the high performance computing (“HPC”)

industry.

10. In approximately September 2002, Cray entered into a contract with Sandia

National Laboratories (“Sandia”) for the Red Storm Computing Development Program, which

was a project for Sandia to create an HPC system referred to as “Red Storm.” The Red Storm

system was intended to replace another HPC system residing at Sandia known as “ASCI Red.”

As stated on its website, “Sandia National Laboratories is operated and managed by Sandia

Corporation, a wholly owned subsidiary of Lockheed Martin Corporation. Sandia Corporation

operates Sandia National Laboratories as a contractor for the U.S. Department of Energy’s

National Nuclear Security Administration (NNSA) and supports numerous federal, state, and

local government agencies, companies, and organizations.”

11. During the development of the Red Storm system, as well as during the pre-

contract bidding process, Cray submitted to Sandia and its designated representatives

confidential and proprietary information of Cray relating to, among other things, the design and

operation of the proposed Red Storm system, as well as Cray’s SeaStar interconnect chip. Such

representatives included one or more oversight committee(s) (singly or jointly “Oversight

Committee”). The Oversight Committee was responsible for validating and challenging Cray’s


Appx650


28

design of Red Storm.

12. James Ballew (“Ballew”)—a named inventor on the ’909 and ’833 patents—was

an external member of Sandia’s Oversight Committee. In his role as a member of the Oversight

Committee, Cray disclosed to Ballew, and Ballew otherwise learned of, confidential and

proprietary details concerning its design of the Red Storm system. Such information included

technical details concerning the interconnect of the Red Storm system, as well as the

composition of the compute nodes of the system.

13. For example, prior to the award of the Red Storm contract, Cray submitted a

detailed proposal regarding its proposed design for the Red Storm system. Following the award

of the contract, Cray submitted detailed specifications of the Red Storm system, as well as

progress reports, to the Oversight Committee, including Ballew.

14. Through his role on the Oversight Committee, Ballew worked and interacted with

the Cray employees primarily responsible for the SeaStar interconnect design that was

incorporated into the Red Storm system.

15. During his participation on the Oversight Committee, Ballew was an employee of

Raytheon. Emails sent and received by Ballew in his role as a member of the Oversight

Committee used a “raytheon.com” email address.

16. On November 18, 2003, Cray entered into a non-disclosure agreement with

Raytheon (“the 2003 NDA”). Under the terms of the 2003 NDA, Cray was to disclose

confidential and proprietary information “relating to Cray’s current and future products and

product plans for the purpose of User evaluating the potential purchase or license of Cray

products.” Upon information and belief, Cray disclosed confidential and proprietary information

concerning the Red Storm system and associated SeaStar interconnect chip.


Appx651


29

17. On February 19, 2004, Cray entered into another non-disclosure agreement with

Raytheon (“the February 19 NDA”). The February 19 NDA specifies that Cray was to disclose

its proprietary information to Raytheon for Raytheon’s evaluation.

18. On February 20, 2004, Cray entered into a non-disclosure agreement with

Raytheon Intelligence and Information Systems, a division of Raytheon (“the February 20

NDA”). Upon information and belief, Raytheon Intelligence and Information Systems was an

agent of Raytheon. Pursuant to the agreement, Cray was to disclose to Raytheon “Confidential

Information” regarding “Cray’s Red Storm system and related information for the purpose of

evaluation by Raytheon of the suitability of the Red Storm system for Raytheon’s use.”

19. During the development of the Red Storm system, Cray disclosed extensive

confidential and proprietary information to Raytheon, both to Ballew and others at Raytheon.

Upon information and belief, Ballew began receiving Cray’s confidential and proprietary

information concerning the Red Storm system in 2001. Cray’s disclosures to Raytheon

regarding its design for the Red Storm system continued through and beyond April 15, 2004—

the date on which U.S. Patent Application No. 10/824,874 (“the ’874 application”), which was

the patent application leading to the ’909 and ’833 patents, was filed by Ballew and Raytheon.

20. The ’874 application contains technical information similar or identical to

information disclosed to Ballew and Raytheon concerning the Red Storm system. Ballew and

others at Raytheon intentionally acquired a substantial portion of this information from Cray.

21. During the time that Ballew and Raytheon were receiving confidential and

proprietary information regarding the Red Storm system, they concealed their intent to

misappropriate Cray’s confidential and proprietary information for the purpose of the filing the

’874 application. Ballew and Raytheon also concealed from Cray that they intended to design


Appx652


30

and make HPC systems, to file patent applications, and to try and extract royalties for patents

issued from said applications.

FIRST COUNTERCLAIM (Declaratory Judgment of Non-Infringement of the ’274 Patent)

22. Paragraphs 1-21 of Cray’s counterclaims are incorporated by reference, as if fully

restated herein.

23. Raytheon asserts in this action that Cray is infringing the ’274 patent.

24. Cray has not infringed and is not infringing, directly or indirectly, contributorily

or by inducement, any claim of the ’274 patent, either literally or under the doctrine of

equivalents, or in any other manner.

25. Accordingly, Cray seeks a judgment declaring that it does not infringe and has not

infringed, directly or indirectly, contributorily or by inducement, any claim of the ’274 patent,

either literally or under the doctrine of equivalents, or in any other manner.

SECOND COUNTERCLAIM (Declaratory Judgment of Non-Infringement of the ’714 Patent)


restated herein.









Appx653


31

THIRD COUNTERCLAIM (Declaratory Judgment of Non-Infringement of the ’909 Patent)


restated herein.








FOURTH COUNTERCLAIM (Declaratory Judgment of Non-Infringement of the ’833 Patent)


restated herein.








FIFTH COUNTERCLAIM (Declaratory Judgment of Invalidity of the ’274 Patent)



Appx654


32

restated herein.


40. The ’274 patent is invalid for failure to meet one or more of the conditions for

patentability specified in Title 35, U.S.C., or the rules, regulations, and laws related thereto,

including, without limitation, in 35 U.S.C. §§ 101, 102, 103, and 112, as well as the judicial

doctrine of double patenting. Cray hereby incorporates by reference its Initial Invalidity

Contentions, which Cray served on February 12, 2016 pursuant to Eastern District of Texas

Patent Rules 3-3 and 3-4, and its Preliminary Non-infringement and Invalidity Contentions,

which Cray served on March 4, 2016 pursuant to Western District of Washington Local Patent

Rules 121 and 122.

41. Accordingly, Cray seeks a judgment declaring that the ’274 patent is invalid.

SIXTH COUNTERCLAIM (Declaratory Judgment of Invalidity of the ’714 Patent)


restated herein.









Rules 121 and 122.


Appx655


33


SEVENTH COUNTERCLAIM (Declaratory Judgment of Invalidity of the ’909 Patent)


restated herein.









Rules 121 and 122.


EIGHTH COUNTERCLAIM (Declaratory Judgment of Invalidity of the ’833 Patent)


restated herein.








Appx656


34



Rules 121 and 122.


NINTH COUNTERCLAIM (Declaratory Judgment of Unenforceability of the ’909 Patent for Inequitable Conduct)


restated herein.

55. On April 15, 2004, Raytheon filed the ’874 application naming James D. Ballew,

Gary R. Early, and Shannon V. Davidson as inventors. Together with the application, Raytheon

filed oaths of inventorship by Messrs. Ballew, Early, and Davidson. The oaths of inventorship

stated as follows: “I am an original, first, and joint inventor of the subject matter which is

claimed and for which a patent is sought on the invention entitled HIGH PERFORMANCE

COMPUTING SYSTEM AND METHOD, filed on April 15, 2004, as U.S. Application No.

10/824,874.”

56. On November 19, 2004, Raytheon filed an “Amendment and Petition for

Correction of Inventorship in a Patent Application Under 37 C.F.R. § 1.48” withdrawing

Shannon V. Davidson as a named inventor on the ’874 application.






information concerning the Red Storm system and SeaStar interconnect in describing the alleged


Appx657


35

inventions contained in the ’874 application and the ’909 patent. Upon information and belief, at

least Ballew falsely stated in the oath of inventorship filed on April 15, 2004 that he was an

inventor of the inventions of the ’874 application.



Early recognized this obligation in the oaths of inventorship filed on April 15, 2004 by stating

the following: “I have reviewed and understand the contents of the above-identified

specification, including the claims; and I acknowledge my duty to disclose to the U.S. Patent and

Trademark Office all information known to me to be material to patentability as defined in 37

C.F.R. § 1.56. I acknowledge the duty to disclose to the U.S. Patent and Trademark Office all

information known to me to be material to patentability as defined in 37 C.F.R. § 1.56.”



61. Raytheon filed Information Disclosure Statements (“IDS”) on April 15, 2004;

August 1, 2005; August 15, 2005; October 10, 2005; March 8, 2006; May 8, 2006; October 13,

2006; November 13, 2006; December 29, 2006; March 2, 2007; March 26, 2007; May 18, 2007;

January 9, 2008; January 30, 2008; March 14, 2008; March 26, 2008; October 10, 2008;

February 9, 2009; March 19, 2009; March 31, 2009; May 5, 2009; July 14, 2009; October 19,

2009; October 20, 2009; March 24, 2010; May 5, 2010; May 20, 2010; July 15, 2010; August 25,

2010; November 16, 2010; December 20, 2010; January 18, 2011; January 26, 2011; April 15,

2011; April 29, 2011; August 5, 2011; September 2, 2011; November 22, 2011; and March 27,

2012. Despite having knowledge of Cray’s Red Storm system, including Cray’s SeaStar

interconnect chip, Raytheon and Ballew failed to disclose information concerning the Red Storm


Appx658


36

system, including Cray’s SeaStar interconnect chip, to the USPTO.




July 11, 2008, the Examiner rejected the pending claims in light of Karpoff, U.S. Patent

Application No. US 2001/0049740 A1.

63. On January 12, 2009, Raytheon filed a response to the July 11, 2008 office action.

That response, however, was not fully responsive, and per a notice dated April 28, 2009, the

Examiner instructed Raytheon to file a compliant response.

64. On May 28, 2009, Raytheon filed its revised response to the July 11, 2008 office

action. In that response, Raytheon amended the pending claims, including the pending

independent claims. For example, Raytheon amended pending claim 9 as follows:

9. (Currently Amended) A system comprising a plurality of interconnected nodes, each node comprising:

a first motherboard; a switch comprising eight or more ports, the switch integrated on the motherboard and operable to interconnect at least a subset of the plurality of nodes; and at least two processors, each processor communicably coupled to the integrated switch and integrated on the motherboard. at least two first processors integrated onto the first motherboard and operable to communicate with each other via a direct link between them: and a first switch integrated onto the first motherboard, the first processors communicably coupled to the first switch, the first switch operable to communicably couple the first processors to at least six second motherboards that each comprise at least two second processors integrated onto the second motherboard and a second switch integrated onto the second motherboard operable to communicably couple the second processors to the first motherboard and at least five third motherboards that each comprise at least two third


Appx659


37

processors integrated onto the third motherboard and a third switch integrated onto the third motherboard; the first processors operable to communicate with particular second processors on a particular second motherboard via the first switch and the second switch on the particular second motherboard; the first processors operable to communicate with particular third processors on a particular third motherboard via the first switch, a particular second switch on a particular second motherboard between the first motherboard and the particular third motherboard, and the third switch on the particular third motherboard without communicating via either second processor on the particular second motherboard.

65. The other pending independent claims contained substantially similar limitations.

66. In its Remarks in response to the Examiner’s obviousness rejection under 35

U.S.C. § 103, Raytheon argued that the pending claims were patentable over the prior art

because the “cited references fail to teach, suggest, or disclose ‘the first processors operable to

communicate with particular third processors on a particular third motherboard via the first

switch, a particular second switch on a particular second motherboard between the first

motherboard and the particular third motherboard, and the third switch on the particular third

motherboard.’” Raytheon also argued that the prior art references “fail to teach, suggest, or

disclose a ‘first motherboard,’ a ‘second motherboard,’ or a ‘third motherboard.’”










Appx660


38






material prior art.

69. In the same May 28, 2009 response, Raytheon also took issue with the

Examiner’s assertion that “integrating all of the elements onto a motherboard is well known.”

Raytheon opposed that conclusion and criticized the Examiner for failing to identify any prior art

of record to support the statement. With respect to the integration of elements on a motherboard,

certain of the systems that Raytheon now accuses of infringement do not materially differ from

the Red Storm system and SeaStar interconnect. Raytheon and Ballew, however, failed to

disclose that system to the Examiner, and as a result the Examiner was unable to recognize that

this statement was false.

70. Raytheon further argued that the prior art “fails to teach, suggest, or disclose ‘the

first processors’ integrated onto the first motherboard being ‘operable to communicate with

particular third processors on a particular third motherboard via the first switch’ integrated onto

the first motherboard.” With respect to this configuration, certain of the systems that Raytheon

now accuses of infringement do not materially differ from the Red Storm system and SeaStar

interconnect. Raytheon and Ballew, however, concealed that system from the Examiner, which

again kept the examiner from recognizing that this statement was false.

71. Raytheon further argued that the prior art “fails to teach, suggest, or disclose ‘a

particular second switch on a particular second motherboard between the first motherboard and


Appx661


39

the particular third motherboard.’” With respect to this configuration, certain of the systems that

Raytheon now accuses of infringement do not materially differ from the Red Storm system and

SeaStar interconnect. Raytheon and Ballew, however, concealed that system from the Examiner,

which again kept the Examiner from recognizing that this statement was false.



a September 6, 2007 presentation by Raytheon (“the September 6 presentation”) purports to

describe the technologies claimed in the patents-in-suit. The September 6 presentation expressly

describes Raytheon’s alleged invention as mimicking the Red Storm system, among other prior

art systems:


Appx662


40

See RAY_CRAY00030928. In particular, Raytheon advertised that its alleged inventions were

valuable because of “features only available now on expensive proprietary systems like IBM’s

BlueGene and Cray’s Red Storm.” Id. (emphasis in original). The September 6 presentation

further states that the patents-in-suit would enable a licensee to “[g]ain an edge on HP, IBM,

Dell, Cray, and Sun with open source features that duplicate some of their proprietary

features: 3D Torus, Virtual Cluster Manager.” Id. (emphasis in original and emphasis

added).


Raytheon’s attempt to mimic the features of Cray’s proprietary Red Storm system:

See RAY_CRAY00030933. Indeed, Raytheon and/or Ballew described the alleged inventions as


Appx663


41


74. In another presentation dated October 2007 (“the October 2007 presentation”),

Raytheon again likened its invention to Red Storm while touting the potential for its patents to

“block[] competitors” from launching competing products:

See RAY_CRAY00030959. In the October 2007 presentation, Raytheon and/or Ballew further

compared the elements of the alleged invention directly to the Red Storm system and the IBM

BlueGene system:


Appx664


42

See RAY_CRAY00030961. Raytheon’s presentation demonstrates that the only alleged

differences between the prior art—including the Red Storm system—and Raytheon’s alleged

invention relate to software or other functionality which is not claimed by the ’909 patent.


Red Storm system during prosecution of the ’874 application. Indeed, the presentations show

that Raytheon attempted to market its alleged invention by likening its features to those of the

Red Storm system. Despite this knowledge, and despite Raytheon’s express mimicking of



of misleading the Examiner with respect to the state of the prior art, which Raytheon was


Appx665


43

simultaneously advertising to third parties. This information was material to patentability at least

because disclosure of the Red Storm system would have undermined the arguments made by

Raytheon in traversing rejections by the Examiner. Indeed, but for Raytheon’s and Ballew’s

intentional concealment of the Red Storm system, the claims of the ’909 patent would not have

issued.





approximately 1996.




processor on the first motherboard could communicate with a processor on the third motherboard

via the switching elements associated with each processor.








their interactions with Cray. The T3E system was introduced in approximately 1995, almost a


Appx666


44

decade before Raytheon and Ballew filed the ’874 application. The T3E system was widely

known throughout the HPC industry, as evidenced by the significant number of publications

relating to the system.








prior art at least because disclosure of the system would have undermined or proven false


claims of the ’874 application either as anticipated or obvious in light of the T3E system.




to patentability at least because disclosure of Cray’s prior art would have undermined or proven

false the arguments made by Raytheon in traversing rejections by the Examiner. Indeed, but for



83. The specific examples of inequitable conduct described above are intended to be


of inequitable conduct during the prosecution of the ’874 application.


Appx667


45

84. In light of Raytheon’s and Ballew’s inequitable conduct described above, Cray

requests that the claims of the ’909 patent and all related patents be declared unenforceable.

TENTH COUNTERCLAIM (Declaratory Judgment of Unenforceability of the ’833 Patent for Inequitable Conduct)


restated herein.

86. The ’833 patent is rendered unenforceable in light of the inequitable conduct

committed by Raytheon and Ballew during the prosecution of the parent ’874 application, as

described above in Cray’s Ninth Counterclaim.

87. In addition, Raytheon and Ballew committed inequitable conduct during the

prosecution of U.S. Patent Application No. 13/712,451 (“the ’451 application”), filed on

December 12, 2012, which led to the issuance of the ’833 patent. The ’451 application named

James D. Ballew and Gary R. Early as inventors.

88. On July 8, 2013, Messrs. Ballew and Early stated the following: “I believe I am

the original inventor or an original joint inventor of a claimed invention in the above-identified

application.”






information concerning the Red Storm system and SeaStar interconnect in conceiving the alleged

inventions contained in the ’451 application and ’833 patent. Upon information and belief, at

least Ballew falsely stated in the oath of inventorship filed on July 8, 2013 that he was an


Appx668


46

inventor of the alleged inventions of the ’451 application.



Early recognized this obligation in the oaths of inventorship filed on July 8, 2013 by stating the

following: “I acknowledge the duty to disclose to the United States Patent Office all information

known to me to be material to the patentability of the above-identified application.”



93. Raytheon filed IDSs on January 24, 2014 and August 14, 2014. Despite having

knowledge of Cray’s Red Storm system, including Cray’s SeaStar interconnect chip, Raytheon

and Ballew failed to disclose information concerning the Red Storm system, including Cray’s

SeaStar interconnect chip, to the USPTO.




December 19, 2013, the Examiner rejected the pending claims of the ’451 application. In its

response filed on March 19, 2014, Raytheon argued that the pending claims of the ’451

application were patentable over the prior art because “each of the n > 8 interconnected nodes

has its own switch to facilitate message passing between nodes without additional devices

therebetween.”





Appx669


47











material prior art.



the September 6 presentation purports to describe the technologies claimed in the patents-in-suit.

The September 6 presentation expressly describes Raytheon’s alleged invention as mimicking

the Red Storm system, among other prior art systems. See RAY_CRAY00030928. In particular,

Raytheon advertised that its alleged inventions were valuable because of “features only available

now on expensive proprietary systems like IBM’s BlueGene and Cray’s Red Storm.” Id.

(emphasis in original). The September 6 presentation further states that the patents-in-suit would

enable a licensee to “[g]ain an edge on HP, IBM, Dell, Cray, and Sun with open source

features that duplicate some of their proprietary features: 3D Torus, Virtual Cluster

Manager.” Id. (emphasis in original and emphasis added).



Appx670


48

Raytheon’s attempt to mimic the features of Cray’s proprietary Red Storm system. See

RAY_CRAY00030933. Indeed, Raytheon and/or Ballew described the alleged inventions as


99. In the October 2007 presentation, Raytheon again likened its invention to Red

Storm while touting the potential for its patents to “block[] competitors” from launching

competing products. See RAY_CRAY00030959. In the October 2007 presentation, Raytheon

and/or Ballew further compared the elements of its alleged invention directly to the Red Storm

system and the IBM BlueGene system. See RAY_CRAY00030961. Raytheon’s presentation

demonstrates that the only alleged differences between the prior art—including the Red Storm

system—and Raytheon’s alleged invention relate to software or other functionality which is not

claimed by the ’833 patent.


Red Storm system for years before the ’451 application was filed. Indeed, the presentations

show that Raytheon attempted to market its alleged invention by likening its features to those of

the Red Storm system. Despite this knowledge, and despite Raytheon’s express mimicking of



of misleading the Examiner with respect to the state of the prior art. This information was

material to patentability at least because disclosure of the Red Storm system would have

undermined the arguments made by Raytheon in traversing rejections by the Examiner. Indeed,

but for Raytheon’s and Ballew’s intentional concealment of the Red Storm system, the claims of

the ’833 patent would not have issued.



Appx671


49




approximately 1996.




processor on the first motherboard could communicate with a processor on the third

motherboard via the switching elements associated with each processor.








their interactions with Cray. The T3E system was released in or around November 1995, almost

a decade before Raytheon and Ballew filed the application to which the ’451 application claims

priority. The T3E system was widely known throughout the HPC industry, as evidenced by the

significant number of publications relating to the system.





Appx672


50





prior art at least because disclosure of the system would have undermined Raytheon’s arguments

identified above, and would have enabled the Examiner to reject the claims of the ’451

application either as anticipated or obvious in light of the T3E system.




to patentability at least because disclosure of Cray’s prior art would have undermined the

arguments made by Raytheon in traversing rejections by the Examiner. Indeed, but for



108. The specific examples of inequitable conduct described above are intended to be


of inequitable conduct during the prosecution of the ’451 application.

109. In light of Raytheon’s and Ballew’s inequitable conduct described above, Cray

requests that the claims of the ’833 patent and all related patents be declared unenforceable.

ELEVENTH COUNTERCLAIM (Declaratory Judgment of Unenforceability of the ’909 Patent for Unclean Hands)

110. Paragraphs 1-109 of Cray’s counterclaims are incorporated by reference, as if

fully restated herein.

111. As set forth above, Ballew acquired extensive confidential and proprietary


Appx673


51

information concerning Cray’s Red Storm system, including the SeaStar interconnect. Ballew

subsequently improperly used that information in filing the ’874 application, which ultimately

issued as the ’909 patent.

112. Ballew’s misappropriation of Cray’s confidential and proprietary information and

attempt to claim it as his own invention was conducted in bad faith and with the intent of

harming Cray.

113. Given Ballew’s intentional misappropriation of Cray’s confidential and

proprietary information concerning Cray’s Red Storm system, including the SeaStar

interconnect, Cray requests an order declaring the ’909 patent unenforceable for unclean hands.

TWELTH COUNTERCLAIM (Declaratory Judgment of Unenforceability of the ’833 Patent for Unclean Hands)



115. As set forth above, Ballew acquired extensive confidential and proprietary

information concerning Cray’s Red Storm system, including the SeaStar interconnect. Ballew

subsequently improperly used that information in filing the ’451 application, which ultimately

issued as the ’833 patent.

116. Ballew’s misappropriation of Cray’s confidential and proprietary information and

attempt to claim it as his own invention was conducted in bad faith and with the intent of

harming Cray.

117. Given Ballew’s intentional misappropriation of Cray’s confidential and

proprietary information concerning Cray’s Red Storm system, including the SeaStar

interconnect, Cray requests an order declaring the ’833 patent unenforceable for unclean hands.


Appx674


52

THIRTEENTH COUNTERCLAIM (Correction of Inventorship Pursuant to 35 U.S.C. § 256 as to the ’909 Patent)



119. As set forth above, the ’909 patent identifies Messrs. Ballew and Early as the

named inventors. At least claim 1 of the ’909 patent, however, resulted from the work of one or

more employees of Cray on the architecture of the Red Storm system and SeaStar interconnect,

including at least Robert Alverson. Such inventorship is evident from the detailed proposals and

specifications which Cray submitted to Sandia during the Red Storm project, which were

simultaneously disclosed to Raytheon and Ballew due to Ballew’s role on the Oversight

Committee.

120. Cray maintains a concrete financial interest in the ’909 patent because its

employees are obligated to assign any inventions to Cray. Cray further maintains a concrete

financial interest in the ’909 patent because had it not been for Raytheon’s and Ballew’s

misappropriation of information gained in connection with the Red Storm project, Raytheon

would be unable to wrongfully assert at least the ’909 and ’833 patents against Cray. The

wrongful conduct of Raytheon and Ballew, described above, has also resulted in reputational

injury to Cray insofar as Raytheon purports to be the inventor of inventions which Cray was

instrumental in developing.

121. Given that the claims of the ’909 patent result from the work of at least one Cray

employee, Cray requests an order correcting inventorship on the ’909 patent to add one or more

Cray employees, including at least Mr. Alverson.


Appx675


53

FOURTEENTH COUNTERCLAIM (Correction of Inventorship Pursuant to 35 U.S.C. § 256 as to the ’833 Patent)



123. As set forth above, the ’833 patent identifies Messrs. Ballew and Early as the

named inventors. At least claim 1 of the ’833 patent, however, resulted from the work of one or

more employees of Cray on the architecture of the Red Storm system and SeaStar interconnect,

including at least Robert Alverson. Such inventorship is evident from the detailed proposals and

specifications which Cray submitted to Sandia during the Red Storm project, which were

simultaneously disclosed to Raytheon and Ballew due to Ballew’s role on the Oversight

Committee.

124. Cray maintains a concrete financial interest in the ’833 patent because its

employees are obligated to assign any inventions to Cray. Cray further maintains a concrete

financial interest in the ’833 patent because had it not been for Raytheon’s and Ballew’s

misappropriation of information gained in connection with the Red Storm project, Raytheon

would be unable to wrongfully assert at least the ’909 and ’833 patents against Cray. The

wrongful conduct of Raytheon and Ballew, described above, has also resulted in reputational

injury to Cray insofar as Raytheon purports to be the inventor of inventions which Cray was

instrumental in developing.

125. Given that the claims of the ’833 patent result from the work of at least one Cray

employee, Cray requests an order correcting inventorship on the ’833 patent to add one or more

Cray employees, including at least Mr. Alverson.


Appx676


54

FIFTEENTH COUNTERCLAIM (Unjust Enrichment)



127. Cray disclosed its confidential and proprietary information concerning the design

of Red Storm system and SeaStar interconnect to Raytheon at least through Ballew during his

tenure on the Oversight Committee for the Red Storm project.

128. Ballew and Raytheon knew of and appreciated the value of Cray’s confidential

and proprietary information, including the design of the Red Storm system, so much so that they

used it to file patent applications leading to the ’909 and ’833 patents. On information and

belief, Ballew and Raytheon also used Cray’s confidential and proprietary information to attempt

to develop competing HPC systems.

129. Raytheon benefitted from its use of Cray’s confidential and proprietary

information at least by obtaining the ’909 and ’833 patents, as well as entering into licenses with

companies for technology comprising or based on Cray’s confidential and proprietary

information.

130. It would be inequitable to permit Raytheon to retain the benefits that it received as

a result of its misuse of Cray’s confidential and proprietary information.

131. Cray, therefore, requests all proceeds—including any sales of HPC systems and

licensing fees—that Raytheon received as a result of its use of Cray’s confidential and

proprietary information, as well as an order transferring title of the ’909 and ’833 patents to

Cray.


Appx677


55

SIXTEENTH COUNTERCLAIM (Conversion)



133. Raytheon misappropriated Cray’s confidential and proprietary information,

including the design of the Red Storm system, in obtaining the ’909 and ’833 patents. As such,

Raytheon deprived Cray of intellectual property rightfully belonging to Cray.

134. Cray has suffered damages as a result Raytheon’s improper misappropriation of

its confidential and proprietary information, at least in the form of loss of goodwill.

135. Cray, therefore, requests damages in an amount to be determined at trial and/or

the return of the property—the ’909 and ’833 patents—rightfully belonging to it.

SEVENTEENTH COUNTERCLAIM (Breach of Contract)



137. Cray and Raytheon entered into a number of valid NDAs as described above.

Pursuant to those NDAs, Raytheon maintained an obligation to use any confidential or

proprietary information disclosed by Cray solely for the purpose of evaluating Cray’s products.

138. Upon information and belief, in violation of one or more of those NDAs,

Raytheon misappropriated confidential and proprietary information disclosed by Cray under

those NDAs for the purpose developing its own HPC technology and/or obtaining the ’909 and

’833 patents.

139. Upon information and belief, Raytheon’s breach of one or more of the NDAs is

the proximate and actual cause of damage to Cray, at least in the forms of the loss of goodwill


Appx678


56

and not receiving adequate compensation for the use of its confidential and proprietary

information.

140. Cray, therefore, requests damages in amount to be determined at trial.

PRAYER FOR RELIEF

Cray requests that this Court enter a judgment in its favor and against Raytheon as follows:

(a) Dismissal of Raytheon’s claims for patent infringement and injunctive relief with

prejudice;

(b) Denial of all remedies and relief sought by Raytheon in its Complaint;

(c) Declaration that the ’274, ’714, ’909, and ’833 patents are not infringed by Cray;

(d) Declaration that the ’274, ’714, ’909, and ’833 patents are invalid;

(e) Declaration that the ’909 and ’833 patents are unenforceable for inequitable

conduct;

(f) Declaration that the ’909 and ’833 patents are unenforceable for unclean hands;

(g) Grant of title to the ’909 and ’833 patents to Cray;

(h) Declaration that one or more Cray employee(s), including at least Robert

Alverson, is at least a joint inventor(s) on the ’909 and ’833 patents;

(i) Permanent injunction preventing Raytheon, including its officers, agents,

employees, and all persons acting in concert or participation with Raytheon, from charging that

any claim of the patents-in-suit is infringed by Cray or its customers;

(j) Award of damages to Cray in an amount to be determined at trial;

(k) Disgorgement of all proceeds received by Raytheon resulting from its

misappropriation of Cray’s confidential and proprietary information;

(l) Declaration that this case is exceptional, entitling Cray to, and therefore awarding,

its reasonable attorneys’ fees under 35 U.S.C. § 285;


Appx679


57

(m) Award of costs to Cray; and

(n) Award to Cray such other relief as the Court deems just and reasonable.

DEMAND FOR JURY TRIAL

In accordance with Rule 38(b) of the Federal Rules of Civil Procedure, Cray respectfully

requests a jury trial on all issues so triable, including without limitation, Raytheon’s claims and

Cray’s affirmative defenses and counterclaims.


Appx680


58

Dated: October 7, 2016 Respectfully Submitted,

FENWICK & WEST LLP

By: /s/David K. Tellekson David K. Tellekson (admitted E.D. Tex.) Melanie L. Mayer (admitted E.D. Tex.) Jonathan T. McMichael (admitted E.D. Tex.) 1191 Second Avenue, 10th Floor Seattle, WA 98101 Tel: (206) 389-4510 Fax: (206) 389-4511 Email: [email protected] [email protected] [email protected] Bryan A. Kohm (admitted E.D. Tex.) Eman Sojoodi (admitted E.D. Tex.) 555 California Street, 12th Floor San Francisco, CA 94104 Tel: (415) 875-2300 Fax: (415) 281-1350 Email: [email protected] [email protected] Michael C. Smith SIEBMAN, BURG, PHILLIPS & SMITH LLP 113 East Austin Street P.O. Box 1556 Marshall, TX 75671 Tel: (903) 938-8900 Fax: (972) 767-4620 Email: [email protected] Attorneys for Defendant Cray Inc.


Appx681


59


I hereby certify that all counsel of record who consented to electronic service are being served with a copy of this document via the Court’s CM/ECF system per Local Rule CV-5(a) on October 7, 2016.

/s/ David K. Tellekson David K. Tellekson


Appx682


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

MARSHALL DIVISION

RAYTHEON COMPANY,

Plaintiff vs. CRAY, INC.

Defendant

Civil Action No. 2:15-CV-1554-JRG-RSP

JURY TRIAL DEMANDED

JOINT FINAL PRETRIAL ORDER

Pursuant to Federal Rule of Civil Procedure 16, Local Rule CV-16, and the Court’s Fourth

Amended Docket Control Order (Dkt. 149), Plaintiff Raytheon Company (“Raytheon”) and

Defendant Cray, Inc. (“Cray”) jointly submit the following Proposed Joint Pre-Trial Order with

respect to the asserted claims involving U.S. Patent Nos. 7,475,274; 8,190,714; 8,335,909; and

9,037,833, as well as Cray’s counterclaims. This case is scheduled to come before the Court at the

Pretrial Conference on February 16, 2017 in Marshall, Texas.

A. COUNSEL FOR THE PARTIES

1. RAYTHEON COMPANY

William E. Davis, III Texas State Bar No. 24047416 THE DAVIS FIRM P.C. 213 N. Fredonia Street, Suite 230 Longview, Texas 75601 Telephone: (903) 230-9090 Facsimile: (903) 230-9661 E-mail: [email protected] Of Counsel Thomas J. Filarski Daniel S. Stringfield


Appx683


2

Robert F. Kappers Matthew M. Zuziak STEPTOE & JOHNSON LLP 115 South LaSalle Street, Suite 3100 Chicago, IL 60603 Telephone: (312) 577-1300 Email: [email protected] [email protected] [email protected] [email protected] Sanjeet K. Dutta STEPTOE & JOHNSON LLP 1891 Page Mill Road, Suite 200 Palo Alto, California 94304 Telephone: (650) 687-9484 Email: [email protected] Stephanie Roberts STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, NW Washington, DC 20036 Telephone: (202) 429-3000 Email: [email protected]

2. CRAY, INC.

Michael C. Smith SIEBMAN, BURG, PHILLIPS & SMITH LLP113 East Austin Street P.O. Box 1556 Marshall, TX 75671 Telephone: (903) 938-8900 Email: [email protected]


Appx684


3

Of Counsel

David K. Tellekson Melanie L. Mayer Jonathan T. McMichael FENWICK & WEST LLP 1191 Second Avenue, 10th Floor Seattle, WA 98101 Telephone: (206) 389-4510 Email: [email protected] [email protected] [email protected]

Virginia K. DeMarchi Yixin Zhang FENWICK & WEST LLP 801 California Street Mountain View, CA 94041 Telephone: (650) 988-8500 Email: [email protected] [email protected]

Bryan A. Kohm Eman Sojoodi FENWICK & WEST LLP 555 California Street, 12th Floor San Francisco, CA 94104 Telephone: (415) 875-2300 Email: [email protected] [email protected]

B. STATEMENT OF JURISDICTION

The action arises under the Patent Laws of the United States, namely, 35 U.S.C. § 1, et

seq. This Court has exclusive subject matter jurisdiction over this action pursuant to 28 U.S.C.

§§ 1331 and 1338(a). This Court has personal jurisdiction over Cray and Raytheon pursuant to

28 U.S.C. § 1391(d). Raytheon believes venue is proper in this District pursuant to 28 U.S.C.

§§ 1391 and 1400(b).1 Cray disagrees that venue is proper in this District for at least the reasons

1 See Report and Recommendation Denying Cray’s Motion to Dismiss (Dkt. 65); Order Adopting Magistrate Judge’s Report and Recommendation Denying Cray’s Motion to Dismiss (Dkt. 94).


Appx685


4

explained in Defendant Cray Inc.’s Motion to Dismiss or Transfer for Improper Venue or, in the

Alternative, to Dismiss or Transfer the Action Under the First-to-File Rule (Dkt. Nos. 21, 21-1,

21-2), Defendant Cray Inc.’s Reply Memorandum in Support of its Motion to Dismiss or

Transfer for Improper Venue or, in the Alternative, to Dismiss or Transfer the Action Under the

First-to-File Rule (Dkt. Nos. 25, 25-1), and Defendant Cray’s Objection to Report and

Recommendation of United States Magistrate Judge (Dkt. No. 69).

C. NATURE OF ACTION

This is a patent infringement action. Raytheon brought this patent infringement action

against Cray. Raytheon alleges infringement of each of the following patents, referred to

collectively as the “patents-in-suit” or “asserted patents,” by Cray: U.S. Patent No. 7,475,274;

U.S. Patent No. 8,190,714, U.S. Patent No. 8,335,909, and U.S. Patent No. 9,037,833. Cray

denies that it infringes any asserted claim of the patents-in-suit, directly or indirectly. Cray

further contends that all of the asserted claims of the patents-in-suit are invalid because they are

either anticipated by or rendered obvious by one or more prior art references or because they are

unenforceable due to inequitable conduct and/or unclean hands. Cray also has several

counterclaims against Raytheon, including breach of contract, unjust enrichment, and

conversion. Raytheon disputes Cray’s counterclaims and submits that Cray’s breach of contract,

unjust enrichment, and conversion claims are barred by the statute of limitations.

D. CONTENTIONS OF THE PARTIES

1. Raytheon’s Statement of its Contentions

By providing these Contentions, Raytheon does not concede that all of these issues are

appropriate for trial. In addition, Raytheon does not waive any of its motions in limine or other

pending motions.


Appx686


5

Raytheon filed this patent infringement suit in this Court on September 25, 2015 seeking

money damages from Cray for infringing the patents-in-suit by making, using, selling, importing,

or offering for sale in the United States products that Raytheon argues are covered by the

following asserted claims of the Raytheon patents:

• U.S. Patent 8,335,909 (“’909 Patent”): claims 1, 4, 9, 11, 14, 15, 18, 23-24, and 27

• U.S. Patent 9,037,833 (“’833 Patent”): claims 1-4, 8-11, and 15

• U.S. Patent 8,190,714 (“’714 Patent”): claims 1, 2, 4-6, 9, 11-14, 29, 30, 32-34, 37,

and 39-42

• U.S. Patent 7,475,274 (“’274 Patent”): claims 1-8, 10, 12-25, 27-36, and 38

Raytheon seeks a judgment of infringement by Cray of the asserted claims pursuant to 35

U.S.C. §§ 271 and 281. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391 and

1400(b). This Court has personal jurisdiction over Cray for its acts of patent infringement within

the State of Texas and within the Eastern District of Texas.

Raytheon alleges that Cray directly infringes, and indirectly infringes by way of induced

infringement of, U.S. Patent No. 7,475,274; U.S. Patent No. 8,190,714, U.S. Patent No.

8,335,909, and U.S. Patent No. 9,037,833 by making, using, selling and/or offering for sale in

the United States or importing into the United States the following Cray products: the Cray “XC”

family of computers; the Cray “XK” family of computers; the Cray “XE” family of computers;

the Cray “CS” family of computers; and the Cray “URIKA” family of computers.

Raytheon contends that Cray owes Raytheon reasonable royalties to compensate

Raytheon for Cray’s infringement of the asserted patents pursuant to 35 U.S.C. § 284.

Raytheon has also alleged that Cray’s infringement has been willful with respect to the

asserted claims of the asserted patents.


Appx687


6

Raytheon disputes Cray’s counterclaims, including its counterclaims of breach of

contract, unjust enrichment, and conversion. Raytheon denies that Cray is entitled to any

damages for its counterclaims. Further, Raytheon contends that Cray’s breach of contract, unjust

enrichment, and conversion counterclaims are barred by the statute of limitations.

2. Cray’s Statement of its Contentions

By providing these Contentions, Cray does not concede that all of these issues are

appropriate for trial. In addition, Cray does not waive any of its motions in limine or other

pending motions.

Cray denies that venue is proper in this District under 28 U.S.C. §§ 1391 and 1400(b) for

at least the reasons explained in Cray’s Motion to Dismiss or Transfer for Improper Venue or, in

the Alternative, to Dismiss or Transfer the Action Under the First-to-File Rule (Dkt. No. 21), as

well as other papers filed in support of that motion (Dkt. Nos. 21-1, 21-2, 25, 25-1, 50, 52, 69).

Cray denies that its “XC,” “XK,” “XE,” “CS” or “URIKA” families of supercomputers

infringe any asserted claim of the ʼ909, ʼ833, ʼ274 or ʼ714 Patents, either directly or indirectly by

way of induced infringement. Cray also denies that any infringement has been willful. In

addition, Cray contends that all of the asserted claims of the patents-in-suit are invalid because

they are anticipated by or rendered obvious by one or more prior art references, the inventors did

not invent the subject of the claimed invention, and the claims do not claim what the inventors

regard as their invention. Cray also asserts that certain claims are indefinite. Cray further

contends that the ʼ909 and ʼ833 Patents are unenforceable due to inequitable conduct and/or

unclean hands.

Cray denies that Raytheon is entitled to a reasonable royalty pursuant to 35 U.S.C. § 284

because Cray has not infringed any valid claim of the asserted patents. In addition, about half of

Cray’s sales of the accused “XC,” “XK,” “XE,” “CS” or “URIKA” supercomputers are to the


Appx688


7

U.S. Government. Cray contends that these sales were “for the United States” and with the

“authorization and consent” of the United States under 28 U.S.C. § 1498, and that these sales

should therefore be excluded from this case, including for purposes of calculating any damages.

Cray has asserted counterclaims of breach of contract, unjust enrichment, and conversion

against Raytheon. These claims are related to James Ballew’s (a named inventor on the ʼ909 and

ʼ833 Patents) and Raytheon’s misappropriation of Cray’s property, including but not limited to

its inventions, ideas, plans, and confidential and proprietary information (such as the design of

the Red Storm System) and using that information in obtaining the ʼ909 and ʼ833 Patents.

E. STIPULATIONS AND UNCONTESTED FACTS

The parties agree to the following uncontested facts:

1. U.S. Patent No. 7,475,274, which is entitled “Fault Tolerance and Recovery in a

High-Performance Computing (HPC) System,” issued on January 6, 2009 from a patent

application filed on November 17, 2004

2. U.S. Patent No. 8,190,714, which is entitled “System and Method for Computer

Cluster Virtualization Using Dynamic Boot Images and Virtual Disk,” issued on May 29, 2012

from a patent application filed on April 15, 2004.

3. U.S. Patent No. 8,335,909, which is entitled “Coupling Processors to Each Other

for High Performance Computing (HPC),” issued on December 18, 2012 from a patent

application filed on April 15, 2004.

4. U.S. Patent No. 9,037,833, which is entitled “High Performance Computing

(HPC) Node Having a Plurality of Switch Coupled Processors,” issued on May 19, 2015 and

claims priority to a patent application filed on April 15, 2004.


Appx689


8

F. CONTESTED ISSUES OF FACT AND LAW2

1. Statement of Contested Issues of Fact and Law

By providing this Statement, Raytheon and Cray do not concede that all of these issues

are appropriate for trial. In addition, Raytheon and Cray do not waive any of their pending

motions.

1. Whether Cray directly infringes claims 1, 4, 9, 11, 14, 15, 18, 23-24, and 27 of

U.S. Patent 8,335,909 (“’909 Patent”), literally or alternatively, under the doctrine of

equivalents.

2. Whether Cray induced third parties to directly infringe the asserted claims of the

’909 Patent.

3. Whether Cray directly infringes claims 1-4, 8-11, and 15 of U.S. Patent 9,037,833

(“’833 Patent”), literally or alternatively, under the doctrine of equivalents.


’833 Patent.

5. Whether Cray directly infringes claims 1, 2, 4-6, 9, 11-14, 29, 30, 32-34, 37, and

39-42 of U.S. Patent 8,190,714 (“’714 Patent”), literally or alternatively, under the doctrine of

equivalents.


’714 Patent.

7. Whether Cray directly infringes claims 1-8, 10, 12-25, 27-36, and 38 of U.S.

Patent 7,475,274 (“’274 Patent”), literally or alternatively, under the doctrine of equivalents.

2 The issues identified below are made subject to the parties’ pending motions and without waiver of objection as to whether the issues have been properly pleaded, disclosed, or whether related evidence is admissible.


Appx690


9


’274 Patent.

9. Whether Cray’s infringement is willful with regards to Raytheon’s alleged

infringement of the asserted claims of the ’909 Patent, the ’833 Patent, the ’714 Patent, and the

’274 Patent.

10. Whether Raytheon is entitled to damages to compensate for Cray’s infringement,

and, if so, the dollar amount of pre-verdict and post-verdict damages adequate to compensate for

the infringement of the patents-in-suit.

11. Whether Raytheon is entitled to reasonable attorneys’ fees, expenses, and costs,

and, if so, the dollar amount of its fees, expenses, and costs.

12. Whether Raytheon is entitled to prejudgment and post-judgment interest, and, if

so, the dollar amount of prejudgment and post-judgment interest.

13. Whether Raytheon is entitled to enhanced damages pursuant to 35 U.S.C. § 284,

and, if so, the dollar amount of the enhancement.

14. Whether Raytheon is entitled to an injunction to enjoin any further alleged

infringement or a running royalty to compensate it for any continuing infringement.

15. Whether this case is an exceptional case pursuant to 35 U.S.C. §285 and whether

Raytheon is entitled to an award of attorneys’ fees.

16. Whether claims 1, 4, 9, 11, 14, 15, 18, 23-24 and/or 27 of the ’909 Patent are

invalid as anticipated by or rendered obvious by one or more prior art references, including but

not limited to, Cray’s XD1 system, Cray’s T3D system, Cray’s T3E system, Cray’s Red Storm

system, and U.S. Patent No. 6,643,764.


Appx691


10

17. Whether claims 1-4, 8-11 and/or 15 of the ’833 Patent are invalid as anticipated

by or rendered obvious by one or more prior art references, including but not limited to, Cray’s

XD1 system, Cray’s T3D system, Cray’s T3E system, Cray’s Red Storm system, and U.S. Patent

No. 6,643,764.

18. Whether claims 1, 2, 4-6, 9, 11-14, 29, 30, 32-34, 37 and/or 39-42 of the ’714

Patent are invalid as anticipated by or rendered obvious by one or more prior art references,

including but not limited to, IBM Tivoli Intelligent ThinkDynamic Orchestrator (“Tivoli”),

Simple Linus Utility for Resource Management (“SLURM”), and XIOtech’s Virtualized Storage

Architecture (“XIOtech”).

19. Whether claims 1-8, 10, 12-25, 27-36 and/or 38 of the ’274 Patent are obvious

over one or more prior art references, including but not limited to, Reliable Clustered Computing

Project (“RCC”), U.S. Patent No. 7,409,577 (“Wing”), Altair PBS Professional v. 5.3 (“PBS

Pro”), and Simple Linus Utility for Resource Management (“SLURM”).


invalid under § 102(f) because the inventors did not invent the subject matter sought to be

patented.

21. Whether claims 1-4, 8-11 and/or 15 of the ’833 Patent are invalid under § 102(f)

because the inventors did not invent the subject matter sought to be patented.


invalid under § 112(2) because the claims do not particularly point out and distinctly claim the

subject matter which the applicant regards as his invention.


Appx692


11

23. Whether claims 1-4, 8-11 and/or 15 of the ’833 Patent are invalid under § 112(2)

because the claims do not particularly point out and distinctly claim the subject matter which the

applicant regards as his invention.

24. Whether claims 1-4, 8-11 and/or 15 of the ’833 Patent are invalid under § 112(2)

because the term “associated with” renders them indefinite.

25. Whether claims 6, 20, and/or 34 of the ’274 Patent are invalid under § 112(2)

because the term “low utilization” renders them indefinite.


unenforceable for inequitable conduct and/or unclean hands.

27. Whether claims 1-4, 8-11 and/or 15 of the ’833 Patent are unenforceable for

inequitable conduct and/or unclean hands.

28. Whether Cray’s sales of accused systems to the U.S. Government were “for the

United States” and “with the authorization and consent” of the United States under 28 U.S.C.

§ 1498, such that those sales should be excluded from this case, including for any calculation of

damages for patent infringement.

29. Whether Raytheon has been unjustly enriched, including by misappropriating

Cray’s property, including but not limited to its inventions, ideas, plans, and confidential and

proprietary information (such as the design of the Red Storm System) and using that information

to obtain the ʼ909 Patent and the ʼ833 Patent.

30. Whether Raytheon is liable for conversion, including by misappropriating Cray’s

property, including but not limited to its inventions, ideas, plans, and confidential and proprietary

information (including the design of the Red Storm system) and using that information to obtain

the ʼ909 Patent and the ʼ833 Patent.


Appx693


12

31. Whether Raytheon breached Non-Disclosure Agreements with Cray.

32. Whether Cray is entitled to damages to compensate for Raytheon’s conversion,

and, if so, the dollar amount of pre-verdict and post-verdict damages.

33. Whether Cray is entitled to damages for Raytheon’s unjust enrichment and, if so,

the dollar amount of pre-verdict and post-verdict damages.

34. Whether Cray is entitled to damages for Raytheon’s breach of its Non-Disclosure

Agreements with Cray and, if so, the dollar amount of pre-verdict and post-verdict damages.

35. Whether Cray is entitled to reasonable attorneys’ fees, expenses, and costs, and, if

so, the dollar amount of its fees, expenses, and costs.

36. Whether Cray is entitled to prejudgment and post-judgment interest, and, if so, the

dollar amount of prejudgment and post-judgment interest.

37. Whether Cray’s unjust enrichment, conversion, and/or breach of contract claims

are barred by the statute of limitations.

38. Whether Cray is entitled to an injunction to enjoin Raytheon (including its officers,

agents, employees, and all persons acting in concert or participation with Raytheon) from

charging that any claim of the ʼ909, ʼ833, ʼ714, or ʼ274 Patents is infringed by Cray or its

customers.

39. Whether this case is an exceptional case pursuant to 35 U.S.C. §285 and whether

Cray is entitled to an award of attorneys’ fees.

40. Any issues of fact that are determined to constitute issues of law are hereby

designated as such, and vice versa.

2. Raytheon’s Statement Regarding Issues to be Decided by the Court


Appx694


13

Raytheon contends that all equitable issues require determination by the Court, should

not be submitted to the jury, and the jury should not be advised of the issues or evidence relating

solely thereto.

Specifically, Raytheon contends Cray’s equitable affirmative defenses of Laches (Eighth

Defense) and Waiver, Estoppel, and/or Unclean Hands (Ninth Defense) require determination by

the Court, and should not be submitted to the jury.

Raytheon further contends that Cray’s counterclaims relating to the ʼ909 and ’833 Patents

for Inequitable Conduct (9-10), Unclean Hands (11-12), Unjust Enrichment (13), Conversion

(14), and Breach of Contract (15) also require determination by the Court, and should not be

submitted to the jury.3

Raytheon submits that the issue of venue was already decided by the Court. See Report

and Recommendation Denying Cray’s Motion to Dismiss (Dkt. 65); Order Adopting Magistrate

Judge’s Report and Recommendation Denying Cray’s Motion to Dismiss (Dkt. 94). To the

extent Cray is allowed to relitigate this issue, Raytheon contends that the issue of venue should

be decided by the Court rather than the jury.

3. Cray’s Statement Regarding Issues to be Decided by the Court

Cray agrees that its affirmative defenses of Laches (Eighth Defense) and Waiver/Estoppel,

and/or Unclean Hands (Ninth Defense), as well as its counterclaims for Inequitable Conduct (9-

10) and Unclean Hands (11-12), are issues for the Court to decide. However, Cray contends that

its counterclaims of Unjust Enrichment (13), Conversion (14), and Breach of Contract (15) should

be submitted to the jury.

3 Raytheon’s Motions to Dismiss and/or Sever are currently pending. (Dkts. 103 and 128.) The counterclaims asserted by Cray pending dismissal or severance include inequitable conduct (9-10), unclean hands (11-12), unjust enrichment (13), conversion (14), and breach of contract (15).


Appx695


14

Cray disagrees that venue has been decided by the Court. The Court’s finding that

Raytheon satisfied a prima facie burden in overcoming a motion to dismiss does not relieve

Raytheon of its ultimate burden at trial. Travelers Indem. Co. v. Calvert Fire Ins. Co., 798 F.2d

826, 831 (5th Cir. 1986) (“[A]t any time when the plaintiff avoids a preliminary motion to dismiss

by making a prima facie showing of jurisdictional facts, he must still prove the jurisdictional facts

at trial by a preponderance of the evidence.”); see also Mullins v. TestAmerica, Inc., 564 F.3d 386,

399 (5th Cir. 2009) (“[An] adverse jurisdictional ruling at the pre-trial stage did not foreclose []

defendant from holding [plaintiff] to its ultimate burden at trial of establishing contested

jurisdictional facts by a preponderance of the evidence.”). Cray also disagrees that the Court, as

opposed to a jury, should decide the underlying facts relating to the exercise of venue.

G. LIST OF WITNESSES

1. Raytheon’s Witness List is attached as Exhibit A.

2. Cray’s Witness List is attached as Exhibit B.

3. Raytheon’s Deposition designations are attached as Exhibit C.

4. Cray’s Deposition designations are attached as Exhibit D.

H. LIST OF EXHIBITS

1. Raytheon’s Trial Exhibit List is attached as Exhibit E.

2. Cray’s Trial Exhibit List is attached as Exhibit F.

I. LIST OF PENDING MOTIONS

There are pending motions, including, but not limited to discovery motions, Daubert

motions, motions in limine, motions to strike, and motions for summary judgment.

A. Raytheon’s Pending Motions

Date Docket No. Raytheon Company’s Motions 01/20/2017 186 Raytheon’s Motion In Limine:

(1) Excluding References to Other Cases;


Appx696


15

Date Docket No. Raytheon Company’s Motions (2) Excluding References to Cray’s Patents or the Number of Patents Cray Possesses; (3) Excluding Any Evidence, Testimony, Argument, or Reference to any Patent, Publication, or System, not included in Cray’s Invalidity Contentions as Evidence of Invalidity; (4) Excluding Any Pejorative Terms or Inflammatory Language Relating to the Alleged Misappropriation by Mr. Ballew; (5) Excluding Any Reference, Testimony, or Argument Relating to Alleged Withholding Prior Art by the Raytheon Inventors, Raytheon as a Corporation, or Any Other Unidentified Raytheon Employees; (6) Excluding Any Reference, Testimony, or Argument Relating to the Inventors’ Beliefs as To The Scope of the Invention as Evidence of Invalidity; (7) Excluding Testimony from Third-Parties Adaptive and Altair; (8) Excluding Argument and Evidence Disparaging Raytheon’s Business Model and Practices Including Excluding Use of the Term “Patent Troll” or Other Similar Pejorative Terms; (9) Preclude Cray from Referencing or Arguing Correction of Inventorship; (10) Preclude Cray from Referring to or Arguing that any Alleged Misappropriation Extends Beyond What Cray Provided to Mr. Ballew and What Mr. Ballew Used; (11) Preclude Cray from Referencing the Errata Sheet to the Transcript of Mr. Robert Alverson.

12/9/2016 133 Raytheon’s Motion to Strike Portions of the Planned Testimony of Cray’s Damages Expert, Julie L. Davis

12/9/2016 132 Plaintiff Raytheon Company’s Motion for Partial Summary Judgment of No Inequitable Conduct

12/9/2016 131 Raytheon’s Motion to Strike Portions of the Expert Report of Dr. Alan J. Smith

12/9/2016 128 Raytheon’s Motion to Dismiss Cray’s Amended Counterclaims 11-15

11/3/2016 107 Raytheon’ Motion for Leave to Take Certain Discovery 10/31/2016 103 Raytheon Company’s Motion to Dismiss or, In The Alternative, To

Sever Cray, Inc.’s Counterclaims 9-17

B. Cray’s Pending Motions

Date Docket No. Cray Inc.’s Motions 11/3/2016 105 Defendant Cray Inc.’s Motion to Compel 30(b)(6) Deposition

Testimony 11/3/2016 108 Defendant Cray Inc.’s Motion to Compel Documents Based on

Waiver of the Attorney-Client Privilege 11/3/2016 109 Defendant Cray Inc.’s Motion to Compel 30(b)(6) Deposition


Appx697


16

Date Docket No. Cray Inc.’s Motions Testimony on Topics 40 and 41 and to Compel Document Production

01/20/2017 187 Cray’s Omnibus Motion In Limine: (1) Excluding Expert Opinions Not Disclosed in Reports or Subject to Pending Motions (2) Excluding Documents Not Produced During Discovery (3) Excluding Evidence or Argument That Cray T3D, Cray T3E, Cray XD1, and Red Storm Prior Art Was Considered by the Patent Office (4) Excluding Reference to Infringement Theories Barred by Prosecution History Estoppel (5) Excluding Evidence or Argument that the ʼ909 and ʼ833 Patents are Entitled to a Priority Date Earlier Than March 4, 2004 (6) Excluding Reference to the Fact that Cray Did Not Challenge the Asserted Patents at the Patent Office (7) Preclude Raytheon from Alleging Cray Had Knowledge of the Asserted Patents Before March 20, 2015 (8) Excluding Reference to Cray’s Government Sales (9) Excluding Doctrine of Equivalents Opinions Not Disclosed in Reports (10) Excluding Evidence, Testimony, or Argument Regarding Cray’s Total Revenue, Total Revenue from the Accused Products, Revenue from Services or Other Non-Accused Products, or Profits (11) Excluding Evidence Regarding Metadata or Dates of Documents Not Provided During Discovery (12) Excluding Evidence, Testimony, or Argument Contrary to the Court’s Claim Constructions (13) Excluding Evidence, Testimony, or Argument Regarding Raytheon’s Connections to the State of Texas (14) Excluding Evidence, Testimony, or Argument that Contradicts Binding Statements Made by Raytheon’s Rule 30(b)(6) Witnesses (15) Excluding Evidence, Testimony, or Argument Relating to Indemnity Obligations (16) Excluding Disparaging References to Irrelevant Corporate History (17) Excluding Evidence or Argument by Raytheon that the Accused Systems May be Capable of Infringement if New, Undisclosed Custom Software is Added (18) Excluding Reference to Pretrial Discovery (19) Excluding Characterization of Outside Counsel (20) Excluding Reference to the Governmental Security Clearance of Raytheon or its Employees (21) Excluding Explanation or Characterization of Legal Standards (22) Excluding Evidence, Testimony, or Argument Regarding Damages for Sales of Non-Infringing Products


Appx698


17

Date Docket No. Cray Inc.’s Motions (23) Excluding Evidence, Testimony, or Argument Regarding Any Damages Analysis that Uses a Royalty Rate From the Appro or Ciara Licenses that is Not Apportioned to Account for Differences in the Number of Patents Licensed

1/18/2017 179 Defendant Cray Inc.’s Motion to Strike Improper Evidence and Testimony

12/9/2016 141 Cray’s Motion for Summary Judgment of Non-Infringement Regarding U.S. Patent No. 8,190,714

12/9/2016 140 Cray’s Motion for Summary Judgment of Invalidity Regarding the ‘909 and ‘833 Patents

12/9/2016 139 Cray’s Motion for Summary Judgment of Non-Infringement Regarding U.S. Patent No. 7,475,274

12/9/2016 138 Cray’s Motion for Summary Judgment of Non-Infringement Regarding the ‘909 and ‘833 Patents

12/9/2016 137 Cray’s Motion to Exclude Testimony of Dr. Martin Walker 12/9/2016 136 Cray’s Motion to Strike Raytheon’s Unauthorized Infringement

Contentions and Exclude Related Testimony 12/9/2016 135 Cray’s Motion to Exclude Testimony of Raytheon’s Technical

Expert, Dr. Isaac D. Scherson 12/9/2016 134 Cray’s Motion for Summary Judgment on Raytheon’s Claims of

Induced Infringement of the ‘274 and ‘714 Patents 12/9/2016 130 Cray’s Motion to Exclude Testimony of Raytheon’s Damages

Expert, Vincent A. Thomas 12/9/2016 127 Cray’s Motion for Summary Judgment Under 28 U.S.C. § 1498 that

Cray is Not Liable for Sales to the U.S. Government

C. Third Party Pending Motion

Date Docket No. Adaptive Computing Enterprises, Inc.’s Motion 8/24/2016 2 Raytheon Company v. Cray Inc., Civil No. 2:16-mc-00898-DAK,

Motion to Quash Raytheon’s Subpoena and For Protective Order, and Memorandum in Support Thereof (D. Utah Aug. 24, 2016)

J. PROBABLE LENGTH OF TRIAL

Raytheon’s Position

Raytheon expects the trial to last (1) one week or five business days.

Cray’s Position


Appx699


18

Cray believes that two weeks or ten business days will be needed for trial, unless the Court

significantly alters the scope of the case through rulings on the parties’ pending summary

judgment motions and motions to strike. This is particularly true as Raytheon refuses to agree

that Cray’s sales of accused products to the U.S. Government fall within the scope of 28 U.S.C.

§ 1498, such that they should be excluded from the scope of this case. This issue affects one half

of the damages sought by Raytheon. Cray has filed a summary judgment motion directed to the

§ 1498 sales (see Dkt. Nos. 127, 170). But, if the Court denies this motion, a significant amount

of time will be required for Cray to present evidence for each of its U.S. Government contracts at

trial. In addition, there are four asserted patents, 71 asserted claims, and four or five separate

Cray product lines at issue (some of which are accused of infringement by running five separate

software products), as well as complex subject matter that must be explained to the jury.

K. MANAGEMENT CONFERENCE LIMITATIONS

None.

L. CERTIFICATIONS

The undersigned counsel for each of the parties to this action does hereby certify and

acknowledge the following:

1. Full and complete disclosure has been made in accordance with the Federal Rules

of Civil Procedure, the Local Rules, and the Court’s orders;

2. Subject to the pending motions, the parties contend each has complied with

discovery limitations set forth in the Federal Rules of Civil Procedure, the Local Rules, and the

Court’s orders.4 The parties have stipulated and moved this Court on various issues altering

discovery limitations, which have all been approved by this Court;

4 This representation is subject to any matters addressed in pending motions and/or objections.


Appx700


19

3. Each exhibit in the List of Exhibits herein:

a. is in existence;

b. is numbered; and

c. will be disclosed and produced electronically to opposing counsel on or

before February 7, 2017.

M. OTHER ISSUES

The parties currently anticipate they will need to present at trial certain highly

confidential and competitively-sensitive information, namely, source code and revenue data. The

parties inform the Court that, at the appropriate time, they may request for the courtroom to be

sealed during the presentation of this evidence, which may require the respective corporate

representatives to leave the courtroom. The parties also anticipate that certain highly confidential

and competitively information, namely, financial data, will be presented. The parties respectfully

inform the Court that, at the appropriate time, they may request the courtroom to be sealed during

presentation of this evidence.

Additionally, Raytheon Company is a defense contractor, and many of its products are

subject to protections under the International Traffic in Arms Regulations (ITAR) and the Export

Administration Regulations (EAR). See 22 C.F.R. 120-130 (2015); 15 C.F.R. 15.700-799 (2015).

As a result, certain documents related to this case containing technical data under the ITAR or

EAR (the ITAR- or EAR-Restricted Documents) must be protected from export or transfer to

unauthorized foreign persons, whether located inside or outside of the United States, including

any foreign persons (as defined under these export control regimes) that may be employed by

law firms, consultants, or any other third party involved in this dispute. Additionally, the

furnishing of technical assistance (including the disclosure or release of ITAR controlled

technical data) may constitute a “defense service,” which also requires approval. Any disclosure


Appx701


20

of Raytheon-produced export-controlled technical data or furnishing of technical assistance

where an authorization is needed but not secured constitutes and export violation, which should

be disclosed to the Department of State. The ITAR-Restricted Documents have been stamped

with the following language:

THIS DOCUMENT CONTAINS TECHNICAL DATA CONTROLLED UNDER THE INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR) AND MAY NOT BE EXPORTED, REEXPORTED, TEMPORARILY IMPORTED, TRANSFERRED, OR RETRANSFERRED TO ANY NON-U.S. PERSON, COUNTRY OR ENTITY, BY ANY MEANS, WITHOUT THE APPROPRIATE APPROVAL OF THE U.S. DEPARTMENT OF STATE, DIRECTORATE OF DEFENSE TRADE CONTROLS (DDTC).

The parties respectfully inform the Court that, at the appropriate time, they may request

the courtroom to be sealed during presentation of this evidence.


Appx702


21

Dated: January 31, 2017 Respectfully Submitted,

/s/ William E. Davis, III William E. Davis, III Texas State Bar No. 24047416 THE DAVIS FIRM P.C. 213 N. Fredonia Street, Suite 230 Longview, Texas 75601 Telephone: (903) 230-9090 Facsimile: (903) 230-9661 E-mail: [email protected] Of Counsel Thomas J. Filarski Daniel S. Stringfield Robert F. Kappers Matthew M. Zuziak STEPTOE & JOHNSON LLP 115 South LaSalle Street, Suite 3100 Chicago, IL 60603 Telephone: (312) 577-1300 Email: [email protected] [email protected] [email protected] [email protected] Sanjeet K. Dutta STEPTOE & JOHNSON LLP 1891 Page Mill Road, Suite 200 Palo Alto, California 94304 Telephone: (650) 687-9484 Email: [email protected] Stephanie Roberts STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, NW Washington, DC 20036 Telephone: (202) 429-3000 Email: [email protected] ATTORNEYS FOR PLAINTIFF RAYTHEON COMPANY

/s/ Michael C. Smith Michael C. Smith SIEBMAN, BURG, PHILLIPS & SMITH LLP 113 East Austin Street P.O. Box 1556 Marshall, TX 75671 Telephone: (903) 938-8900 Email: [email protected] Of Counsel David K. Tellekson Melanie L. Mayer Jonathan T. McMichael FENWICK & WEST LLP 1191 Second Avenue, 10th Floor Seattle, WA 98101 Telephone: (206) 389-4510 Email: [email protected] [email protected] [email protected] Virginia K. DeMarchi Yixin Zhang FENWICK & WEST LLP 801 California Street Mountain View, CA 94041 Telephone: (650) 988-8500 Email: [email protected] [email protected] Bryan A. Kohm Eman Sojoodi FENWICK & WEST LLP 555 California Street, 12th Floor San Francisco, CA 94104 Telephone: (415) 875-2300 Email: [email protected] [email protected] ATTORNEYS FOR DEFENDANT CRAY INC.


Appx703



The undersigned certifies that the foregoing document is being filed electronically in

compliance with Local Rule CV-5(a). As such, this document is being served on all counsel who

is deemed to have consented to electronic service. Local Rule CV-5(a)(3)(V). Pursuant to

Federal Rule of Civil Procedure 5(d) and Local Rule CV-5(d) and (e), any counsel of record not

deemed to have consented to electronic service will be served with a true and correct copy of the

foregoing by email on this 31st day of January 2017.

/s/ William E. Davis, III William E. Davis, III


Appx704


IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

RAYTHEON COMPANY,

Plaintiff,

v.

CRAY, INC.,

Defendant.

§

§

§

§

§

§

§

§

§

§

CIVIL ACTION NO. 2:15-CV-01554-JRG

ORDER FOR STAY

The Court issues this Order sua sponte. It is hereby ORDERED that this case is STAYED

until further Order of this Court.

.

____________________________________RODNEY GILSTRAPUNITED STATES DISTRICT JUDGE

SIGNED this 19th day of December, 2011.So ORDERED and SIGNED this 18th day of July, 2017.

Case 2:15-cv-01554-JRG Document 315 Filed 07/18/17 Page 1 of 1 PageID #: 40942

Appx705


1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

REALTIME DATA LLC, §

§

Plaintiff, §

§ CIVIL ACTION NO. 6:17-CV-124

§ RWS-JDL

v. §

§

§

EXINDA INC., § JURY TRIAL DEMANDED

§

Defendant. §

REPORT AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

Before the Court is Defendant Exinda Inc.’s (“Exinda”) Motion to Dismiss for Improper

Venue. (Doc. No. 26.) Realtime Data LLC (“Realtime”) has filed a Response. (Doc. No.89.)

Exinda has filed a request for an extension of time to file a reply in support of its Motion.

(Doc. No. 32.) However, “[t]he court need not wait for the reply or sur-reply before ruling on

the motion.” L.R.-CV 7(f). Upon review of Exinda’s Motion and Realtime’s Response (and

because the Court generally does not consider evidence submitted for the first time in a reply

brief when that evidence could have been raised in the original Motion), the Court DENIES

Exinda’s Motion for an Extension of Time to File a Reply (Doc. No. 32) and proceeds to review

the merits of Exinda’s Motion to Dismiss.

Realtime filed this action for patent infringement on February 27, 2017. (Doc. No. 1.)

On May 8, 2017, Exinda filed its Answer to the Complaint. (Doc. No. 22.) In its original

Answer, Exinda “admit[ted] that venue is authorized in this district under 28 U.S.C. §§ 1391(c)

and/or 1400(b).” (Id. at ¶5.) Two weeks later, on May 22, 2017, the Supreme Court issued its

opinion in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017),

Case 6:17-cv-00124-RWS-JDL Document 33 Filed 08/01/17 Page 1 of 5 PageID #: 359

Appx706


2

reaffirming its holding in Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222, 229

(1957) that 28 U.S.C. § 1400(b) is the “sole and exclusive provision controlling venue in patent

infringement actions.” On May 30, 2017, Exinda filed a First Amended Answer pursuant to

Federal Rule of Civil Procedure 15(a)(1)(A). (See Doc. No. 25.) In its First Amended Answer,

Exinda states, in part:

Exinda denies that venue is authorized in this district under 28 U.S.C. § 1400(b)

and affirmatively asserts that 28 U.S.C. § 1391(c) does not apply. Exinda denies

that the Eastern District of Texas is a proper and convenient forum for this

dispute. Exinda further denies that it has committed any acts of infringement,

direct or indirect, in the Eastern District of Texas or any other judicial district.

Except as expressly admitted, Exinda denies the allegations of this paragraph.

(Id. at ¶5.) Exinda filed the now-pending Motion to Dismiss for Improper Venue on June 22,

2017. (Doc. No. 26.)

Under § 1400(b), venue is only proper (1) in the district in which the defendant resides or

(2) in a district where the defendant has committed acts of infringement and has a regular and

established place of business. “[A] domestic corporation ‘resides’ only in its State of

incorporation for purposes of the venue statute.” TC Heartland, 137 S.Ct. at 1517. With respect

to whether a defendant has a regular and established place of business, courts seek to discern

“whether the corporate defendant does its business in that district through a permanent and

continuous presence.” In re Cordis Corp., 769 F.2d 733, 737 (Fed. Cir. 1985).

Exinda submits an affidavit that states 1) Exinda is “incorporated in Delaware and has its

principal place of business in Boston, Massachusetts” (Doc. No. 26-1 (“Ainsley Decl.”), ¶3); and

2) Exinda “does not directly or indirectly own business, sales, or distribution locations or other

physical facilities in the Eastern District of Texas” (Id. at ¶4).

Realtime responds by arguing 1) Exinda waived its improper venue challenge by

admitting venue was proper in its original answer; and 2) Exinda failed to set forth sufficient


Appx707


3

analysis or facts in its Motion to meet its burden of showing improper venue. (See generally,

Doc. No. 31.)

Pursuant to Rule 12(h)(1)(B), an improper venue defense is waived by failing to “include

it in a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course.”

Fed.R.Civ.P. 12(h)(1)(B)(ii). “The specified defenses are of such a character that they should

not be delayed and brought up for the first time by means of an application to the court to amend

the responsive pleading.” Fed. R. Civ. P. 12, Notes of Advisory Committee on Rules—1966

Amendment.

Here, Exinda filed its Amended Answer as a matter of course under Rule 15(a)(1).1

Fed.R.Civ.P. 15(a)(1)(A). Thus, Exinda did not need to seek permission of the Court to amend

its responsive pleading and add an improper venue defense. This course of conduct appears

sanctioned by the language of Rule 12(h)(1)(B)(ii), which simply indicates a Rule 12(b) defense

is waived if it is not included in a responsive pleading or included in an amendment allowed as a

matter of course. See Brennan v. Hawaii, No. CV 17-00163 HG-RLP, 2017 WL 3187215, at *3

(D. Haw. July 26, 2017) (defendant did not waive defenses of lack of personal jurisdiction and

insufficient process where defendant’s original answer did not assert those defenses, but

defendant amended answer within 21 days under Rule 15(a)(1) to add those defenses); see also

Glycobiosciences, Inc. v. Innocutis Holdings, LLC, 189 F. Supp. 3d 61, 66 n.4 (D.D.C. 2016)

(“even if the Rule 12(h) waiver rules applied [in the forum non conveniens context], [defendant]

complied with Rule 12(h)(1)(B)(ii) by filing an amended answer that asserted improper venue as

a defense.”).

1 Exinda technically filed its Amended Answer 22 days after filing its original Answer. However, Exinda’s May 29,

2017 deadline to amend its Answer as a matter of course under Rule 15(a)(1) fell on Memorial Day, a federal

holiday. Realtime does not challenge Exinda’s filing of its Amended Answer on May 30, 2017 as untimely under

the Federal Rules. See Fed.R.Civ.P. 6(a)(1).


Appx708


4

Proceeding to the merits of Exinda’s Motion, Exinda asserts that it “does not have a

regular and established place of business in the Eastern District of Texas.” (Doc. No. 26, at 2, 3.)

However, Exinda’s underlying affidavit to support this assertion simply states, “Exinda does not

directly or indirectly own business, sales, or distribution locations or other physical facilities in

the Eastern District of Texas.” (Ainsley Decl., ¶4.) But lack of physical presence in the District

is insufficient to establish improper venue. As far back as 1985, the Federal Circuit had made

clear that “the appropriate inquiry is whether the corporate defendant does its business in that

district through a permanent and continuous presence there and not as [defendant] argues,

whether it has a fixed physical presence in the sense of a formal office or storefront.” In re

Cordis Corp., 769 F.2d 733, 737 (Fed. Cir. 1985) (emphasis added). By solely making

statements regarding physical facilities in the District, Exinda fails to set forth sufficient facts to

support its argument that it lacks a regular and established place of business in the District.

Accordingly, the Court RECOMMENDS Exinda’s Motion to Dismiss for Improper

Venue (Doc. No. 26) be DENIED.

Within fourteen (14) days after receipt of the magistrate judge’s report, any party may

serve and file written objections to the findings and recommendations contained in this Report. A

Party’s failure to file written objections to the findings, conclusions and recommendations

contained in this Report within fourteen (14) days after being served with a copy shall bar that

party from de novo review by the district judge of those findings, conclusion, and

recommendations and, except on grounds of plain error, from appellate review of unobjected-to

factual findings and legal conclusions accepted and adopted by the district court. Fed. R. Civ. P.

72(b)(2); see Douglass v. United States Auto Ass’n, 79 F.3d 1415, 1430 (5th Cir. 1996) (en

banc).


Appx709


5

So ORDERED and SIGNED this 1st day of August, 2017.


Appx710


WI-LAN INC., WI-LAN USA, INC., and WI-LAN LABS, INC.,..., Slip Copy (2017)

2017 WL 3194692

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 1

2017 WL 3194692Only the Westlaw citation is currently available.

United States District Court,S.D. California.

WI-LAN INC., WI-LAN USA, INC., and WI-LAN LABS, INC., Plaintiffs,v.

LENOVO (UNITED STATES), INC., et al., Defendants.

Case No.: 17cv365-BEN-MDD|

07/27/2017

ORDER GRANTING LIMITED EXPEDITED DISCOVERY [ECF NO. 40]

*1 On February 23, 2017, Wi-LAN, Inc., Wi-LAN USA, Inc., and Wi-LAN Labs, Inc., (“Wi-LAN”) filed a complaintalleging patent infringement against Lenovo (United States), Inc., Lenovo Holding Company, Inc., Motorola Mobility,LLC, and Motorola Mobility Holdings, LLC (“Lenovo”). (ECF No. 1). Wi-LAN alleges that Lenovo infringes its U.S.Patent Nos. 8,787,924 (“the '924 patent”), 8,867,351 (“the ‘351 patent”), 9,226,320 (“the ‘320 patent”), and 9,497,743(“the ‘743 patent”) by manufacturing, using, selling, offering to sell, and/or importing various wireless communicationproducts without license. (Id. ¶¶ 1, 37, 45, 59, 73, 87).

On June 16, 2017, Defendants filed a motion to dismiss for improper venue or transfer to the Northern District ofCalifornia. (ECF No. 39). On June 29, 2017, Plaintiffs filed the instant ex parte motion for leave to seek expediteddiscovery. (ECF No. 40). The motion was referred to this Court by the district judge. Defendants responded in oppositionon July 13, 2017. (ECF No. 48). Both sides filed supplemental authority. (ECF Nos. 43, 50).

As provided herein, Plaintiffs' Motion for Expedited Discovery is GRANTED in part and DENIED in part.

DISCUSSION

A. Legal Standard for Motion for Expedited DiscoveryFederal Rule of Civil Procedure 26(d) states:

A party may not seek discovery from any source before the parties have conferred as required byRule 26(f), except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B), or whenauthorized by these rules, by stipulation, or by court order.

In the instant case, Plaintiffs may obtain early discovery only by court order. In this Circuit, courts must find “goodcause” to determine whether to permit discovery before the Rule 26(f) conference. Good cause exists where the needfor expedited discovery, in consideration of the administration of justice, outweighs the prejudice to the respondingparty. See, e.g., Arista Records, LLC v. Does 1–43, Case No. 07cv2357-LAB-POR, 2007 WL 4538697, at *1 (S.D. Cal.Dec. 20, 2007). In considering whether good cause exists, factors courts may consider include ‘(1) whether a preliminaryinjunction is pending; (2) the breadth of the discovery request; (3) the purpose for requesting the expedited discovery; (4)the burden on the defendants to comply with the requests; and (5) how far in advance of the typical discovery process

Appx711


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the request was made.‘ Palermo v. Underground Sols., Inc., Case No. 12cv1223-WQH-BLM, 2012 WL 2106228, at *2(S.D. Cal. June 11, 2012).

B. ANALYSISPlaintiffs assert that expedited discovery is necessary to address whether Defendants have a “regular and established placeof business” in the Southern District of California. (ECF No. 40-1 at 5). In support, Plaintiffs claim to have independentlydiscovered multiple Lenovo employees in the Southern District of California, “including at least one witness at theexecutive level.” (Id. at 7). Defendants, on the other hand, assert that Plaintiffs' arguments are “flatly contradicted” bythose individuals' declarations. (ECF No. 48 at 8). As Plaintiffs note, however, counsel for Defendants conceded thateven after filing their motion and declarations, they did not know how many employees Defendants have in the SouthernDistrict of California. (ECF No. 40-1 at 7).

*2 Plaintiffs have served eight requests for production, five interrogatories, one deposition notice under Rule 30(b)(6),and a deposition notice for Brian Siegel, Lenovo's Executive Director of Consumer Sales (who submitted a declarationin support of Lenovo's venue motion). (See ECF Nos. 40-4, 40-5, 40-6, 40-7). The scope of Plaintiffs' requests broadlyinclude residences of Defendants' personnel; Defendants' relationships with personnel, customers, and other companies;activities in connection with any of Defendants' products; and Defendants' property. (See id.). The scope of Plaintiffs'requests are limited in time from July 22, 2014, the earliest issue date of the patents-in-suit, to present. (ECF No. 40-1at 9. See 40-5 at 6). Plaintiffs' requests are limited in place to the Southern District of California. (See ECF Nos. 40-4,40-5, 40-6).

Defendants claim that much of the information Plaintiffs request is “irrelevant” to establishing venue, citing LogantreeLP v. Garmin Int'l, Inc., Case No. SA-17-CA-0098-FB, 2017 WL 2842870 (W.D. Tex. June 22, 2017) (Biery, F.). (ECFNo. 48 at 6). Defendants' reliance on Logantree is misguided. While the court in Logantree rules that certain contactsin a district do not individually establish venue, it does not address whether such contacts, individually or collectively,are irrelevant to a question of venue. This Court finds that the information Plaintiffs request, subject to the limitationsset out below, is relevant to establishing venue.

The Court finds good cause for strictly limited expedited discovery as Plaintiffs have demonstrated that the need forsome expedited discovery outweighs the prejudice to Defendants in having to respond to limited discovery at this stageof the case. The discovery Plaintiffs seek, however, is overbroad.

For instance, Plaintiffs have not demonstrated that the need for an expedited 30(b)(6) deposition outweighs the prejudiceto Defendants. Rule 30(b)(6) provides that a witness testifying on behalf of a corporation “must testify about informationknown or reasonably available to the organization.” Under the Federal Rules, Plaintiffs normally would not be permittedto notice a 30(b)(6) deposition until after the early neutral evaluation conference. Moreover, in the ordinary course ofdiscovery, 30(b)(6) depositions generally are not taken at the inception of discovery. To require Defendants to preparefor a 30(b)(6) deposition on such broad topics and on such a tight timeline would be unduly burdensome. Apple Inc. v.Samsung Elecs. Co., Case No. 11cv1846-LHK, 2011 WL 1938154 (N.D. Cal. May 18, 2011) (Koh, L.). See also Semitool,Inc., v. Tokyo Electron America, Inc., 208 F.R.D. 273, 276 (N.D. Cal. 2002) (granting expedited discovery in part becauserequest did not involve “a free ranging deposition for which a representative of Defendants may not have had sufficienttime or information with which to prepare”).

The same can be said of Plaintiffs' written discovery demands, both interrogatories and requests for productionof documents. For instance, the written demands concerning Defendants' relationships with customers, personnel,“vendors, suppliers, researchers, designers, manufacturers, collaborators,” and “any [other] person[s]” who have apresence in the forum is nothing more than a prohibited fishing expedition. (EFC No. 40-4 (Document Requests Nos. 1,2, 3 and 7; Interrogatories Nos. 1 and 2)). These requests are over-inclusive because they sweep in even those relationshipsthat do not require Defendants to conduct any activity in this District merely because the third party has a presence in

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this District. A recent opinion from a District Court in South Carolina held, albeit without supporting law or analysis,that the identity of the defendant's in-district customers, the volume of sales to in-district customers, and the presenceof a third party distributing defendant's products in-district are all irrelevant to the § 1400(b) venue analysis. Hand HeldProd., Inc., v. The Code Corp., Case No. 2:17cv167-RMG *7, 2017 WL 3085859, at *4 (D. S.C. July 18, 2017) (Gergel,R.) (available on this docket at ECF No. 50-1 at 8-9).

*3 Plaintiffs may seek discovery of only those third party relationships that either 1) require Defendants to conductregular activity in this District, or 2) require a third party to regularly conduct activity directly on behalf of Defendantsin this District (e.g., if Defendants have delegated an essential business function to a third party such as directsales, customer service or product storage and distribution). The Court specifically finds that Plaintiffs may not seekinformation about the residences of personnel absent some connection of that residence to Defendants' business activities.(See ECF No. 40-4 (Document Request No. 2 and Interrogatory No. 2)). Further, Plaintiffs' requests regardingdistribution and storage of Defendants' products are limited to inventory directly owned and controlled by Defendants;branded products owned by third parties are excluded, as is any inventory owned by Defendants for which they haverelinquished control of distribution and storage.

Defendants further claim that discovery must be limited in time to the date Plaintiffs filed suit, citing Hoffman v. Blaski,363 U.S. 335 (1960). (ECF No. 48 at 11). It is unclear where Defendants find support for their claim in Hoffman.Regardless, this Court adopts the view that “under the patent venue statute, venue is properly lodged in the district if thedefendant had a regular and established place of business at the time the cause of action accrued and suit is filed withina reasonable time thereafter.” Welch Sci. Co. v. Human Eng'g Inst., Inc., 416 F.2d 32, 35 (7th Cir. 1969), cert. denied,396 U.S. 1003 (1970) (emphasis added); Raytheon Co. v. Cray, Inc., Case No. 2:15cv1554-JRG, 2017 WL 2813896, at *3(E.D. Tex. June 29, 2017) (Gilstrap, R.). Plaintiffs are not entitled to venue discovery before the claims accrued. Plaintiffsare not necessarily entitled to venue discovery through the present. Accordingly, all discovery requests must be limitedin time to the date the claims accrued plus a reasonable time thereafter.

Finally, Defendants contend that venue discovery should be limited to only the infringing products. This Court adoptsthe view that the patent venue statute “creates no relationship between the act of infringement and the regular andestablished place of business.” Raytheon, 2017 WL 2813896, at *7. See also Gaddis v. Calgon Corp., 449 F.2d 1318, 1320(5th Cir. 1971) (concluding that the particular company division charged with the infringements need not be present inthe district to establish that the company had a regular and established place of business in the district). Plaintiffs are notrequired to limit their discovery to only infringing products.

CONCLUSION

For the foregoing reasons, Plaintiffs' Motion for Expedited Discovery is GRANTED in part and DENIED in part.

Defendants are ORDERED to respond to limited discovery requests by Plaintiffs. Discovery shall be subject to thefollowing limitations:

(1) Discovery mechanisms: requests for production, interrogatories, and the deposition of Brian Siegel;

(2) Subjects:

a. personnel working—not merely residing—in the Southern District of California;

b. customers, business partners, and third party relationships that either 1) require Defendants to conduct regularactivity in this District, or 2) require a third party to conduct activity directly on behalf of Defendants in this District;

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c. property located in this District that is directly owned by Defendants;

d. Defendants' sales offers and product maintenance and support services in connection with Defendants' products;

e. distribution and storage of Defendants' products are limited to inventory directly owned and controlled byDefendants; Defendant-branded products owned by third parties are excluded, as is any inventory owned byDefendants for which Defendants have relinquished control of distribution and storage;

(3) Time: the time the claim or claims accrued plus a reasonable time thereafter;

(4) Place: the Southern District of California. IT IS SO ORDERED.

Dated: July 27, 2017

All Citations

Slip Copy, 2017 WL 3194692

End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works.

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wts

copyright

Page 1

1 of 1 DOCUMENT

Chisum on Patents

Copyright 2017, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

Part I. Treatise on the Law of Patentability, Validity and Infringement CHAPTER 21 Jurisdiction and Procedure in Patent Litigation

8-21 Chisum on Patents § 21.02

§ 21.02 Jurisdiction and Venue A suit for patent infringement, for a declaratory judgment of invalidity or noninfringement, or for other relief concern-ing patent rights must be filed in a proper court. Three basic requirements govern whether a patent suit is filed in a proper court: (1) subject matter jurisdiction, (2) ven-ue, and (3) jurisdiction over the person.

[1] Subject Matter Jurisdiction Subject matter jurisdiction relates to the power of the court to decide a particular type of controversy. United States (or federal) courts are courts of limited subject matter jurisdiction. n1 This means that the party filing the action must af-firmatively show a statutory basis for the court's jurisdiction over the controversy. n2 A defect in subject matter juris-diction cannot be waived by the parties because a court has an independent obligation to assure that it has subject matter jurisdiction over a case. n3 A civil action may be brought in federal court in one of two ways. First, a plaintiff may file the action in federal court originally. Second, a defendant may remove to federal court an action filed by a plaintiff in a state court. Generally, a case may be removed to federal court only if it could have been brought there originally. n4 By statute (28 U.S.C. § 1338), the federal courts have exclusive jurisdiction over all suits "arising under any Act of Congress relating to patents." However, the courts distinguish between patent cases and patent questions. Not all suits that raise patent questions arise under the patent laws. A classic example is a suit for breach of a patent license in which the invalidity of the underlying patent is raised as a defense. Such suits may be filed in a state court of general jurisdic-tion. They may be filed in (or removed to) a federal court only if some other statutory basis for jurisdiction can be found (such as diversity of citizenship). n5 A federal court has subject matter jurisdiction over a complaint asserting a claim arising under patent law even if the claim fails on the merits or even if the claim can be dismissed as a matter of law: it is only necessary that a claim not be wholly insubstantial. n6 There are different standards and consequences for, on the one hand, dismissal for lack of ju-risdiction and, on the other hand, dismissal for failure to state a claim. n7 A separate jurisdictional requirement is that there be an actual ripe controversy between the parties. The actual contro-versy requirement arises most often in connection with actions for a declaratory judgment concerning patent rights. n8

[a] Supreme Court Decisions. In a series of decisions, the Supreme Court fashioned the basic rules for determin-ing when a suit "arises under" the patent laws. The "arising under" issue came up in several contexts. First, the existence

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venue. n112 However, in Bradford Novelty Co., Inc. v. Manheim (1957), n113 Judge Kaufman refused to extend pen-dent venue to a patent claim joined to a claim for unfair competition. The unfair competition claim was virtually a re-statement of the elements of the infringement claim. Judge Kaufman noted that "Since unfair competition can almost always be charged in a patent infringement action, if plaintiff were to prevail in its argument, it would be a simple mat-ter of pleading for a party to evade the venue limitation imposed by § 1400." Later cases reject pendent venue in patent cases categorically, and not just in situations where the other claim is for unfair competition or substantially restates the patent claim. n114 Given the reluctance of the courts to recognize the theory of pendent venue as to multiple claims against the same de-fendant, it seems most unlikely that the theory would be extended to multiple parties. n115 In Hoover Group, Inc. v. Custom Metalcraft, Inc. (1996), n116 the Federal Circuit embraced a form of "pendent party" venue for a suit naming a corporate officer. Hoover Group filed a complaint for infringement of two patents against Custom Metalcraft, Inc., a corporation, in the Nebraska District Court. On appeal, the Federal Circuit held one patent valid and infringed and the other not infringed. After the district court found infringement, the plaintiff filed an amend-ed complaint charging the defendant Holden, who was the president, chief executive officer, and principal shareholder of Custom, with personal liability for infringement and inducement to infringe Hoover's patents. The complaint alleged that Holden "made all major decisions concerning the business involved in this lawsuit... ." Holden moved to dismiss the complaint for improper venue. The district court held that venue was proper, and the Federal Circuit affirmed.

"Venue is based on the facts alleged in the well-pleaded complaint... .

"... [V]enue as to corporate employees charged with personal liability for acts taken as individuals, not as the alter ego of the corporation, does not flow automatically to forums in which venue is proper as to the corporation."

"Venue requirements exist for the benefit of defendants... . When the cause of action is personal to the individual defendant, the venue requirement must be met as to that defendant... . In comparison, ven-ue for personal liability of a corporate officer/owner for acts of infringement by the corporation, whether or not the facts support piercing the corporate veil, may reasonably be based on the venue provisions for the corporation, 28 U.S.C. §§ 1400(b) and 1391(c). See Minnesota Mining&Mfg. Co. v. Eco Chem, Inc., 757 F.2d 1256, 1265, 225 USPQ 350, 356 (Fed. Cir. 1985) ('The precedents establish that a court which has jurisdiction over a corporation has jurisdiction over its alter egos.').

"The district court... did not distinguish between the charges of inducement to infringe and direct in-fringement, and did not require that the corporate veil be penetrated. However, the allegations of the complaint with respect to Mr. Holden's ownership, control, and active management of the corporation provide sufficient basis for finding that venue was proper under §§ 1400(b) and 1391(c). We have given weight to the convenience of parties and courts in this subsidiary action, wherein the issues of infringe-ment were tried to the same court now considering Mr. Holden's personal liability for infringement. We have also given deference to the ruling of the district court that, on the pleadings, venue as to Mr. Holden was proper in Nebraska." n117

The courts apply a rigid distinction when dealing with venue over multiple patent claims. If multiple patents are in-volved, venue must be established as to each patent. n118 Thus, if the act of infringement portion of Section 1400(b) is evoked, there must be acts in the district infringing each of the patents. On the other hand, if venue is proper as to any one claim in a patent, it is proper as to all claims in that same patent. n119

[g] Time--Waiver--Burden of Proof. Venue under Section 1400(b) turns on acts and status, such as commission of acts of infringement, maintenance of a regular and established place of business, and residence, that may change over time. There is some confusion in the case law over the time frame for determining such facts for venue purposes. Some decisions assume that the relevant time frame is the date the complaint is filed (or possibly the date the defendant is served). n120 Thus events after the filing of the complaint cannot be relied upon (though they may provide the basis for refiling a complaint or possibly filing a supplemental complaint). n121 On the other hand, in Welch Scientific Co. v. Human Engineering Institute, Inc. (1969) n122 the court held that "under the patent venue statute, venue is properly

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lodged in the district if the defendant had a regular and established place of business at the time the cause of action ac-crued and suit is filed within a reasonable time thereafter." Improper venue is a defense and will be deemed waived by the defendant if not raised in a timely fashion. n123 A plaintiff by filing suit against a defendant consents to assertion of proper counterclaims and thus cannot object to venue as to a counterclaim for patent infringement. n124 Once the defendant does object to venue, the decisions indicate the burden of proof falls on the plaintiff to establish that venue in a patent infringement suit is properly laid in the district under Section 1400(b). n125 These holdings seem in-consistent with the concept of venue as a personal defense and seem based in part the obsolete notion that the patent venue statute is "jurisdictional" in nature. A plaintiff may be allowed to use the discovery provisions of the Federal Rules of Civil Procedure in order to establish facts critical to venue. n126 When the facts critical to venue overlap the facts on the merits (as is the case with the "act of infringement" requirement), the plaintiff need not establish those facts with the same degree of certainty as is necessary to prevail on the merits. n127

[3] Jurisdiction Over the Person Jurisdiction over the person relates to the power of the court to render a binding judgment as to a particular party. Such jurisdiction is defined both by legislative authorization and by constitutional provisions prohibiting the deprivation of liberty and property without due process of law. In the United States, the issue of jurisdiction over the person arises most often in relation to the power of state courts to exercise jurisdiction over defendants who (1) are not residents of the state, n1 (2) have not been served with process while present in the state, n2 and (3) do not conduct regular and systematic business in the state. Systematic and regular business activity in the state by a defendant corporation is a sufficient ground for jurisdiction over the person even as to claims for relief that do not arise out of that activity. n3 This type of personal jurisdiction is referred to as "general" jurisdiction in contrast to "specific" jurisdiction, which is based on minimum contracts with a state and is limited to causes of action that "arise out of" or are "related to" the contacts. n4 How substantial the activity must be in order to justify general personal jurisdiction is a difficult question. n5 Many states have, by statute or court rule, authorized their courts to exercise jurisdiction over nonresident individuals and corporations--as for example, where the nonresident has committed a tortious wrong in the state or done business in the state and the lawsuit concerns that wrong or that business. n6 These provisions are commonly referred to as "long-arm" statutes. The initial scope of these long-arm statutes is a matter of state law. However, the exercise of juris-diction under a long-arm statute must always comply with the federal standard of due process of law, which is imposed on States by the Fourteenth Amendment to the United States Constitution. n7 Thus, the federal due process standard operates as an outer limit on state court personal jurisdiction. In its early decisions, the Supreme Court imposed rigid territorial limits on the jurisdiction of state courts, reasoning that such jurisdiction was an exercise of sovereign power which inherently could not extend beyond the States' sovereign borders. n8 In later decisions, the Supreme Court abandoned strict territoriality. Under the International Shoe doctrine, a state court may constitutionally exercise jurisdiction over a nonresident if but only if there exist "minimum contacts" between the nonresident defendant and the forum state. n9 The focus of the minimum contacts test is whether "the de-fendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." n10 The primary concern is with the unfairness of subjecting a defendant to suit in a distant and inconven-ient forum in a state with which he or she has had little contact. A secondary concern mentioned by the Supreme Court is with "interstate federalism," which might be jeopardized if the courts of one state overzealously expanded their power over persons and property in other states. n11 The modern minimum contacts test caused a major expansion of state court jurisdiction over nonresidents. For example, manufacturers have been subjected to product liability suits in states in which their products cause injury to a plaintiff even though the manufacturer did no direct business in the state and the product came into the state only through inter-mediate manufacturers and distributors. n12 State court jurisdiction is not limitless however. n13 In World-Wide Volkswagen Corp. v. Woodson (1980), n14 the Supreme Court held that a retail dealer and a regional distributor of au-tomobiles could not be subjected to jurisdiction by a court in a state in which they did no business. The plaintiffs were

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I hereby certify that on August 8, 2017, I electronically transmitted this

PUBLIC APPENDIX TO REPLY IN SUPPORT OF PETITION FOR WRIT

OF MANDAMUS. I further certify that the following counsel of record for

Respondent are being served with a copy of this as follows:

Thomas J. Filarski Daniel S. Stringfield STEPTOE & JOHNSON LLP 115 South LaSalle St., Ste. 3100 Chicago, IL 60603

Counsel for Respondent


Robert F. Kappers Matthew M. Zuziak STEPTOE & JOHNSON LLP 115 South LaSalle St., Ste. 3100 Chicago, IL 60603



Fang Bu Christopher M. Re STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, NW Washington, DC 20036




Stephanie L. Roberts STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, NW Washington, DC 20036



John J. Molenda STEPTOE & JOHNSON LLP 1114 Avenue of the Americas New York, NY 10036


[ ] By United States Mail [ ] By Legal Messenger [X] By Electronic CM/ECF [ ] By Overnight Express Mail [ ] By Facsimile [X] By Email [email protected]

Robert Greenfeld STEPTOE & JOHNSON LLP 1114 Avenue of the Americas New York, NY 10036 Counsel for Respondent


Sanjeet K. Dutta STEPTOE & JOHNSON LLP 1891 Page Mill Road, Ste. 200 Palo Alto, CA 94304



William E. Davis, III Edward Chin THE DAVIS FIRM P.C. 213 N. Fredonia Street, Ste. 230 Longview TX 75601




I further certify that this Public Appendix to Reply in Support of Petition for

Writ of Mandamus is being served via FedEx delivery to the courtroom deputy to:

The Honorable Rodney Gilstrap Sam B. Hall, Jr. Federal Building and United States Courthouse 100 East Houston Street Marshall, TX 75670

Dated: August 8, 2017 By:/s/ David K. Tellekson David K. Tellekson

FENWICK & WEST LLP Counsel for Petitioner CRAY INC.
