Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 1 of 21 PageID #: 1299
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`
`Case No.: 2:22-cv-00134--JRG-RSP
`
`JURY TRIAL DEMANDED
`
`
`ADVANCED MICRO DEVICES, INC., ET
`AL.,
`
`
`
`
`
`TCL INDUSTRIES HOLDINGS CO., LTD.;
`ET AL.,
`
`
`
`
`
`
`
`
`
`
`Plaintiffs,
`
`
`
`v.
`
`Defendants.
`
`
`PLAINTIFFS’ OPPOSITION TO DEFENDANT REALTEK SEMICONDUCTOR
`CORP.’S MOTION TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
`AND AN ORDER TO SHOW CAUSE AS TO WHY PLAINTIFFS SHOULD NOT BE
`HELD IN CONTEMPT (DKT. NO. 71)
`
`
`
`

`

`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 2 of 21 PageID #: 1300
`
`TABLE OF CONTENTS
`
`
`
`Page
`
`I.
`
`II.
`
`III.
`
`IV.
`
`INTRODUCTION ...............................................................................................................1 
`
`FACTUAL BACKGROUND ..............................................................................................4 
`
`LEGAL STANDARDS .......................................................................................................6 
`
`ARGUMENT AND AUTHORITIES ..................................................................................8 
`
`A.
`
`B.
`
`Realtek Misunderstands the “Stay” in This Case ....................................................8 
`
`Should This Court Grant Realtek’s Motion for Relief (Dkt. No. 70), This Court
`Should Deny Realtek’s Motion To Strike the Second Amended Complaint (Dkt.
`No. 71) .....................................................................................................................8 
`
`1.
`
`Realtek’s Cited Authority Is Distinguishable ............................................10 
`
`C.
`
`Should This Court Grant Realtek’s Motion for Relief (Dkt. No. 70) This Court
`Should Deny Realtek’s Motion for a Show Cause Order (Dkt. No. 71) ...............12 
`
`1.
`
`Realtek’s Cited Authority Is Distinguishable ............................................15 
`
`V.
`
`CONCLUSION ..................................................................................................................15 
`
`
`
`
`
`i
`
`

`

`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 3 of 21 PageID #: 1301
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Am. S. Ins. Co. v. Buckley,
`748 F. Supp. 2d 610 (E.D. Tex. 2010) .......................................................................................6
`
`Arismendy v. United States Comm’r,
`No. 4:17-1139, 2018 U.S. Dist. LEXIS 228223 (S.D. Tex. Mar. 29, 2018) .............................7
`
`Augustus v. Bd. of Pub Instruction of Escambia Cnty., Fla.,
`306 F.2d 862 (5th Cir. 1962) .....................................................................................................6
`
`Beverly v. Beverly,
`Case No. 1:16-cv-2978, 2017 U.S. Dist. LEXIS 134132 (N.D. Ohio Aug. 22,
`2017) ........................................................................................................................................13
`
`Cypress Lake Software, Inc. v. Samsung Electronics Am., Inc.,
`No. 6:18-cv-30-JDK, Dkt. No. 318 (E.D. Tex. Aug. 9, 2019) ................................................15
`
`Edmiston v. Nevada ex rel. Nevada Dep’t of Corr.,
`No. 320-CV-00559, 2022 WL 168214 (D. Nev. Jan. 19, 2022) ..................................11, 12, 13
`
`Ellison Framing, Inc. v. Zurich Am. Ins. Co.,
`No. CIV. S-11-0122 LKK, 2013 WL 6499058 (E.D. Cal. Dec. 11, 2013) .............................11
`
`Farac v. Sundown Energy, LP,
`No. CIV.A. 06-7147, 2009 WL 2241329 (E.D. La. July 23, 2009). Dkt. No. 71 ....................15
`
`Gibson Brands, Inc. v. Armadillo Distrib. Enter.,
`No. 4:19-cv-00358, 2023 U.S. Dist. LEXIS 35905 (E.D. Tex. Mar. 3, 2023) ....................7, 13
`
`Gibson v. Dzurenda,
`No. 3:18-CV-00190, 2019 WL 3573667 (D. Nev. Aug. 6, 2019) .....................................11, 12
`
`Hitters v. Hitters,
`No. 1:20-CV-00167-RP, 2021 U.S. Dist. LEXIS 257004 (W.D. Tex. July 29,
`2021) ..........................................................................................................................................7
`
`Implicit, LLC v. Imperva, Inc.,
`No. 2:19-cv-0040-JRG-RSP, 2020 WL 10356908 (E.D. Tex. Apr. 22, 2020) ........................11
`
`In re Thomason,
`No. 21-40435-JMM, 2021 Bankr. LEXIS 3172 (Bankr. D. Idaho Nov. 17,
`2021) ..................................................................................................................................14, 15
`
`ii
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`

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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 4 of 21 PageID #: 1302
`
`James v. FLH Holdings of Florida, LLC, et al.,
`No. 1:16-cv-0033-MCR-GRJ, Dkt. 37 (N.D. Fla. Aug. 11, 2017) ..........................................14
`
`Martin v. Trinity Indus., Inc.,
`959 F.2d 45 (5th Cir. 1992) .......................................................................................................7
`
`Motorola Mobility, Inc. v. Microsoft Corp.,
`No. 11-3136 SC, 2011 U.S. Dist. LEXIS 134080 (N.D. Cal. Nov. 21, 2011) ................3, 9, 10
`
`Nichia Corp. v. Mary Elle Fashions, Inc.,
`No. 2:16-CV-615-JRG, 2016 WL 9558954 (E.D. Tex. Dec. 22, 2016) ..................................12
`
`Nken v. Holder,
`556 U.S. 418 (2019) ...............................................................................................................1, 8
`
`Pavlic v. Kauffman,
`Civil Action No. 15 - 916, 2017 U.S. Dist. LEXIS 21431 (W.D. Pa. Feb. 15,
`2017) ........................................................................................................................................13
`
`RAI Strategic Holdings, Inc. et al v. Altria Client Services LLC et al,
`1:20-cv-00393-LMB-WEF, Dkt. No. 54 (E.D. Va. 2020) .....................................................2, 8
`
`SEC v. Res. Dev. Int’l LLC,
`217 F. App’x 296 (5th Cir. 2007) ..............................................................................................7
`
`Software Publishers Ass’n v. Scott & Scott, LLP,
`No. 3:06-cv-0949-G, 2007 U.S. Dist. LEXIS 59814 (N.D. Tex. Aug. 15,
`2007) ..........................................................................................................................................7
`
`T-Netix, Inc. v. MCI Worldcom, Inc.,
`Case No. 01-cv-00189, Dkt. No. 200 (E.D. Tex. Mar. 4, 2003) ............................................2, 8
`
`Tesfamichael v. Gonzales,
`411 F.3d 169 (5th Cir. 2005) .....................................................................................................1
`
`Thompson v. Hartford Life & Accident Ins. Co.,
`270 F.R.D. 277 (W.D. Ky. 2010)...........................................................................................2, 8
`
`Trontech Licensing v. Thomson, Inc.,
`2007 U.S. Dist. LEXIS 117676 (E.D. Tex. Nov. 7, 2007) ........................................................3
`
`Yovan v. Lithia Motors, Inc.,
`Case No. 3:01-cv-03082, Dkt. No. 40 (Aug. 25, 2004) ...........................................................14
`
`
`
`iii
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`

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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 5 of 21 PageID #: 1303
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`Plaintiffs Advanced Micro Devices, Inc. and ATI Technologies ULC (collectively,
`
`“AMD” or “Plaintiffs”) submit this Opposition to Defendant Realtek’s Motion To Strike and for
`
`an Order to Show Cause (Dkt. No. 71).
`
`I.
`
`INTRODUCTION
`
`Realtek’s motion should be denied in its entirety. A “stay” of this case does not prohibit
`
`amended pleadings. Realtek’s concurrent motion (Dkt. No. 71) relies on a misunderstanding of
`
`“stay” from Tesfamichael, which involves “a stay of removal [of immigrant petitioners] pending
`
`[the District Court’s] consideration, on the merits, of their petition for review of the decision of
`
`the Board of Immigration Appeals (‘BIA’).” Tesfamichael v. Gonzales, 411 F.3d 169, 170 (5th
`
`Cir. 2005); see also id. at 172 (quoting Weng v. United States AG, 287 F.3d 1335, 1338 (11th Cir.
`
`2002) (quoting Black’s Law Dictionary 529 (6th ed. 1990))). That case, in turn, was later cited by
`
`the Supreme Court in Nken v. Holder, 556 U.S. 418 (2019). In Nken, the Court stated “[a] stay
`
`‘simply suspend[s] judicial alteration of the status quo’” and “[b]y contrast, instead of directing
`
`the conduct of a particular actor [such as an injunction], a stay operates upon the judicial
`
`proceeding itself.” Nken v. Holder, 556 U.S. 418, 428, 129 S. Ct. 1749, 1758 (2009) Id.
`
`Thus even if the articulation in Tesfamichael applies (notwithstanding the fact that it was
`
`an immigration case), that articulation of “stay” does not mean that parties are foreclosed from
`
`amending pleadings in this action, particularly in accordance the Court’s Docket Control Order.
`
`To the contrary, AMD’s Second Amended Complaint was filed in accordance with the Docket
`
`Control Order’s directive that “[i]t is not necessary to seek leave of Court to amend pleadings
`
`prior to this deadline [March 28, 2023] unless the amendment seeks to assert additional patents”
`
`(Dkt. No. 52 at 4 (Aug. 24, 2022) (emphasis added)). Unlike other cases Realtek cites in Dkt. No.
`
`71, the stay order in this case (Dkt. No. 65) contained no prohibition on filing amended pleadings.
`
`Indeed, as discussed further in AMD’s opposition to Dkt. No. 70, several parties in other cases
`
`1
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`

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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 6 of 21 PageID #: 1304
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`(including in E.D. Tex.) have amended complaints without seeking to lift a stay. See, e.g.,
`
`Thompson v. Hartford Life & Accident Ins. Co., 270 F.R.D. 277, 278-79 (W.D. Ky. 2010); RAI
`
`Strategic Holdings, Inc. et al v. Altria Client Services LLC et al, 1:20-cv-00393-LMB-WEF, Dkt.
`
`No. 54 (E.D. Va. 2020); T-Netix, Inc. v. MCI Worldcom, Inc., Case No. 01-cv-00189, Dkt. No.
`
`200 (E.D. Tex. Mar. 4, 2003).
`
`Realtek’s motion to strike and for a show cause order (Dkt. No. 71) also faults AMD for
`
`“creat[ing]” a “dilemma” (Dkt. No. 71 at 6), but Realtek misleadingly omits several material facts.
`
`First, for example, Realtek states that it “sent a letter to AMD on March 7, 2023,” notifying AMD
`
`of Realtek’s “intention to bring an action in the Northern District of California against AMD for
`
`breaching a license[.]” Dkt. No. 71 at 2. But Realtek leaves out the fact that its ‘letter’ was really
`
`a threat to AMD, directly threatening AMD with a new lawsuit in N.D. Cal. on issues subject of a
`
`stay in this case, unless AMD withdrew all its claims against Realtek for the asserted ’628 Patent
`
`in this action. See Dkt. No. 69-3 (Ex. C to Dkt. No. 69), Letter from Realtek to AMD (Mar. 7,
`
`2023).
`
`Second, Realtek also omits that, despite being aware of AMD’s outside counsel in this case
`
`and in the ITC Action, Realtek directed its outside counsel at K&L Gates (a law firm representing
`
`Realtek in the ITC Action) to send that threatening letter directly to AMD officers, including
`
`AMD’s CEO and one of its ITC trial witnesses, around the backs of AMD’s outside counsel.
`
`Contacting AMD personnel directly in this way contravened the rules of professional conduct.
`
`Cal. R. Prof’l Conduct 4.2.
`
`And third, Realtek leaves out the fact that AMD’s second amended complaint merely adds
`
`allegations for declaratory judgment regarding the Khronos-based defenses that Realtek put at
`
`issue in this case, and Realtek’s threatened breach of contract claim is a compulsory counterclaim
`
`2
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`

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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 7 of 21 PageID #: 1305
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`in this action. Indeed, Realtek’s September 2022 initial disclosures have already asserted that
`
`AMD’s claims in this case are barred by AMD’s “commitments to the Khronos Group[.]” Ex. 1,
`
`Realtek Initial Disclosures, 2:22-cv-00134 (E.D. Tex.) at 4 (Sept. 2, 2022).1 Therefore, Realtek’s
`
`incorrect assertion that, because there is a license to the ’628 Patent through the Khronos IP Policy
`
`(and there is not), AMD’s alleged “breach” of that contract (to which Realtek is not a party), if
`
`anything, amounts to a compulsory counterclaim in this action and thus subject of the stay in this
`
`case. See, e.g., Trontech Licensing v. Thomson, Inc., 2007 U.S. Dist. LEXIS 117676 (E.D. Tex.
`
`Nov. 7, 2007) (finding breach of contract action in a patent case as a compulsory counterclaim to
`
`the patent infringement action, finding that the “breach of contract claims logically relate to the
`
`patent infringement claims, as the alleged breach results from Trontech’s filing suit. The
`
`counterclaims, if Defendants have sufficiently pleaded them, are compulsory[.]”).
`
`For at least all these reasons, it is Realtek, and not AMD, who “created” the “dilemma”
`
`(Dkt. No. 71 at 6), and is the party attempting to circumvent the stay in this case by threatening to
`
`file elsewhere on issues relating to the ’628 Patent subject to the stay here.2 Realtek’s improper
`
`attempt to do so by threatening to file in a separate district on those issues, and at the same time
`
`trying to strike AMD’s Second Amended Complaint, should be rejected. Therefore, Realtek’s
`
`motion to strike and for a show cause order (Dkt. No. 71) should be denied.
`
`
`1 These initial disclosures were served over two months after Realtek and TCL alleged their
`Khronos-based licensing defenses in their answers in the co-pending ITC Action.
`2 While Realtek alleges that the Khronos IP Policy requires Realtek’s breach of contract claim to
`be litigated in California, Realtek’s motion omits the fact that the alleged forum selection clause
`does not even apply, given that, inter alia, Realtek is not a party to the contract serving as the basis
`for Realtek’s defense. See, e.g., Motorola Mobility, Inc. v. Microsoft Corp., No. 11-3136 SC, 2011
`U.S. Dist. LEXIS 134080, at *2 (N.D. Cal. Nov. 21, 2011).
`
`3
`
`

`

`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 8 of 21 PageID #: 1306
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`II.
`
`FACTUAL BACKGROUND
`
`On May 5, 2022, AMD filed a Complaint against Defendants Realtek and TCL in this
`
`District, with respect to AMD’s U.S. Patent Nos. 7,742,053 (“the ’053 patent”), 8,760,454 (“the
`
`’454 patent”), 11,184,628 (“the ’628 patent”), 8,468,547 (“the ’547 patent”), and 8,854,381 (“the
`
`’381 patent”) (collectively, the “Asserted Patents”).
`
`On the same day, May 5, 2022, AMD filed a Complaint against the same defendants in the
`
`International Trade Commission (“ITC”), styled Certain Graphic Systems, Components Thereof,
`
`and Digital Televisions Containing the Same, 337-TA-1318 (“ITC Action”), asserting the same
`
`patents.
`
`On June 27, 2022, Realtek filed a response to the ITC Action, alleging a defense of license
`
`and covenant not to sue based on “AMD’s commitments to the Khronos Group[.]” Ex. 2, ITC
`
`Action, Realtek Response to ITC Complaint at 37 (June 27, 2022).
`
`On July 7, 2022, TCL filed a response to the ITC Action, also alleging a defense of license
`
`and covenant not to sue based on “AMD’s commitments to the Khronos Group[.]” Ex. 3, ITC
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`Action, TCL Response to ITC Complaint at 42 (July 7, 2022).
`
`On July 22, 2022, TCL filed an unopposed motion to stay the proceedings as against TCL,
`
`under the mandatory stay provision of 28 U.S.C. § 1659. Dkt. No. 36 (July 22, 2022). In that
`
`motion, TCL argued that the “ITC investigation and this case both encompass issues relating to
`
`the patents, such as infringement, validity, and enforceability; and the defenses that TCL might
`
`raise are also the same in the two proceedings [i.e., the ITC Action and this E.D. Tex. action].”
`
`Defendant TCL's Unopposed Mot. to Stay, Dkt. No. 36 at 4 (July 22, 2022) (emphasis added).
`
`TCL’s unopposed motion to stay was granted on August 11, 2022. Dkt No. 44 (Aug. 11, 2022).
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`Having determined not to seek a similar stay under 28 U.S.C. § 1659, AMD sought
`
`Realtek’s position on a motion for discretionary stay of this case, given the concurrent stay against
`
`4
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`

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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 9 of 21 PageID #: 1307
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`TCL. Realtek stated it would oppose a stay of the proceedings in this case, and filed its opposition
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`on August 5, 2022. Dkt. No. 43 (Aug. 5, 2022).
`
`On August 5, 2022, in that opposition, Realtek argued that “Every claim and defense
`
`raised in the ITC proceeding can (and likely will) be relitigated in this action, should it be
`
`stayed.” Defendant Realtek’s Opposition to Mot. to Stay, Dkt. No. 43 at 4 (Aug. 5, 2022)
`
`(emphasis added). Also after filing its answer in the ITC, in which Realtek alleged a licensing
`
`defense based upon the Khronos IP Policy for the ’628 Patent, Realtek even went so far as to
`
`request that AMD agree to be bound in this case by whatever final determinations the Commission
`
`makes in the ITC Action (i.e., the 1318 Investigation), stating by email: “In connection with its
`
`motion for a stay of the district court case, we are asking AMD if it will stipulate to be bound by
`
`any final determination by the Commission in the 1318 investigation that Realtek products do not
`
`infringe the ‘053, ‘547, ‘381 or ‘628 patents, any final determination by the Commission that any
`
`claims of those patents are invalid, and any other determination adverse to AMD related to the
`
`merits of the claims and defenses asserted in the 1318 investigation.” Dkt. No. 43-7 (Aug. 5,
`
`2022) (emphases added).
`
`On September 2, 2022, Realtek served its initial disclosures (over two months after Realtek
`
`and TCL previously alleged Khronos-based licensing defenses in the co-pending ITC Action) in
`
`which Realtek asserted defenses based on AMD’s alleged licensing obligations with respect to
`
`Khronos, and alleged that AMD’s claims in this case are barred by AMD’s “commitments to the
`
`Khronos Group[.]” Ex. 4, Realtek Initial Disclosures, 2:22-cv-00134 (E.D. Tex.) at 4 (Sept. 2,
`
`2022).
`
`On September 12, 2022, the Court granted AMD’s motion for discretionary stay, and
`
`stayed this case pending resolution of the ITC Action. Dkt. No. 65 at 3 (Sept. 12, 2022).
`
`5
`
`

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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 10 of 21 PageID #: 1308
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`Despite the fact that this action was stayed, on March 7, 2023, days before the ITC trial
`
`was scheduled to occur, outside counsel for Realtek from K&L Gates, a law firm representing
`
`Realtek in the ITC Action, sent a letter directly to AMD, its CEO Dr. Lisa Su, General Counsel
`
`Harry Wolin, and one of the ITC trial witnesses scheduled to testify in the ITC mere days later,
`
`Vice President of IP Kevin O’Neil (the “Letter”). Realtek’s outside counsel directly sent this letter
`
`to AMD in-house representatives without contacting or notifying AMD’s outside counsel in this
`
`action or in the ITC action at all.
`
`In the Letter, Realtek threatened to sue AMD for alleged breach of the Khronos IP Rights
`
`Policy in the Northern District of California—despite that allegation being subject of the stay in
`
`this case, if AMD did not withdraw this action as to the asserted ’628 Patent. Ex. 4 at 1-2, 4.
`
`Two days later, AMD filed its Second Amended Complaint in this action seeking
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`declaratory judgment of no breach of contract and no license based upon AMD’s complaint in this
`
`action as to the ’628 Patent against Realtek. Dkt. No. 69 (March 9, 2023).
`
`III. LEGAL STANDARDS
`
`On August 24, 2022, this Court issued the Docket Control Order in this case with the
`
`directive that on or before March 28, 2023, “[i]t is not necessary to seek leave of Court to amend
`
`pleadings prior to this deadline [March 28, 2023] unless the amendment seeks to assert additional
`
`patents.” Dkt. No. 52 at 4 (Aug. 24, 2022).
`
`On September 12, 2022, the Court ordered that this action “be stayed in its entirety until
`
`final resolution of Investigation No. 337-TA-1318.” Dkt. No. 65 at 3 (Sept. 12, 2022). In that
`
`Order, the Court did not make any statements prohibiting filings or amended pleadings during the
`
`stay. Id.
`
`Motions to strike are generally disfavored and infrequently granted. See, e.g., Augustus v.
`
`Bd. of Pub Instruction of Escambia Cnty., Fla., 306 F.2d 862, 868-69 (5th Cir. 1962); Am. S. Ins.
`
`6
`
`

`

`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 11 of 21 PageID #: 1309
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`Co. v. Buckley, 748 F. Supp. 2d 610, 626-27 (E.D. Tex. 2010) (“[Motions to strike] are viewed
`
`with disfavor and infrequently granted, both because striking portions of pleadings is a drastic
`
`remedy and because it is often sought by a movant simply as a dilatory tactic.”); Software
`
`Publishers Ass’n v. Scott & Scott, LLP, No. 3:06-cv-0949-G, 2007 U.S. Dist. LEXIS 59814, 2007
`
`WL 2325585, at *1 (N.D. Tex. Aug. 15, 2007) (stating motions to strike are disfavored).
`
`Civil contempt is committed only if a party “‘violates a definite and specific order of the
`
`court requiring him to perform or refrain from performing a particular act or acts with knowledge
`
`of the court’s order.’” Gibson Brands, Inc. v. Armadillo Distrib. Enter., No. 4:19-cv-00358, 2023
`
`U.S. Dist. LEXIS 35905, at *6-7 (E.D. Tex. Mar. 3, 2023) (quoting SEC v. First Fin. Grp. of Tex.,
`
`Inc., 659 F.2d 660, 669 (5th Cir. 1981)). The court’s “contempt power should only be invoked
`
`where a specific aspect of the order has been clearly violated.” Hitters v. Hitters, No. 1:20-CV-
`
`00167-RP, 2021 U.S. Dist. LEXIS 257004, at *7 (W.D. Tex. July 29, 2021) (citing Piggly Wiggly
`
`Clarksville, Inc., 177 F.3d at 382-83)). The court’s civil contempt power “is a potent weapon
`
`which should not be used if the court’s order upon which the contempt was founded is vague or
`
`ambiguous.” Arismendy v. United States Comm’r, No. 4:17-1139, 2018 U.S. Dist. LEXIS 228223,
`
`at *2 (S.D. Tex. Mar. 29, 2018) (quoting Piggly Wiggly Clarksville, Inc. v. Mrs. Baird’s Bakeries,
`
`177 F.3d 380, 382-83 (5th Cir. 1999)).
`
`In a civil contempt proceeding, the movant bears the burden of establishing the elements
`
`of contempt by clear and convincing evidence. SEC v. Res. Dev. Int’l LLC, 217 F. App’x 296, 298
`
`(5th Cir. 2007) (citing Petroleos Mexicanos v. Crawford Enter., Inc., 826 F.2d 392, 401 (5th Cir.
`
`1987)). Here, Realtek must prove by clear and convincing evidence that: (1) a court order is or was
`
`in effect; (2) the order requires certain conduct; and (3) AMD fails to comply with the court order.
`
`See Martin v. Trinity Indus., Inc., 959 F.2d 45, 47 (5th Cir. 1992).
`
`7
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`

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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 12 of 21 PageID #: 1310
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`IV. ARGUMENT AND AUTHORITIES
`A.
`
`Realtek Misunderstands the “Stay” in This Case
`
`Realtek simply misunderstands what it meant for this action to be “stayed.” On September
`
`12, 2022, the Court ordered that this action “be stayed in its entirety until final resolution of
`
`Investigation No. 337-TA-1318.” Dkt. No. 65 at 3 (Sept. 12, 2022). Such a stay ‘simply suspend[s]
`
`judicial alteration of the status quo’” (see, e.g., Nken v. Holder, 556 U.S. 418, 428-29 (2019)) and
`
`does not mean, as Realtek suggests, that AMD is prohibited from amending its complaint during
`
`the stay. Id. As discussed in AMD’s opposition to Realtek’s motion for relief from the stay,
`
`several parties in other cases (including in E.D. Tex.) have amended complaints without seeking
`
`to lift a stay. See, e.g., Thompson v. Hartford Life & Accident Ins. Co., 270 F.R.D. 277, 278-79
`
`(W.D. Ky. 2010); RAI Strategic Holdings, Inc. et al v. Altria Client Services LLC et al, 1:20-cv-
`
`00393-LMB-WEF, Dkt. No. 54 (E.D. Va. 2020); T-Netix, Inc. v. MCI Worldcom, Inc., Case No.
`
`01-cv-00189, Dkt. No. 200 (E.D. Tex. Mar. 4, 2003). By contrast, the TCL co-defendants appear
`
`to have fully understood this fact, and have not sought to file a responsive pleading, nor sanctions
`
`against AMD for its filing.
`
`B.
`
`Should This Court Grant Realtek’s Motion for Relief (Dkt. No. 70), This Court
`Should Deny Realtek’s Motion To Strike the Second Amended Complaint (Dkt. No.
`71)
`
`Undermining Realtek’s motion to strike is the fact that Realtek is the party seeking to
`
`litigate on issues subject to the stay, not AMD. Realtek is trying to circumvent the stay by
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`threatening to file and filing a lawsuit in another district on an issue that should be litigated in this
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`case. Realtek’s alleged breach of contract action, which it threatened to file in California, is solely
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`(and wrongly) premised on the fact that the ’628 Patent is licensed to Realtek through the Khronos
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`IP Policy—which it is not (and Realtek is not even a party to Khronos). See, e.g., Second Am.
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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 13 of 21 PageID #: 1311
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`Compl., ¶¶ 87-105 (Mar. 9, 2023). Even worse, Realtek is trying to circumvent the stay by
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`escalating litigation elsewhere, and by going around outside counsel and unethically contacting
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`AMD’s client representatives (including AMD’s CEO and an AMD trial witness scheduled to
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`testify in the ITC hearing mere days following the transmittal of Realtek’s letter).
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`
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`While ultimately, Realtek’s efforts to litigate elsewhere—based on a “forum selection”
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`clause—will be adjudicated on the merits separately from this motion practice, it bears mentioning
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`that Realtek’s efforts will ultimately fail. Realtek attempts to justify its unethical threat to file a
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`lawsuit in California by pointing to a governing law provision in the Khronos Agreement and
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`claiming California has exclusive jurisdiction. However, what Realtek’s motion omits is that the
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`alleged forum selection clause does not even apply, given the reasons that, inter alia, Realtek is
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`not a party to the contract serving as the basis for Realtek’s defense. See, e.g., Motorola Mobility,
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`Inc. v. Microsoft Corp., No. 11-3136 SC, 2011 U.S. Dist. LEXIS 134080, at *2 (N.D. Cal. Nov.
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`21, 2011). The relevant provision provides:
`
`the
`that any dispute regarding
`The parties hereby agree
`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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`Dkt. 69, Ex. A at 7 (emphasis added).
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`Notably, the governing law provision applies only to disputes “arising out of” the Khronos
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`
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`Agreement. Realtek’s alleged breach of license claim, however, does not arise out of the Khronos
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`Agreement – it arises out of Realtek’s infringement of AMD’s ’628 Patent, and Realtek’s
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`disagreement that AMD should have filed a complaint against Realtek. Similarly, Realtek’s
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`threatened breach of contract claim, which presumes Realtek has a license to the ’628 Patent, arises
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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 14 of 21 PageID #: 1312
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`out of Realtek’s patent infringement and not out of the Khronos Agreement. In fact, ten months
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`ago, Realtek’s response to AMD’s Complaint for patent infringement in the ITC Action asserted
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`a license defense based on “AMD’s commitments to the Khronos Group.” Ex. 2 at 37 (June 27,
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`2022).
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`
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`Moreover, Realtek is not a party to the Khronos Agreement nor even a Khronos Member,
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`and as a result, the forum selection clause does not apply for at least this reason as well. For
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`example, in Motorola Mobility, Inc. v. Microsoft Corp., No. 11-3136 SC, 2011 U.S. Dist. LEXIS
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`134080, at *2 (N.D. Cal. Nov. 21, 2011), Microsoft filed a complaint against Motorola in the
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`Western District of Washington and the ITC. Motorola filed counterclaims, based in part on its
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`agreements with the SD Card Association (“SDA”), including the Host/Ancillary Product License
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`Agreement (“HALA”). Id. at *5. Motorola removed its counterclaims to the Northern District of
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`California, arguing that the HALA “contain[ed] [a] forum selection clause[] requiring that all suits
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`arising out of the agreement[]” be brought in the Northern District of California.” Id. at *5.
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`Microsoft argued that “the HALA forum selection clause does not apply to third parties such as
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`Motorola.” Id. at *16. The Court agreed with Microsoft, explaining that “interpreting the language
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`of the HALA in its ‘ordinary and popular sense,’ the Court cannot conclude that the forum
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`selection clause, which expressly applies to the parties to the agreement, should extend to third
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`parties.” Id. at 18. “While third party beneficiaries or implementers may very well have a right to
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`enforce the other terms of the HALA, the language of the forum selection clause is specific to the
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`parties to the agreement.” Id.
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`1.
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`Realtek’s Cited Authority Is Distinguishable
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`Realtek cites to Implicit, LLC v. Imperva, Inc., No. 2:19-cv-0040-JRG-RSP, 2020 WL
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`10356908, at *1 (E.D. Tex. Apr. 22, 2020) for the misguided argument that “forum selection
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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 15 of 21 PageID #: 1313
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`clauses govern claims brought by third-party beneficiaries of a license.” Dkt. No. 71 at 3-4. Yet
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`Realtek appears to simply assume it is a third-party beneficiary without even attempting to make
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`an actual showing that they are, in fact, third-party beneficiaries to the Khronos Agreement. Also,
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`the license at issue in Implicit, LLC was governed by Delaware law, not California law. Id. at *12.
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`But even if Delaware law applied here, and it does not, Implicit, LLC also stands for the proposition
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`that “[a] bare allegation that a license provides a defense to the claims in suit fails to meet this
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`standard and will not trigger a forum selection clause.” Id. at *7.
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`Realtek also argues that “[w]hen a stay order is in place, and a party files an amended
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`pleading in violation of the stay, courts strike the unauthorized pleadings” and cites to a string of
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`distinguishable cases. Dkt. No. 71 at 4. For example, in Ellison Framing, Inc. v. Zurich Am. Ins.
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`Co., No. CIV. S-11-0122 LKK, 2013 WL 6499058, at *4 (E.D. Cal. Dec. 11, 2013), the plaintiff
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`filed two complaints in two different cases, and the defendant moved to consolidate. Id. at *4. In
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`Edmiston v. Nevada ex rel. Nevada Dep’t of Corr., No. 320-CV-00559, 2022 WL 168214, at *1
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`(D. Nev. Jan. 19, 2022), the court had previously ordered that “until the Court lifts the stay, no
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`other pleadings or papers may be filed in this case, and the parties may not engage in any
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`discovery, nor are the parties required to respond to any paper filed in violation of the stay unless
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`specifically ordered by the court to do so.” Id. (emphasis added). There was no such prohibition
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`on filing any pleadings in the Court’s Order (Dkt. No. 65) in this case.
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`Gibson v. Dzurenda, No. 3:18-CV-00190, 2019 WL 3573667, at *1 (D. Nev. Aug. 6, 2019)
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`is similarly distinguishable. In that case, the court entered a screening order which imposed a 90-
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`day stay. When the plaintiff filed a motion to amend the complaint during the stay, the court
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`denied the motion without prejudice because “[t]he screening order explicitly stated that ‘[d]uring
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`this 90-day stay period, no other pleadings or papers will be filed in this case, and the parties will
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`Case 2:22-cv-00134-JRG-RSP Document 73 Filed 04/05/23 Page 16 of 21 PageID #: 1314
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`not engage in any discovery, nor are the parties required to respond to any paper filed in violation
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`of the stay unless specifically ordered by the Court to do so.’” Id. at *1 (emphasis added).
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`Likewise, in contrast to Edmiston, there was no such prohibition on filing any pleadings in the
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`Court’s Order (Dkt. No. 65) in this case.
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`Moreover, pursuant to the Docket Control Order, the deadline to file amended pleadings
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`was March 28, 2023, and “[i]t is not necessary to seek leave of Court to amend pleadings prior
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`to this deadline unless the amendment seeks to assert additional patents.” Dkt. 52 at 4 (Aug. 24,
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`2022). Although AMD understands that a new procedural schedule will ultimately be issued when
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`the stay is lifted, that does not change the fact that the original DCO confirmed that AMD had
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`leave to amend pleadings through no earlier than March 28, 2023. Realtek argues that “[t]he
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`Court’s stay order undeniably nullified and replaced the schedule set forth in the previously
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`applicable DCO” and cites to Nichia Corp. v. Mary Elle Fashions, Inc., No. 2:16-CV-615-JRG,
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`2016 WL 9558954, at *1 (E.D. Tex. Dec. 22, 2016) for support. Dkt. No. 71 at 5. Nichia Corp.
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`does not, however, stand for that proposition. In that case, the court gr