Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 1 of 17 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

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1 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 1 of 17 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION WI-LAN INC., v. ACER, INC., et al. Plaintiff, Defendants. Civil Action No. 2:07-CV-473 (TJW) JURY TRIAL REQUESTED Wi-LAN INC. S MOTION FOR LEAVE TO FILE A SUPPLEMENTAL FIRST AMENDED COMPLAINT Pursuant to FED. R. CIV. P. 15(d), Plaintiff Wi-LAN, Inc. ( Wi-LAN ) moves for leave to supplement its First Amended Complaint (Supplemental First Amended Complaint attached as Exhibit A to the McManus Decl.) to add allegations of infringement of United States Patent No. 6,549,759. I. INTRODUCTION A. The Original Complaint In its original Complaint, Wi-LAN asserted infringement of U.S. Patent Nos. 5,282,222 ( the 222 patent ) and RE37,802 ( the 802 patent ) (the patents-in-suit ). Wi-LAN alleged (and continues to allege) that defendants infringe the patents-in-suit by making, using, and selling laptop computers and/or other products capable of practicing one or more of the IEEE wireless communication standards (also known as the Wi-Fi standards ) (hereinafter the accused Wi-Fi products ).

2 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 2 of 17 On September 30, 2008, without prior notice to Wi-LAN, defendant Intel Corporation ( Intel ) filed an action in the Northern District of California for declaratory judgment of non-infringement and invalidity of eighteen (18) other Wi-LAN patents, including U.S. Patent No. 6,549,759 (the 759 patent, attached as Exhibit B to the McManus Decl.). This declaratory judgment action was brought in anticipation of Intel s and other defendants introduction of accused Wi-Fi products that are also capable of the next generation in Wi-Fi communication (see, infra, Section II (Technology At Issue), pp. 5-7) that is, Wi-Fi products that also practice the IEEE wireless communication standard (known as the Wi-MAX standard for its extended Wi-Fi range). (Intel Complaint attached as Exhibit C to the McManus Decl.) Shortly thereafter, on October 8, 2008, defendant Intel announced in a press release that it was now shipping its first-ever combined Wi-MAX/Wi-Fi module. (Press release attached as Exhibit D to the McManus Decl.). The Intel press release indicated that several personal computer manufacturers would include the Wi-Fi/Wi-MAX wireless communication module in their laptops including Acer, Asus, Lenovo and Toshiba. (Id.) The Intel press release further indicated that Dell, Panasonic, Samsung and Sony also plan to support Wi-MAX in their laptops starting in (Id.) Thus, a significant number of defendants are now, or soon will be, selling accused Wi-Fi products that infringe the patents-in-suit not only because of their Wi-Fi capability, but because they are also Wi-MAX-enabled for wireless communication. On October 30, 2008, in response to the introduction of Wi-Fi products with dual Wi-Fi/Wi-MAX wireless communication capability, and as permitted by the Court s Docket Control Order, Wi-LAN filed its First Amended Complaint. In the First 2

3 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 3 of 17 Amended Complaint, Wi-LAN alleges that defendants accused Wi-Fi products also infringe the patents-in-suit to the extent they are enabled for Wi-MAX wireless communications. More specifically, Wi-LAN alleges that defendants making, using or selling of laptops and other wireless products that practice one or more of the Wi-Fi/Wi- MAX wireless communication standards (as alleged, that practice the and/or standards ) infringe the patents-in-suit. Wi-LAN has included the basis for its Wi- MAX infringement allegations in its P.R. 3.1 and 3.2 infringement disclosures for the 222 and 802 patents-in-suit (which were also served on October 30, pursuant to the Docket Control Order, D.I. 172). Thus, the Wi-Fi and Wi-MAX allegations are part of this litigation and focus specifically on the wireless communication capabilities of the same products identified in the original Complaint, the accused Wi-Fi products. B. The Requested Supplement In the instant motion, Wi-LAN seeks to supplement its First Amended Complaint to allege that the 759 patent (which, as explained below, is essential to the practice of Wi-MAX wireless communication) is also infringed by defendants making, using, and selling the accused Wi-Fi products. 1 This supplement will ensure that all allegations of infringement of defendants accused Wi-Fi products, whether for Wi-Fi or Wi-MAX wireless communication capability, or both, may be heard in a single suit, rather than having the same parties litigate these closely related wireless communication features in the same products separately in different jurisdictions. 2 1 Wi-LAN has filed the instant motion well before the December 4, 2009 deadline to amend pleadings and shortly after Intel and the other defendants publicly announced that Wi-MAX wireless communication capability would be included in the accused Wi-Fi products. 2 To avoid the risk of future claim preclusion, Wi-LAN has also added allegations of infringement of the 759 patent by the Bluetooth function in each Wi-Fi product. (Bluetooth serves as the 3

4 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 4 of 17 It is anticipated that defendants will oppose the subject motion by arguing that the 759 patent is included in Intel s declaratory judgment action recently filed in the Northern District of California. As explained below, such an argument is not persuasive. Under the prevailing case law, the present suit is the first-filed suit concerning Intel s and the other defendants accused Wi-Fi products and, as such, should be the one to proceed, at least as to the 759 patent that is the subject of Wi-LAN s motion. Intel s latest accused Wi-Fi product its dual Wi-MAX/Wi-Fi module and defendants laptops that include this module clearly fall within the ambit of Wi-LAN s original Wi-Fi allegations because of their Wi-Fi wireless communication capability. Intel s attempt to have half of Wi-LAN s patent rights associated with the accused Wi-Fi products (the Wi-Fi wireless communication capability) litigated in Texas and the other half associated with the same accused Wi-Fi products (the Wi-MAX wireless communication capability) litigated in California is not consistent with the sound and economical administration of justice. Nor is judicial economy served by proceeding in California against only Intel for inducing or contributing to the infringement of the 759 patent, while Intel and the defendant laptop makers (the direct infringers of the 759 patent) are already present in this Court. Indeed, Intel s declaratory judgment action, filed on the eve of its new product release, is a litigation ploy to avoid this Court s proper jurisdiction and to put severe cost pressure on Wi-LAN. In its communications with defendant Intel, Wi-LAN has asserted standard short range, wireless substitute for plugging in or connecting by wire to a desktop computer, see Dubuc Decl. 15). Laptop computers sold by defendants utilize Bluetooth for short range wireless connectivity and Wi-Fi and/or Wi-MAX for wireless LAN applications and wireless internet access. Id. Accordingly, because these functions are in the Wi-Fi products already at issue in the original Complaint and relate to wireless connectivity, such additional allegations may be viewed as arising from the same transactional facts as the Wi-Fi/Wi-MAX allegations and, if so, must be pled with the 759 patent allegations. 4

5 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 5 of 17 only four patents among the Wi-Fi and Wi-MAX-related patents that Wi-LAN now holds: the patents-in-suit (the 222 and 802 patents mentioned above); the 759 patent (the Wi-MAX essential patent that Wi-LAN seeks to add to this action); and U.S. Patent No. 5,925,068 (the 068 patent ), which (as Intel knows) Wi-LAN can no longer assert. (Middleton Decl. at 2 and Exs. J and K.) As a result, Wi-LAN expects the California court will dismiss the remaining patents for lack of subject matter jurisdiction; but, regardless of whether it does so, the 759 patent is best placed before this Court. 3 Thus, Wi-LAN respectfully requests that the Court grant its motion to supplement the First Amended Complaint. 4 II. THE TECHNOLOGY AT ISSUE Wi-Fi capability is a standard feature in all current laptops, enabling fixed (or stationary) wireless internet access. Wi-Fi enabled laptops reach the Internet through Wi- Fi wireless routers (or access points) known as hotspots that are connected to the Internet through a DSL, satellite, or cable service. (Dubuc Decl. 2.) Such hotspots have 3 Wi-LAN s time to answer or otherwise plead in the California action is January 5, On December 5, a week before this motion was filed, Wi-LAN s counsel met and conferred with counsel for Intel (who, to date, has acted on behalf of all defendants) to determine whether defendants would agree to the proposed supplement to the First Amended Complaint. In response, Intel s counsel requested until the following week to speak with the other defendants before responding. To accommodate the time Intel requested to speak with the other defendants, Wi-LAN advised that it would not file this motion until December 10. See McManus Decl. 6 and Ex. E (the confirming ). Wi-LAN also supplied a draft Supplemental First Amended Complaint. In response, several defendants requested additional time to formulate their position, so on December 9 Wi-LAN scheduled a meet and confer for December 11 to answer any questions defendants might have and extended the time by which it would file this motion until December 12. Id., 8 and Ex. F. On December 10, in response to Wi-LAN s efforts to meet and confer, and in anticipation of Wi-LAN s motion to supplement, defendants Broadcom, Atheros, and Marvell filed (but, to our knowledge, have not yet served) declaratory judgment actions in the Northern District of California as to the 759 patent. Id., 9 (McManus Decl. Exs. G and H). Such anticipatory actions are disfavored and do not change the fact that this action has firstfiled status. Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 n.3 (5th Cir. 1983). 5

6 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 6 of 17 become ubiquitous in offices, airports, hotels, homes, and other locations around the world. (Id. 3.) Wi-MAX, which is the next generation in Wi-Fi wireless communication, enables mobile wireless Internet access in a laptop or other Wi-Fi product across an entire metropolitan area by linking together a network of hotspots into one metropolitan-wide hotspot. (Id. 4; see Intel White Paper, Wi-MAX and Wi-Fi Together: Synergies for Next-Generation Broadband (July 2008) attached as Exhibit L to the Dubuc Decl.). The fundamental air interface (or wireless communication technology) behind Wi-Fi and Wi-MAX (what makes them both work) is wideband orthogonal frequency division multiplexing (or W-OFDM, (which is the subject of Wi-LAN s patents-insuit). (Dubuc Decl. 6.) W-OFDM sub-divides an available frequency channel (or single highway lane for transporting data) into multiple frequency channels (or many highway lanes) enabling an exponential increase in data throughput over a wireless connection. (Id. 8.) W-OFDM (in Wi-Fi or Wi-MAX) provides a laptop user with a broadband experience equivalent to what he or she would experience using a desktop computer with a wired, broadband connection to the Internet. 5 (Id.) As discussed above, practice of Wi-LAN s 759 patent is also essential to Wi- MAX, and thus essential to mobile wireless or Wi-Fi use of a laptop across a 5 In the early 1990s, Wi-LAN s co-founders (also the named inventors on the patents-in-suit) invented W-OFDM for wireless data communication and formed Wi-LAN. In September 1993, at the Networld telecommunications show in Dallas, Wi-LAN introduced the first-ever W-OFDM product, the , capable of wireless data communication at then unheard of speeds of up to 20 Mbps. Subsequently, Wi-LAN was instrumental in popularizing W-OFDM. Wi-LAN cofounded the industry-leading OFDM forum and led the Wi-MAX forum s adoption of W-OFDM. In addition, in 2001, Wi-LAN obtained approval from the Federal Communications Commission ( FCC ) for the industry s use of W-OFDM, and, in doing so, opened the floodgates for Wi-Fi products (for stationary Wi-Fi use) and, now, dual Wi-Fi/Wi-MAX products (capable of mobile Wi-Fi use). 6

7 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 7 of 17 metropolitan-wide area. (Dubuc Decl. 14.) The patented technology allows asymmetric adaptive modulation of each W-OFDM frequency channel (or highway lane). (Id. 11) Such asymmetric adaptive modulation functions to adapt the level of data modulation used at any given time (how much data is packed on each highway lane) to changes in channel conditions that occur continuously in mobile use, among other things. (Id. 12) As a general rule, when channel conditions are good, a higher order modulation scheme can be used so that more data may be placed on a given W-OFDM channel (or highway lane); and, when channel conditions are not good, a lower order modulation scheme is selected so that less data may be placed on a given W-OFDM channel. (Id. 13) III. ARGUMENT A. Leave to Supplement is Freely Given Federal Rule of Civil Procedure 15(d) permits one to supplement a complaint to include events occurring after the date of filing of the original complaint as follows: Supplemental Pleadings. On motion and reasonable notice, the court may, on just terms, permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented. The court may permit supplementation even though the original pleading is defective in stating a claim or defense. The court may order that the opposing party plead to the supplemental pleading within a specified time. (FED. R. CIV. P. 15(d)). Leave to supplement a complaint should be liberally granted unless good reason exists for denying leave, such as prejudice to the defendants. Gillihan v. Shillinger, 872 F.2d 935, 941 (10th Cir. 1989). The standard under Rule 15(d) is essentially the same as that under 15(a), and leave to supplement should be granted unless it causes undue delay or undue prejudice. Micron Tech., Inc. v. Rambus 7

8 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 8 of 17 Inc., 409 F. Supp. 2d 552, 558 (D. Del. 2006) (internal citations omitted); but see Burns v. Exxon Corp., 158 F.3d 336, 343 (5th Cir. 1998) (drawing distinction between Rule 15(a) and Rule 15(d)). Motions to supplement are to be freely granted when doing so will promote the economic and speedy disposition of the entire controversy between the parties, will not cause undue delay or trial inconvenience, and will not prejudice the rights of any of the other parties to the action. Hall v. C.I.A., 437 F.3d 94, 101 (D.C. Cir. 2006) (citing 6A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE 1504 at ). Consistent with the foregoing, the Fourth Circuit has held as follows: A supplemental pleading differs from an amended pleading because it relates to matters occurring subsequent to the filing of the initial complaint. Fed. R. Civ. P. 15(d). To the extent that the Second Amended Complaint responds to the Permit Reissuance Decision, it constituted a supplemental pleading. This distinction is of little practical significance, however, because the standards used by a district court in ruling on a motion to amend or on a motion to supplement are nearly identical. In either situation, leave should be freely granted, and should be denied only where good reason exists... such as prejudice to the defendants. Franks v. Ross, 313 F.3d 184, 198 n.15 (4th Cir. 2002). Here, the requested supplement to the First Amended Complaint is appropriate: (i) Intel s and defendants accused Wi-Fi products are already at issue in the present suit through the allegations in the original Complaint; (ii) there is a clear relationship between the technologies in the 759 patent and the 222 and 802 patents-in-suit; and (iii) there is no prejudice to defendants in view of the current discovery and trial schedule in this matter. There is no prejudice because of the extended schedule agreed to by the parties and ordered by the Court. The Markman hearing is scheduled for September 1, 2010 and 8

9 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 9 of 17 the trial is set for January 4, Because the trial date in this case is in 2011, with the Court s approval, Wi-LAN agreed with defendants to substantially extend the discovery deadlines set forth in the Court s Local Patent Rules ( P.R. ). 6 In addition, document productions are not until February 12, 2009 with any supplemental document productions to be completed by April 24, (Discovery Order, D.I. 171.) Thus, the requested supplement does not prejudice defendants. Moreover, Wi-LAN s Rule 3.1 infringement disclosures for the 759 patent have been provided to defendants (attached to the McManus Decl. as Exhibit I) and Wi-LAN s 3.2 disclosures will be provided to defendants shortly. In view of the extended schedule and the upfront exchange of Rule 3.1 and 3.2 disclosures, there is no real prejudice. B. The Present Action is First-Filed 1. The First Filed Rule Is Applicable The general rule favors the forum of the first-filed action as the forum for resolving all the issues in dispute. Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993). The first-filed forum has priority and should proceed absent sound reason that would make it unjust or inefficient to continue [with] the first-filed action. Genentech, Inc., 998 F.2d at 937; Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 407 (5th Cir. 1971). It is a well-established rule that in cases of parallel litigation, the first court in which jurisdiction attaches has priority to consider the case. The first to file rule 6 On September 23, 2008, the Court entered the parties proposed Docket Control Order. (Docket Control Order, D.I. 172.) As set forth in the Docket Control Order (i) Wi-LAN s infringement disclosures (P.R. 3-1 and 3-2 disclosures) for Wi-Fi and Wi-MAX infringement of the 222 and 802 patents-in-suit were exchanged on October 30, 2008, (ii) defendants invalidity contentions (P.R. 3-3 and 3.4(b)) are scheduled for exchange on December 18, 2008, and (iii) the defendants technical documents specific to the operation of the accused Wi-Fi products (P.R. 3.4(a)) will be exchanged on January 30,

10 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 10 of 17 exists to promote judicial economy and to avoid the potential for conflicting rulings as to the same controversy. [T]he actions need not be identical as to issues, or parties, for them to be found duplicative. Imation Corp. v. Sterling Diagnostic Imaging, Inc., 47 U.S.P.Q.2d 1745, (D. Minn. 1998). In Texas Instruments, Inc. v. Micron Semiconductor, Inc., this Court held that [i]n determining whether to apply the first-to-file rule to an action, a court must resolve two questions: 1) are the two pending actions so duplicative or involve substantially similar issues that one court should decide the subject matter of both actions; and 2) which of the two courts should take the case? As to the first inquiry, all that need be present is that the two actions involve closely related questions or common subject matter, or that the core issues substantially overlap. The cases need not be identical to be duplicative. As to the second inquiry, the rule is that [the] first [court] seized of jurisdiction over a dispute should be permitted to adjudicate that controversy fully. 815 F. Supp. 994, 997 (E.D. Tex. 1993); see also Third Dimension Semiconductor, Inc. v. Fairchild Semiconductor Int'l, Inc., 2008 U.S. Dist. LEXIS 75511, at *3-4 (E.D. Tex. Sept. 4, 2008) (citing Texas Instruments, Inc. 815 F. Supp at 997). Suits having the same or overlapping parties and accused products have been held to substantially overlap where the patents at issue (whether in the same patent family or not) concern the same or related technology. In AmberWave Sys. Corp. v. Intel Corp., Judge Davis held as follows: It is undisputed that Intel filed the Delaware action two months before AmberWave brought suit in this Court. The parties do dispute whether the two actions substantially overlap such that the first-to-file rule applies. Substantial overlap does not require that the core issues be identical, but that the two actions will involve closely related 10

11 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 11 of 17 questions or subject matter. See Texas Instruments, Inc., 815 F.Supp. at 997. The patents address different scientific aspects, mechanical engineering and electrical engineering, of semiconductor transistors. Thus the patents do not raise identical issues in the two actions, but the subject matter is closely related. Although not required for substantial overlap, the same parties are involved in both actions. Additionally, the same products are accused in both actions. AmberWave Systems Corp. v. Intel Corp., 2005 WL , at *2 (E.D. Tex. Nov. 1, 2005) (finding substantially overlap) (emphasis added). A similar result was obtained in Aventis Pharm., Inc. v. Teva Pharm. USA, Inc WL (E.D. Tex. Sept. 27, 2007). Aventis Pharmaceuticals, Inc. ( Aventis ) filed a first infringement action in New Jersey against Teva Pharmaceuticals USA, Inc. ( Teva ) and several other entities for methods of administering and chemically synthesizing the active ingredient fexofenadine in the allergy medicine Allegra. Later, Aventis filed a second infringement action in this Court against Teva on an unrelated patent (not in the same patent family) claiming a different, but related, aspect of the same accused Allegra products, that is, particular crystalline forms of fexofenadine. Teva moved to transfer the second action to New Jersey. This Court held that the Texas case should be transferred under the first to file rule. That is, this Court held that where two disputes concern overlapping parties and the same accused products, and related technologies, the cases substantially overlap despite the fact the two disputes involve different aspects of the same accused products. Id. at *2 ( Although Aventis may be correct that the inventions claimed in the polymorph patents are distinct from those involved in the coordinated New Jersey suits, the court rejects the suggestion that the cases will not substantially overlap. ). 11

12 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 12 of 17 It is beyond question that the instant action and Intel s declaratory judgment action involve common subject matter and that core infringement issues substantially overlap. Specifically, both cases involve the same accused Wi-Fi products and the same or overlapping fact issues regarding their design, operation, manufacture, testing, marketing, distribution and sale. Even if the same accused Wi-Fi products were not at issue in both cases, there would still be common subject matter because Wi-Fi and Wi-MAXuse the same basic technology: both standards implement the same wireless communication air interface (or modulation scheme) for transporting data over multiple frequency channels, that is, Wi- LAN s patented W-OFDM air interface. There is also substantial overlap in the discovery which must be conducted and the evidence and witness testimony which must be presented at trial to show infringement. To show infringement of the patents-in-suit by the accused Wi-Fi products, Wi-LAN must show that the accused products (whether with Wi-Fi wireless communication capability only or with dual Wi-Fi/Wi-MAX capability) use Wi-LAN s patented W-OFDM air interface (or modulation scheme). To show infringement of the 759 patent, Wi-LAN must show that the W-OFDM air interface in the accused Wi-Fi products uses asymmetric adaptive modulation to control the amount of data transported over each W-OFDM frequency channel (or highway lane). Such inquiries are factually intertwined. Damages issues also substantially overlap. In both cases Wi-LAN must conduct discovery and present witness testimony and documentary evidence at trial regarding each of the fifteen Georgia-Pacific factors, including for example, Wi-LAN s licensing 12

13 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 13 of 17 practices (First Georgia-Pacific Factor), the profitability of the accused Wi-Fi products (Eighth Georgia-Pacific Factor), and licensing practices of the defendants and others in the industry (Second and Twelfth Georgia-Pacific Factors). See Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970). The present action was filed eleven months prior to Intel s declaratory judgment action in California. Thus, under the first-to-file rule, this Court is the appropriate forum to resolve Wi-LAN s allegations as to the 759 patent because they concern overlapping parties, the same accused products (the accused Wi-Fi products), and the same fundamental technology (W-OFDM) already at issue in the present suit, as well as closely related technologies (in the case of the 759 patent, asymmetric adaptive modulation of the W-OFDM frequency channels). Moreover, it is difficult to escape the inference that the Intel declaratory judgment action was filed in anticipation of Wi-LAN asserting its patents against Intel s Wi- MAX/Wi-Fi module. Both the Fifth Circuit and the Ninth Circuit have held that [a]nticipatory suits are disfavored because they are an aspect of forum-shopping. Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 n.3 (5th Cir. 1983); Alltrade, Inc. v. Uniweld Prod., Inc., 946 F.2d 622, 628 (9th Cir. 1991) ( Anticipatory suits are disfavored because they are aspects of forum shopping. ). 2. This Court Determines Which Case is First Filed In Texas Instruments, Inc. v. Micron Semiconductor, Inc., this court has held that the first-to-file rule gives the first-filed court the responsibility to determine which case should proceed. Id. at 999 (citing Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 96 (9th Cir. 1982)). This is consistent with Fifth Circuit authority. Cadle Co. v. 13

14 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 14 of 17 Whataburger of Alice, Inc., 174 F.3d 599, (5th Cir. 1999) (noting that the district court in this case was the second-filed court, and under Fifth Circuit precedent that balancing act is reserved only for the first-filed court. Once the likelihood of a substantial overlap between the two suits ha[s] been demonstrated, it [is] no longer up to the [second filed court] to resolve the question of whether both should be allowed to proceed. ) (citing Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 407 (5th Cir. 1971)). C. Judicial Economy and the Sound Administration of Justice Favor Supplementation to Add the 759 Patent Judicial economy also favors proceeding in this district because the defendants making and selling laptops with dual Wi-Fi/Wi-MAX capability are joined as parties. The 759 patent claims are directed to a wireless communication system and a method for determining a plurality of uplink modulation schemes and a plurality of downlink modulation schemes. ( 759 patent attached as Exhibit B). While Intel s dual Wi- MAX/Wi-Fi module is a critical component of the patented system, it is not the complete system. Rather, the defendant laptop makers and end users of those laptops are direct infringers of the 759 patent. Thus, under the circumstances and subject to discovery, Wi-LAN s claims against Intel are for inducement and/or contributory infringement of the 759 patent. To resolve the liability issue of Intel s indirect infringement of the 759 patent, Wi-LAN will need to develop evidence through discovery and at trial and present witness testimony from the laptop makers to establish the underlying direct infringement by the defendant laptop makers and end users. See Microsoft Corp., et al. v. Commonwealth Scientific & Indus. Research Org., et al., No. 6:06-CV-549, 2007 U.S. Dist. LEXIS 91550, at * 8-10 (E.D. Tex. Dec. 13, 2007) ( It is a cardinal rule that in the absence of direct infringement, there can be no indirect infringement. ) In addition, it is 14

15 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 15 of 17 the laptop defendants who market and sell directly to end users who likely possess much of the evidence concerning direct infringement by end users and the indirect infringement by Intel and the laptop makers, for which Intel and the laptop defendants are joint and severally liable. See Shockley v. Arcan, Inc., 248 F.3d 1349, 1364 (Fed. Cir. 2001). To resolve the issue of damages for Intel s indirect infringement, Wi-LAN will also need to present evidence from the laptop makers concerning the Georgia-Pacific factors necessary for establishing reasonable royalty damages. See Georgia-Pacific, 318 F. Supp. at Accordingly, for Wi-LAN to have a fair opportunity to present its case at trial, it must have access to the laptop defendants during discovery and at trial. Such access may be readily had in the instant proceeding as the laptop defendants are already parties to the suit. These parties are, however, absent from the California litigation. In view of such fact, and for this additional reason, judicial economy favors proceeding in this district where both Intel and the laptop defendants are parties. 7 IV. CONCLUSION For the foregoing reasons, Wi-LAN respectfully moves the Court (i) to grant this motion for leave to supplement its First Amended Complaint and (ii) to order defendants to respond to the supplemental complaint within 20 days of filing the supplemental complaint and to serve P.R. 3.3 and 3.4 invalidity contentions and disclosures within 50 days of such filing. 7 For the same reasons, judicial economy also favors proceeding in this district with defendants Broadcom, Atheros, and Marvell as to the 759 patent, rather than in the Northern District of California where they just filed a declaratory judgment action in response to Wi-LAN s request to meet and confer on this motion. 15

16 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 16 of 17 DATED: December 12, Respectfully submitted, MCKOOL SMITH, P.C. /s/ Sam Baxter Sam Baxter Texas State Bar No E. Houston Street, Suite 300 P.O. Box O Marshall, Texas Telephone: (903) Telecopier: (903) Robert A. Cote rcote@mckoolsmith.com 399 Park Ave., Suite 3200 New York, NY Telephone: (212) Telecopier: (212) ATTORNEYS FOR WI-LAN INC. 16

17 Case 2:07-cv TJW Document 191 Filed 12/12/2008 Page 17 of 17 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing pleading was electronically filed in compliance with Local Rule 5.1. As such, this notice was served on all counsel who are deemed to have consented to electronic service on December 12, /s/ Michael G. McManus Michael G. McManus CERTIFICATE OF CONFERENCE On December 5, 2008, Robert Cote of McKool Smith conferred with Adam Alper of Kirkland & Ellis, LLP, representing Intel Corporation, regarding the instant motion. Subsequently, on December 11, 2008, I conferred telephonically with the following counsel regarding the instant motion: Mr. Adam Alper (Intel), Mr. Dan Conrad (Dell), Mr. Mike DeVries (Broadcom), Mr. John Feldhaus (Toshiba), Mr. Manoj Ghandi (Lenovo), Mr. Kevin Johnson (Sony), Mr. Jonah Mitchell (Atheros), Mr. Mike Spillner (Acer and Gateway), Mr. Mark Scarsi (Apple), Mr. Rob Steinberg (Broadcom), and Mr. Roger Taylor (Marvell). All Defendants counsel indicated that they oppose the instant motion. /s/ Michael G. McManus Michael G. McManus 17