Case 2:22-cv-00134-JRG-RSP Document 71 Filed 03/21/23 Page 1 of 9 PageID #: 1166
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`ADVANCED MICRO DEVICES, INC. ET
`AL.,
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`TCL INDUSTRIES HOLDINGS Co., LTD.,
`ET AL.
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`v.
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`§
`§
`§
`§
`§
`§
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`CASE NO. 2:22-cv-00134-JRG-RSP
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`DEFENDANT REALTEK SEMICONDUCTOR CORP.’S MOTION TO STRIKE
`PLAINTIFFS’ SECOND AMENDED COMPLAINT, AND FOR AN ORDER TO SHOW
`CAUSE AS TO WHY PLAINTIFFS SHOULD NOT BE HELD IN CONTEMPT FOR
`VIOLATING THE COURT’S ORDER STAYING THIS CASE IN ITS ENTIRETY
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`Defendant Realtek Semiconductor Corp. (“Realtek”) respectfully moves to strike
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`Plaintiffs’ Second Amended Complaint for Patent Infringement; Declaratory Judgement of No
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`Breach of Contract; and Declaratory Judgment of No License (“Second Amended Complaint”).
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`Plaintiffs Advanced Micro Devices, Inc. and ATI Technologies ULC (collectively, “AMD”) filed
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`the Second Amended Complaint on March 9, 2023, six months after this Court’s September 12,
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`2022 Order staying this case “in its entirety.” Dkt. 65 at 3. AMD cannot claim ignorance of the
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`Court’s order because the Court entered it at AMD’s insistence, over Realtek’s objection. AMD
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`has flouted the Court’s order by filing an amended complaint without first seeking an order lifting
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`the stay. Indeed, AMD’s Second Amended Complaint contradicts the Court’s specific instructions
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`within the order staying this case—which permit only one subsequent, and joint, submission.
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`AMD’s actions are doubly concerning because the license at issue in AMD’s new claims expressly
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`requires parties to bring all claims arising out of the license in either Santa Clara Superior Court
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`or the Northern District of California. Realtek has met and conferred with AMD, in hopes of
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`Case 2:22-cv-00134-JRG-RSP Document 71 Filed 03/21/23 Page 2 of 9 PageID #: 1167
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`convincing it to withdraw the unauthorized and unjustified Second Amended Complaint, but AMD
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`refuses to do so. Realtek therefore respectfully asks the Court to strike Defendant’s Second
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`Amended Complaint, and requests an order to show cause as to why AMD should not be held in
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`contempt.
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`I.
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`Statement of Facts
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`A.
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`AMD’s Motion to Stay this Litigation and the Court’s September 12,
`2022 Order Granting that Motion
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`AMD filed this action against Realtek on May 5, 2022, alleging infringement of five U.S.
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`patents. Dkt. 1. AMD filed a Motion for a Discretionary Stay, Dkt. 37, which Realtek opposed.
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`Dkt. 43. The Court granted AMD’s motion to stay, and ordered that this case “be stayed in its
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`entirety until final resolution” of the parallel ITC proceeding on September 12, 2022. Dkt. 65 at
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`3 (emphasis added). The Court’s stay order allows only a single subsequent filing: “a joint notice
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`within 30 days from the resolution of the ITC Proceeding” that “inform[s] the Court of the outcome
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`of the ITC Proceeding and whether the stay should be lifted in this case.” Id. (emphasis added).
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`B.
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`Realtek’s Letter to AMD Warning of Forthcoming Breach of License
`Claims and Identifying the Venue in Which Realtek Was Required to
`Bring those Claims
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`Realtek sent a letter to AMD on March 7, 2023 notifying AMD of its intention to bring an
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`action in Northern California against AMD for breaching a license that protects Realtek against
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`the claims AMD brought in the ITC and before this Court alleging that Realtek infringes U.S.
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`Patent No. 11,184,628.1 Dkt. 69 Ex. C. In that letter, Realtek explained that the License
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`1 Realtek provided advance notice to AMD of its intention to bring claims pursuant to the notice
`provisions in the License Agreement and pursuant to the strong preference in the N.D. California
`for pre-suit letters. See https://www.khronos.org/files/member_agreement.pdf (cited in Dkt. 69
`Ex. C, at 1 n.1); see also Dkt. 69 Ex. C at 2 n.2. As Northern District of California Judge Alsup
`has explained, “[c]ease-and-desist letters can efficiently lead to a resolution and save vast
`resources.” Sonos v. Google LLC, No. C 21-07559 WHA, at 5 (N.D. Cal. Mar. 16, 2022).
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`Agreement provides a license to companies, such as Realtek, in “the normal tiers of distribution”
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`for Arm, including “resellers, distributors, dealers, and authorized manufacturers and others in the
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`distribution channel.” Id. at 2. The letter identified that AMD’s infringement contentions target
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`the Arm GPU that Realtek sells within its accused systems-on-a-chip (“SoCs”), and Realtek
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`therefore has the benefit of Arm’s license from AMD. Realtek’s letter further informed AMD that,
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`unless it withdrew its claims, Realtek would bring breach of license claims against AMD in the
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`Northern District of California, which has exclusive jurisdiction over such claims pursuant to the
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`license agreement. Specifically, the agreement provides:
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`The parties hereby agree that any dispute regarding the interpretation or validity of, or
`otherwise arising out of, this Agreement shall be subject to the exclusive jurisdiction of the
`California state courts of Santa Clara, County (or if there is federal jurisdiction, the United
`States District Court for the Northern District of California, San Jose), and the parties agree
`to submit to the personal and exclusive jurisdiction and venue of these courts.
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`See https://www.khronos.org/files/member_agreement.pdf (cited in Dkt. 69 Ex. C, at 1 n.1)
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`(emphasis added).
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`C.
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`AMD’s Filing of the Second Amended Complaint in Violation of the
`Court’s Stay Order, the Forum Selection Clause, and Rule 15(a)(2)
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`On March, 9, 2023, AMD filed its Second Amended Complaint. AMD did not seek relief
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`from the Court’s order staying this case before filing an amended pleading. AMD likewise
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`declined to seek leave of the Court or written permission from Realtek to file an amended
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`complaint. In addition, AMD failed to notify the Court that all disputes regarding the interpretation
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`or validity of the license agreement or “otherwise arising out of” the license agreement must be
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`brought in courts with jurisdiction over Santa Clara, California.
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`AMD’s Second Amended Complaint tries to sidestep the forum selection clause by
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`alleging that Realtek is not a signatory to the license agreement at issue, but AMD failed to cite or
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`comply with this Court’s prior rulings that forum selection clauses govern claims brought by third-
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`party beneficiaries of a license. See Implicit, LLC v. Imperva, Inc., No. 2:19-cv-0040-JRG-RSP,
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`2020 WL 10356908, at *1 (E.D. Tex. Apr. 22, 2020) (Payne, J.).
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`II.
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`Argument and Authorities
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`The Court Should Strike AMD’s Second Amended Complaint
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`A.
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`Courts routinely strike unauthorized pleadings. See, e.g. Cypress Lake Software, Inc. v.
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`Samsung Electronics Am., Inc., No. 6:18-cv-30-JDK, Dkt. No. 318 (E.D. Tex. Aug. 9, 2019)
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`(striking unauthorized Second and Third Amended Complaint); Farac v. Sundown Energy, LP,
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`No. CIV.A. 06-7147, 2009 WL 2241329, at *3 (E.D. La. July 23, 2009) (striking plaintiff’s Fourth
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`Amended Complaint where plaintiff attempted to “expand the scope of the present lawsuit” against
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`the express terms of a minute entry). Here, AMD expressly sought, and this Court entered, an
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`order staying the case in its entirety. Dkt. 65 at 3. A stay is “[a] stopping; the act of arresting a
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`judicial proceeding by the order of a court.” Tesfamichael v. Gonzales, 411 F.3d 169, 172 (5th
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`Cir. 2005). Arresting a judicial proceeding includes arresting the previously operative Docket
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`Control Order. Moreover, the Court’s stay order is specific in allowing precisely one subsequent,
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`and joint, filing. Any other pleading violates the Court’s order unless the party responsible for the
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`filing first obtains relief from the stay.
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`When a stay order is in place, and a party files an amended pleading in violation of the
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`stay, courts strike the unauthorized pleading. See, e.g., See Ellison Framing, , Inc. v. Zurich Am.
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`Ins. Co., No. CIV. S-11-0122 LKK, 2013 WL 6499058, at *4 (E.D. Cal. Dec. 11, 2013) (striking
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`an amended complaint that added claims for declaratory and injunctive relief submitted in violation
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`of the stay); Edmiston v. Nevada ex rel. Nevada Dep't of Corr., No. 320-CV-00559, 2022 WL
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`168214, at *1 (D. Nev. Jan. 19, 2022) (striking First Amended Complaint filed in violation of a
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`90-day); see also Gibson v. Dzurenda, No. 3:18-CV-00190, 2019 WL 3573667, at *1 (D. Nev.
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`Aug. 6, 2019) (denying motion to amend filed during a 90-day stay).
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`During the parties’ meet-and-confer process, AMD identified the previously entered, and
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`now-stayed Docket Control Order, as justification for filing an amended complaint without leave.
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`The Court’s stay order undeniably nullified and replaced the schedule set forth in the previously
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`applicable DCO. See Nichia Corp. v. Mary Elle Fashions, Inc., No. 2:16-CV-615-JRG, 2016 WL
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`9558954, at *1 (E.D. Tex. Dec. 22, 2016) (denying as moot defendants’ motion to amend the DCO
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`because the Court granted defendants’ motion to stay). Indeed, AMD does not actually believe
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`that the prior Docket Control Order remained effective—after the Court’s September 12, 2022 stay
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`order—because AMD did not propose claim terms for construction on February 7, 2023, did not
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`provide preliminary claim constructions on February 28, 2023, and did not participate in any joint
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`claim construction statement, all of which would have been required if the original DCO still
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`governed this case. The stay order undeniably supersedes the prior DCO, as AMD’s own conduct
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`confirms.
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`Even if AMD had sought to lift the stay to allow a second amended complaint, its amended
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`pleading would still have been unauthorized. Because the stay order superseded the DCO, Rule
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`15(a) (and not the previous DCO) would govern any amended pleadings. Rule 15(a) allows a
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`second amended complaint “only with [Realtek’s] written consent or the court’s leave.” Fed. R.
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`Civ. P. 15(a)(2). AMD did not secure Realtek’s consent or leave of the Court. AMD’s Second
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`Amended Complaint violates both the Court’s order and Rule 15, and because AMD did not secure
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`an order lifting the stay and granting leave to file a Second Amended Complaint, the proper remedy
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`is an order striking the Second Amended Complaint. See Ellison Framing, 2013 WL 6499058, at
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`*4 (striking amended complaint where “[t]he proper course of action would have been for
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`[plaintiff] to notify the court as to the status of the arbitration; if [plaintiff] contended that changed
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`circumstances . . . meant that the parties’ dispute was no longer arbitrable or that new issues were
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`presented, it could have sought leave from the court to lift the stay.”).
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`Seeking relief from a stay before filing an amended pleading is critical because otherwise
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`litigants such as Realtek are left in the untenable position of not knowing when, if ever, they must
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`respond. Here, for instance, Federal Rule of Civil Procedure 15 ordinarily requires responding to
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`an amended complaint within 14 days. In contrast, the now-stayed DCO provided an April 11,
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`2023 deadline for filing a “Response to Amended Pleadings.” Dkt. 52 at 4. Of course, the Court’s
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`stay order supersedes both of these conflicting deadlines and prohibits Realtek from submitting
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`any response absent relief from the stay. By flouting the Court’s order, and unilaterally granting
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`itself relief from the stay, AMD creates a trap for Realtek. AMD’s unauthorized pleading puts
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`Realtek in the impossible situation of either violating the Court’s order or risking default. Striking
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`AMD’s unauthorized Second Amended Complaint would resolve the dilemma created by AMD.
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`B.
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`The Court Should Enter an Order Requiring AMD to Justify its
`Actions and Reimburse Realtek for the Costs of this Motion
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`AMD violated the Court’s order, and filed a Second Amended Complaint, solely to gain a
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`procedural advantage regarding the breach of license claims that Realtek identified in its March 7,
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`2023 cease-and-desist letter. In doing so, AMD knowingly violated the Court’s stay and
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`knowingly disregarded the forum selection clause that requires AMD to bring its new claims
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`exclusively in Northern California (while, at the same time, failing to inform the Court of the forum
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`selection clause).
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`In a civil contempt proceeding, the movant must establish by clear and convincing evidence
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`that (1) a court order was in effect, (2) the order required specified conduct by the respondent, and
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`(3) the respondent failed to comply with the court’s order.” United States v. City of Jackson, MS,
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`359 F.3d 727, 731 (5th Cir.2004) (citing Am. Airlines, Inc. v. Allied Pilots Ass’n, 228 F.3d 574,
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`581 (5th Cir.2000)). The contumacious conduct does not need to be willful as long as the
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`contemnor actually failed to comply with the order. Am. Airlines, Inc., 228 F.3d at 578 (citing
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`N.L.R.B. v. Trailways, Inc., 729 F.2d 1013, 1017 (5th Cir.1984)). Here, Realtek has established
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`all three prongs by clear and convincing evidence. First, there can be no dispute that the Court’s
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`September 12, 2022 stay order is “a court order” that was and still is “in effect.” Dkt. 65. Second,
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`the stay order requires specific conduct by AMD. The order stays the case “in its entirety,” thereby
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`expressly prohibiting all activity in the case, other than the authorized “joint notice” to be filed
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`“within 30 days from the resolution of the ITC Proceeding.” Id. at 3. Third, AMD plainly violated
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`the stay order by filing an amended pleading. A stay clearly and convincingly prohibits the
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`plaintiff from enlarging the scope of a case and requiring a defendant to file a responsive pleading.
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`See, e.g., Ellison Framing, 2013 WL 6499058, at *4 (holding that filing amended complaint adding
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`claims for declaratory and injunctive relief while stay order was entered pending arbitration was
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`violation of stay); see also Gibson, 2019 WL 3573667, at *1; Edmiston, 2022 WL 168214, at *1.
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`Realtek met and conferred with AMD, and asked it to withdraw its Second Amended
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`Complaint, in hopes of avoiding this dispute. AMD has refused, however, to withdraw its
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`complaint. Realtek therefore respectfully asks the Court to enter an order to show cause, and
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`absent some showing of exceptional circumstances, to hold AMD in contempt and require AMD
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`to pay Realtek the fees and costs incurred in bringing this motion and its motion for relief from the
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`stay.
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`III. Conclusion
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`Defendant respectfully asks the Court to grant its motion striking the Second Amended
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`Complaint and entering an order requiring AMD to show cause.
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`Case 2:22-cv-00134-JRG-RSP Document 71 Filed 03/21/23 Page 8 of 9 PageID #: 1173
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`Dated: March 21, 2023
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`Respectfully submitted,
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`By: /s/ G. Blake Thompson
`G. Blake Thompson
`State Bar No. 24042033
`Blake@TheMannFirm.com
`J. Mark Mann
`State Bar No. 12926150
`Mark@TheMannFirm.com
`MANN | TINDEL | THOMPSON
`112 E. Line Street, Suite 304
`Tyler, Texas 75702
`(903) 657-8540
`(903) 657-6003 (fax)
`
`Jeffrey L. Johnson
`State Bar No. 24029638
`ORRICK, HERRINGTON & SUTCLIFFE LLP
`609 Main, 40th Floor
`Houston, Texas 77002
`Telephone: 713.658.6400
`Facsimile: 713.658.6401
`jj@orrick.com
`
`Robert Benson
`CA Bar No. 155971
`ORRICK, HERRINGTON & SUTCLIFFE LLP
`2050 Main Street, Suite 1100
`Irvine, CA 92614
`Telephone: 949.567.6700
`Facsimile: 949.567.6710
`rbenson@orrick.com
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`Attorneys for Defendant Realtek
`Semiconductor Corporation
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`Case 2:22-cv-00134-JRG-RSP Document 71 Filed 03/21/23 Page 9 of 9 PageID #: 1174
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`CERTIFICATE OF SERVICE
`The undersigned counsel hereby certifies that on March 21, 2023, a true and correct copy
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`of the foregoing was electronically filed with the Clerk of Court using the CM/ECF system, which
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`will automatically send notification of such filing to all attorneys of record.
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` /s/ G. Blake Thompson
`G. Blake Thompson
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`CERTIFICATE OF CONFERENCE
`The undersigned herby certifies that counsel for Realtek Semiconductor Corp., complied
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`with the meet and confer requirement in Local Rule CV-7(h) on March 21, 2023. AMD has
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`indicated that this motion is opposed, after a conference occurred involving, for AMD Adam Rizk
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`Matthew Karambelas, and Brian Craft and for Realtek, Jeffrey Johnson, Blake Thompson, and
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`Theodore Angelis. During the conference, Realtek explained its position, and after the conference,
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`it provided the authority indicating that AMD’s filing was unauthorized and should be stricken.
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`AMD declined to withdraw the complaint, and discussions ended in an impasse.
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`506517133.5
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` /s/ G. Blake Thompson
`G. Blake Thompson
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