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Message: arm's original motion to intervene
Motion To Intervene
PRELIMINARY STATEMENT
ARM Ltd. and ARM, Inc. (collectively, “ARM”) respectfully submit this motion and
supporting brief in support of ARM’s Motion to Intervene pursuant to Fed. R. Civ. P. 24 as a
party-defendant in this action brought by Technology Properties Limited, Inc. (“TPL”). On
July 18, TPL served Infringement Contentions accusing multiple ARM processor cores (“ARM
Products”) contained within at least four Toshiba chips of infringing United States Patent No.
5,784,584 (“the ‘584 Patent”). On August 14, 2006, TPL filed a motion to supplement its
Infringement Contentions and accused ARM Products contained within at least 9 Toshiba,
NEC, and MEI chips of infringing the ‘584 patent.
By seeking a declaration that the underlying ARM Products infringe the ‘584 patent and
“a permanent injunction,” Complaint, Prayer for Relief § (d), TPL’s lawsuit requests relief that
would directly impair or impede ARM’s legal rights, capital investments, and business plans as
they relate to ARM’s ability to sell the accused products to its customers. For chips in which
TPL chose to identify ARM Products as the infringing portion, ARM is the party-in-interest.
Both Toshiba and NEC have already provided notice to ARM of their positions that TPL's
allegations in this case satisfy the requirements of ARM's indemnity obligations requiring
ARM's participation.
As explained below, ARM is entitled to intervene as a matter of right pursuant to Fed.
R. Civ. P. 24(a) because it “claims an interest relating to the property or transaction which is
the subject of the action” and is “so situated that the disposition of the action may as a practical
matter impair or impede [its] ability to protect that interest.” Id. In the alternative, this Court
should grant ARM permissive intervention pursuant to Fed. R. Civ. P. 24(b). Furthermore,
ARM’s involvement in this litigation is a course of conduct recommended by the Federal
Circuit under the present circumstances.
ARM’s involvement does not expand this case in any fashion. ARM is simply the real
party-in-interest for a subset of the products already accused by TPL. ARM intends to comply
with the Court’s docket and discovery orders and the agreements reached between the parties
regarding discovery so that no existing party will be prejudiced or delayed by ARM’s defense
of its rights. ARM has consulted with the existing parties. Defendants Toshiba and NEC will
not oppose ARM’s motion and Toshiba may request separately that the Court grant
intervention. Plaintiff TPL and Defendant MEI have been apprised of the motion but have not
yet taken a position on the motion.
BACKGROUND
ARM is the leading designer of processors used in cellular telephones, hand held
computers and numerous other electronic products requiring low power consumption and small
size. ARM processor designs are incorporated into the integrated circuits of products sold all
over the world -- including those of the existing defendants. Currently, there are over five
billion such ARM-equipped processors throughout the world.
ARM designs processors that can be embedded into and form a component of larger
integrated circuits and licenses these processor designs to other companies that then make and
sell larger integrated circuits. The processor design supplied by ARM is commonly referred to
as the ARM “core” or ARM “processor core.”
To help maintain its competitive position, ARM invests heavily in research and
development – over $100 million in the last year alone. Indeed, one of ARM’s primary
research and development sites is located in Austin, TX – a facility intimately involved in the
design and test of the ARM “cores” and which employs over 125 scientists, engineers, and
other skilled personnel.
Since ARM’s business depends upon the utilization of its processor cores by its
customers, ARM is acutely sensitive to accusations of patent infringement. ARM’s
licensees/customers are justifiably concerned with allegations that their future products might
infringe a patent. Thus, it is important for ARM to eliminate promptly any cloud of uncertainty
created by allegations of infringement.
On October 24, 2005, TPL filed the present lawsuit against the named defendants. On
June 1, 2006, Toshiba provided notice to ARM of Toshiba's position that TPL's allegations in
this case satisfy the requirements of ARM's indemnity obligations requiring ARM's
participation Exh. A. On August 22, 2006, NEC provided notice to ARM of NEC’s
position that TPL's allegations in this case satisfy the requirements of ARM's indemnity
obligations requiring ARM's participation. Exh. B.
On July 18, 2006, TPL served Infringement Contentions accusing at least four Toshiba
chips of infringement for which the identification of allegedly infringing technology was
various ARM Products. On August 14, TPL filed a motion to supplement its prior
Infringement Contentions (Dkt. # 96-98) and specifically accused ARM Products in at least 5
different Toshiba chips (Exhs. B-5, B-6, B-8, B-9 [3 chips]), 2 different MEI chips (Exhs. C-2,
C-3) and an NEC chip (Exh. A-21). TPL’s contentions are specifically targeted at ARM
Products. TPL identifies nothing unique to the accused chip outside of ARM’s Products for
these allegations of infringement of the ‘584 patent. For these accused chips, there can be no
doubt that ARM is the real party-in-interest against whom TPL seeks an infringement
determination.
ARGUMENT
I. ARM Should Be Allowed To Intervene As Of Right Pursuant To Fed. R. Civ. P.
24(a).
Because TPL’s claims for relief threaten both ARM’s specific products and its
substantial capital investment and business plans in the provision of processor cores to other
customers, and because ARM Products are specifically targeted by TPL’s Infringement
Contentions, ARM submits that it is entitled to intervene as a matter of right.1
The Fifth Circuit has adopted a four-part test to determine if intervention as of right is
warranted: “(1) the applicant must file a timely application; (2) the applicant must claim an
interest in the subject matter of the action; (3) the applicant must show that disposition of the
action may impair or impede the applicant’s ability to protect that interest; and (4) the
applicant’s interest must not be adequately represented by existing parties to the litigation.”
Heaton v. Monogram Credit Card Bank, 297 F.3d 416, 422 (5th Cir. 2002). ARM easily
satisfies these four requirements.
A. ARM’s Motion For Intervention Is Timely.
ARM’s motion to intervene is indisputably timely. To begin with, ARM moved for
intervention prior to the August 25, 2006 due date set by this Court for adding additional
parties. Additionally, ARM has acted within one month of becoming aware of TPL’s
Infringement Contentions identifying ARM “cores” as an infringing product and within 11 days
of TPL’s motion to amend its Infringement Contentions accusing additional ARM cores of
infringement. The 5th Circuit has held repeatedly that an intervention in this time frame is
1 See Fed. R. Civ. P. 24(a) (“Upon timely application anyone shall be permitted to
intervene in an action . . . when the applicant claims an interest relating to the property or
transaction which is the subject of the action and the applicant is so situated that the disposition
of the action may as a practical matter impair or impede the applicant’s ability to protect that
interest, unless the applicant’s interest is adequately represented by existing parties.”).
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
timely. See, e.g., Sierra Club v. Espy, 18 F.3d 1202, 1206 (5th Cir. 1994) (intervention timely
when made within two months of becoming aware that interests were affected); Ass’n of Prof’l
Flight Attendants v. Gibbs, 804 F.2d 318, 320-21 (5th Cir. 1986) (intervention timely where
movant waited five months to intervene); Stallworth v. Monsanto Co., 558 F.2d 257, 267 (5th
Cir. 1977) (“By filing [its] petition less than one month after learning of their interest in this
case, the appellants discharged their duty to act quickly.”).2
Further, no party will be prejudiced by permitting ARM to intervene. ARM has moved
to intervene prior to any significant proceedings in the case. The timing of ARM’s motion will
thus cause no prejudice whatsoever to TPL, which will have ample time to respond to ARM’s
pleadings.3 ARM has begun to collect documents for discovery.
By contrast, ARM is threatened with substantial prejudice if its motion is denied. If
TPL is successful in obtaining a declaration from this Court that the chips containing the
accused ARM Products are infringing, ARM would suffer significant impact to its business.
See infra Section I.C; see also Espy, 18 F.3d at 1207 (finding prejudice to would-be intervenor
2 The Fifth Circuit considers four factors in determining whether a motion to intervene is
timely: “(1) the length of time during which the would-be intervenor actually knew or
reasonably should have known of its interest in the case before it sought to intervene; (2) the
prejudice that existing parties to the litigation may suffer as a result of the would-be
intervenor’s failure to apply for intervention as soon as it knew or reasonably should have
known of its interest in the case; (3) the prejudice that the would-be intervenor may suffer if
intervention is denied; and (4) whether unusual circumstances militate for or against a
determination that the application is timely.” Heaton, 297 F.3d at 422-23. These factors are
merely “a framework” and “[a] motion to intervene may still be timely even if all the factors do
not weigh in favor of a finding of timeliness.” John Doe # 1 v. Glickman, 256 F.3d 371, 376
(5th Cir. 2001). In this case, every factor weighs in favor of granting ARM intervention as of
right.
3 See, e.g., John Doe # 1, 256 F.3d at 378 (finding no prejudice to existing parties where
movant “filed its motion to intervene approximately one month after it became aware of its
stake in the [lawsuit] and before trial and any final judgment”); Diaz v. S. Drilling Corp., 427
F.2d 1118, 1125-26 (5th Cir. 1970) (holding intervention as of right to be timely even though
intervenor had known of the suit for a year, when “[a]t the time of the intervention, there had
been no legally significant proceedings . . . other than completion of discovery and a pretrial”).
where its “economic interests . . . are at stake” and where it would otherwise be denied “the
legal rights associated with formal intervention, namely the briefing of issues, presentation of
evidence, and ability to appeal”). Accordingly, ARM’s motion is timely.
B. ARM Has An Interest In The Subject Matter Of This Proceeding.
ARM obviously has a direct and substantial interest in this litigation. TPL has accused
virtually ARM’s entire product line of infringing its patents. ARM’s ability to honor
commitments to its customers are directly threatened by TPL’s Infringement Contentions and
Complaint, which seek a declaration that ARM’s processor cores are infringing products, as
well as an injunction against Toshiba/NEC/MEI chips containing those cores (Complaint,
Prayer for Relief § (d)).
Toshiba's and NEC’s notices that it is their position that TPL's contentions satisfy the
prerequisites of ARM's indemnity obligations further establishes ARM's significant interest in
the present litigation. Moreover, TPL effectively concedes that ARM has a substantial interest
in this litigation by referencing ARM no fewer than eight times in its Infringement Contentions.
As the Fifth Circuit has observed, the “interest” prong is a means of “‘involving as many
apparently concerned persons as is compatible with efficiency and due process.’” Espy, 18
F.3d at 1207 (quoting Ceres Gulf v. Cooper, 957 F.2d 1199, 1203 n.10 (5th Cir. 1992)).
ARM’s present position is clearly aligned with those situations in which other districts have
found intervention to be appropriate:
The motion to intervene filed by [a proposed intervenor] will also be granted, because it
puts a willing manufacturer defendant in the forefront of litigation aimed squarely at its
product. [The proposed intervenor] correctly claims that it has met the test for
intervention as of right under Rule 24(a). Its motion is timely; discovery has not even
begun in the case and case management issues are only now being addressed. It has a
sufficient interest in the litigation; indeed, as a manufacturer of the product component
which is at the heart of these cases, it has a compelling interest. It can rightly claim that
its interests will be impaired or affected, as a practical matter, by the disposition of the
action, unless it is involved in the case directly and able to make its positions known.
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page Finally, because it is uniquely situated to understand and defend its own product, its
interests are not adequately represented by existing parties to the litigation.
Honeywell Int’l Inc. v. Audiovox Comms. Corp., 2005 U.S. Dist. LEXIS 22933, *12-13 (D.
Del. 2005); see also LG Elecs., Inc. v. Q-Lity Computer, Inc. v. Asustek Computer, Inc., 211
F.R.D. 360 (N.D. Cal. 2002)(permitting intervention where plaintiff’s “patent infringement
contentions” identified intervenor’s products sold to existing defendant as the an infringing
product).
[An intervenor] has more than a speculative economic interest, as the products that it
sells will be at the heart of the litigation …. As [the intervenor] sells the computers that
[the plaintiff] alleges infringe its patents, there can be no question that [the
intervenor]has a legally protectable interest in the products that [the plaintiff] seeks to
place at issue in this patent infringement action. An applicant demonstrates a
significantly protectable interest when the injunctive relief sought by the plaintiffs will
have direct, immediate and harmful effects upon its legally protectable interests.
Id. at 364-65.
C. The Court’s Decision In This Case May Impair Or Impede ARM’s Ability
To Protect Its Interests.
Applying the third prong of the intervention-as-of-right test, there is no question that a
judgment finding ARM Products as the basis for Toshiba’s (or other party’s) infringement
“may, as a practical matter, impair or impede” ARM’s interest if intervention is not allowed.
Sierra Club v. Glickman, 82 F.3d 106, 110 (5th Cir. 1996). While formal collateral estoppel
and res judicata of an adverse decision would not apply against ARM, TPL would undoubtedly
attempt to use such results both in future licensing negotiations and litigation against other
ARM licensees, thus severely impairing ARM’s ability to license its products without ARM
ever having its “fair day in court.” ARM therefore easily satisfies the third requirement for
intervention as of right. See also, LG Elecs., 211 F.R.D. at 364-65.
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
D. The Other Defendants Cannot Adequately Protect ARM’s Interests.
Finally, ARM easily satisfies the “‘minimal’” burden of showing “that [its] interest [is]
inadequately represented by the existing parties.” Espy, 18 F.3d at 1207 (quoting Trbovich v.
United Mine Workers, 404 U.S. 528, 538 n.10 (1972)). To satisfy the fourth requirement for
intervention as of right, ARM merely needs to show that “representation by the existing parties
may be inadequate.” Heaton, 297 F.3d at 425 (emphasis added); see also Trbovich, 404 U.S. at
538, n.10 ( a proposed intervenor need only establish that “representation of his interest ‘may
be’ inadequate; and the burden of making that showing should be treated as
minimal”)(emphasis added). As the Infringement Contentions makes clear, TPL’s interests are
squarely adverse to ARM’s interests. Furthermore, while the current defendants may be
capable of defending their own products, they are manifestly incapable of independently
representing ARM’s substantial economic interests in this litigation. For example, ARM’s
“cores” have both substantial similarities to, and substantial differences from, TPL-accused
“cores” made by the current defendants – a situation that clearly may lead to a potential conflict
of interest should ARM not be permitted the right to represent itself in this litigation.
In addition, certain infringement defenses may be available to ARM’s products that are
not available (or not available to the same degree) to other accused products. Indeed, ARM’s
cores are based on long-known technology that pre-dates the asserted patents. Selection of
noninfringement and invalidity theories could clearly differ between the various accused
products. Absent intervention, ARM would be at the mercy of the present defendants to
present theories favorable to ARM. Since those theories may, in fact, be unfavorable to the
present defendants, it is clear that “representation by the existing parties may be inadequate.”
Heaton, 297 F.3d at 425 (emphasis added).
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
When different defenses may be available, Federal Circuit precedent requires
permission of intervention. See Israel Bio-Engineering Project v. Amgen, Inc., 401 F.3d 1299,
1306 (Fed. Cir. 2005)(reversing the district court's denial of a Rule 24 motion to intervene
where the intervening party had a defense not available to other defendants).
Additionally, ARM’s financial interests are clearly different from the existing parties.
For example, TPL has accused several dozen defendant chips of infringement but only eight
chips are accused of infringement based upon the ARM Products. At some point in the
litigation, a defendant might be forced to make the business decision to settle. While such a
settlement decision might be rational when considering that defendant’s business, such
settlement might be completely irrational when considering ARM’s business interests. Given
this indisputable conflict, ARM has the right to be heard in its own name. See Heaton 297 F.3d
at 425; Glickman, 82 F.3d at 110; Espy, 18 F.3d at 1208; John Doe # 1, 256 F.3d at 381.
In addition, ARM brings to this litigation knowledge gleaned not only through
worldwide experience, but also by way of developing sophisticated cores for many, many
years. ARM’s entire business is processor core designs – not consumer products as is the case
with the presently-existing defendants. Thus, ARM has a unique perspective on the technical
nuances of both the ARM Products and the prior art. See, e.g., Nat’l Farm Lines, 564 F.2d at
383 (noting relevance “that petitioners in intervention possess experience and knowledge in a
complex area of business which the [existing party] does not have”). Moreover, ARM is
constantly developing and licensing new products to its customers, and TPL’s Infringement
Contentions are only one salvo in an apparent effort to accuse ARM’s “cores” in many
products of infringing. TPL has similarly accused many other non-parties both in the U.S. and
the rest of the world of infringement resulting from inclusion of ARM Products.
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
Because ARM will apparently be combating TPL’s infringement accusations with many
customers ARM has particular expertise in the factual and technical issues raised by the TPL’s
accusations, ARM brings important expertise and perspective to the issues presented. See, e.g.,
Sw. Ctr. For Biological Diversity v. Norton, 268 F.3d 810, 823 (9th Cir. 2001) (noting that
intervention as of right was appropriate so that the party could “express their own unique
private perspectives” in the litigation).
Because ARM satisfies all four prongs of the Fifth Circuit test, ARM is entitled to
intervention as of right under Fed. R. Civ. P. 24(a).
II. In The Alternative, ARM Satisfies All Of The Requirements For Permissive
Intervention Under Fed. R. Civ. P. 24(b).
In the alternative, if the Court does not find that ARM is entitled to intervention as of
right, ARM easily satisfies the more liberal standard for permissive intervention. Permissive
intervention is allowed when (1) the applicant’s motion to intervene is timely, (2) the
applicant’s claim or defense and the main action have questions of law or fact in common, and
(3) the intervention will not cause undue delay or prejudice the rights of individual parties.
Fed. R. Civ. P. 24(b).
Here, ARM’s request is timely, TPL’s Infringement Contentions depend primarily on
claim construction which would be common to all accused products, and intervention will
conserve judicial resources and allow for the efficient resolution of all related issues in a single
proceeding rather than forcing ARM to defend itself in an apparently never-ending set of TPL
attempts to litigation against ARM by proxy. In addition, intervention will neither cause undue
delay nor prejudice the rights of either TPL or the other defendants. Accordingly, while ARM
is plainly entitled to intervention as of right, ARM also satisfies the requirements for
permissive intervention under Fed. R. Civ. P. 24(b).
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
III. ARM’s Intervention Is Precisely The Action That The Federal Circuit
Recommends Under The Present Circumstances.
The Federal Circuit specifically identified participation in an existing lawsuit as one
method for a party to address allegations of infringement against its products and indemnitees.
[Defendant] also contends that it could be required to indemnify an entity that
potentially could be held liable in a different case for infringing the [asserted] patent. If
[Defendant’s] interests are affected by a different suit regarding the [asserted] patent,
then [Defendant] should join that action as a party, for example, pursuant to Federal
Rule of Civil Procedure 19(a)(2)(i).
Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1345 (Fed. Cir.
2001).
The difference between the Federal Circuit’s Rule 19 suggestion and ARM’s present
Rule 24 motion is merely one of labeling, not substance. In the 5th Circuit, such labels are
meaningless:
For starters, a court is not bound by how a party labels its motion. Obviously, “the relief
sought, that to be granted, or within the power of the court to grant, should be
determined by substance, not a label”. As noted, this principle is more than well
established. In this regard, courts have applied intervention or joinder standards to
motions to amend when plaintiffs have sought, by that means, to add claims of
additional parties.
Effjohn Intl. Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 560 (5th Cir. 2003)
(internal citations omitted). If anything, the substantive burden is less for a Rule 24 movant
than a Rule 19 movant.4 Additionally, the inclusion of ARM in this litigation does not
implicate any of the service, jurisdiction, or venue limitations of Rule 19.
As in Intellectual Prop. Dev. cited above, ARM could be required to indemnify a party
(Toshiba) to the present litigation. Thus, this Court should permit ARM’s attempt to comply
4 Rule 24 permits non-parties to protect their interests while Rule 19 exists largely to give those
parties actually named in a lawsuit a potential defense if they can meet their burden of
establishing that a party, which has not been sued, is indispensable, thereby making its joinder
necessary. See 7 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL
PRACTICE AND PROCEDURE § 1609 (3d ed. 2001).
with the course of action recommended by the Federal Circuit whether labeled as intervention
under Rule 24 or joinder under Rules 19 and/or 20.
CONCLUSION
For the foregoing reasons, ARM respectfully requests that the Court grant ARM’s
Motion to Intervene and (1) allow ARM to intervene as of right pursuant to Fed. R. Civ. P.
24(a); or (2) in the alternative, grant ARM permissive intervention pursuant to Fed. R. Civ. P.
24(b).
PRELIMINARY STATEMENT
ARM Ltd. and ARM, Inc. (collectively, “ARM”) respectfully submit this motion and
supporting brief in support of ARM’s Motion to Intervene pursuant to Fed. R. Civ. P. 24 as a
party-defendant in this action brought by Technology Properties Limited, Inc. (“TPL”). On
July 18, TPL served Infringement Contentions accusing multiple ARM processor cores (“ARM
Products”) contained within at least four Toshiba chips of infringing United States Patent No.
5,784,584 (“the ‘584 Patent”). On August 14, 2006, TPL filed a motion to supplement its
Infringement Contentions and accused ARM Products contained within at least 9 Toshiba,
NEC, and MEI chips of infringing the ‘584 patent.
By seeking a declaration that the underlying ARM Products infringe the ‘584 patent and
“a permanent injunction,” Complaint, Prayer for Relief § (d), TPL’s lawsuit requests relief that
would directly impair or impede ARM’s legal rights, capital investments, and business plans as
they relate to ARM’s ability to sell the accused products to its customers. For chips in which
TPL chose to identify ARM Products as the infringing portion, ARM is the party-in-interest.
Both Toshiba and NEC have already provided notice to ARM of their positions that TPL's
allegations in this case satisfy the requirements of ARM's indemnity obligations requiring
ARM's participation.
As explained below, ARM is entitled to intervene as a matter of right pursuant to Fed.
R. Civ. P. 24(a) because it “claims an interest relating to the property or transaction which is
the subject of the action” and is “so situated that the disposition of the action may as a practical
matter impair or impede [its] ability to protect that interest.” Id. In the alternative, this Court
should grant ARM permissive intervention pursuant to Fed. R. Civ. P. 24(b). Furthermore,
ARM’s involvement in this litigation is a course of conduct recommended by the Federal
Circuit under the present circumstances.
ARM’s involvement does not expand this case in any fashion. ARM is simply the real
party-in-interest for a subset of the products already accused by TPL. ARM intends to comply
with the Court’s docket and discovery orders and the agreements reached between the parties
regarding discovery so that no existing party will be prejudiced or delayed by ARM’s defense
of its rights. ARM has consulted with the existing parties. Defendants Toshiba and NEC will
not oppose ARM’s motion and Toshiba may request separately that the Court grant
intervention. Plaintiff TPL and Defendant MEI have been apprised of the motion but have not
yet taken a position on the motion.
BACKGROUND
ARM is the leading designer of processors used in cellular telephones, hand held
computers and numerous other electronic products requiring low power consumption and small
size. ARM processor designs are incorporated into the integrated circuits of products sold all
over the world -- including those of the existing defendants. Currently, there are over five
billion such ARM-equipped processors throughout the world.
ARM designs processors that can be embedded into and form a component of larger
integrated circuits and licenses these processor designs to other companies that then make and
sell larger integrated circuits. The processor design supplied by ARM is commonly referred to
as the ARM “core” or ARM “processor core.”
To help maintain its competitive position, ARM invests heavily in research and
development – over $100 million in the last year alone. Indeed, one of ARM’s primary
research and development sites is located in Austin, TX – a facility intimately involved in the
design and test of the ARM “cores” and which employs over 125 scientists, engineers, and
other skilled personnel.
Since ARM’s business depends upon the utilization of its processor cores by its
customers, ARM is acutely sensitive to accusations of patent infringement. ARM’s
licensees/customers are justifiably concerned with allegations that their future products might
infringe a patent. Thus, it is important for ARM to eliminate promptly any cloud of uncertainty
created by allegations of infringement.
On October 24, 2005, TPL filed the present lawsuit against the named defendants. On
June 1, 2006, Toshiba provided notice to ARM of Toshiba's position that TPL's allegations in
this case satisfy the requirements of ARM's indemnity obligations requiring ARM's
participation Exh. A. On August 22, 2006, NEC provided notice to ARM of NEC’s
position that TPL's allegations in this case satisfy the requirements of ARM's indemnity
obligations requiring ARM's participation. Exh. B.
On July 18, 2006, TPL served Infringement Contentions accusing at least four Toshiba
chips of infringement for which the identification of allegedly infringing technology was
various ARM Products. On August 14, TPL filed a motion to supplement its prior
Infringement Contentions (Dkt. # 96-98) and specifically accused ARM Products in at least 5
different Toshiba chips (Exhs. B-5, B-6, B-8, B-9 [3 chips]), 2 different MEI chips (Exhs. C-2,
C-3) and an NEC chip (Exh. A-21). TPL’s contentions are specifically targeted at ARM
Products. TPL identifies nothing unique to the accused chip outside of ARM’s Products for
these allegations of infringement of the ‘584 patent. For these accused chips, there can be no
doubt that ARM is the real party-in-interest against whom TPL seeks an infringement
determination.
ARGUMENT
I. ARM Should Be Allowed To Intervene As Of Right Pursuant To Fed. R. Civ. P.
24(a).
Because TPL’s claims for relief threaten both ARM’s specific products and its
substantial capital investment and business plans in the provision of processor cores to other
customers, and because ARM Products are specifically targeted by TPL’s Infringement
Contentions, ARM submits that it is entitled to intervene as a matter of right.1
The Fifth Circuit has adopted a four-part test to determine if intervention as of right is
warranted: “(1) the applicant must file a timely application; (2) the applicant must claim an
interest in the subject matter of the action; (3) the applicant must show that disposition of the
action may impair or impede the applicant’s ability to protect that interest; and (4) the
applicant’s interest must not be adequately represented by existing parties to the litigation.”
Heaton v. Monogram Credit Card Bank, 297 F.3d 416, 422 (5th Cir. 2002). ARM easily
satisfies these four requirements.
A. ARM’s Motion For Intervention Is Timely.
ARM’s motion to intervene is indisputably timely. To begin with, ARM moved for
intervention prior to the August 25, 2006 due date set by this Court for adding additional
parties. Additionally, ARM has acted within one month of becoming aware of TPL’s
Infringement Contentions identifying ARM “cores” as an infringing product and within 11 days
of TPL’s motion to amend its Infringement Contentions accusing additional ARM cores of
infringement. The 5th Circuit has held repeatedly that an intervention in this time frame is
1 See Fed. R. Civ. P. 24(a) (“Upon timely application anyone shall be permitted to
intervene in an action . . . when the applicant claims an interest relating to the property or
transaction which is the subject of the action and the applicant is so situated that the disposition
of the action may as a practical matter impair or impede the applicant’s ability to protect that
interest, unless the applicant’s interest is adequately represented by existing parties.”).
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
timely. See, e.g., Sierra Club v. Espy, 18 F.3d 1202, 1206 (5th Cir. 1994) (intervention timely
when made within two months of becoming aware that interests were affected); Ass’n of Prof’l
Flight Attendants v. Gibbs, 804 F.2d 318, 320-21 (5th Cir. 1986) (intervention timely where
movant waited five months to intervene); Stallworth v. Monsanto Co., 558 F.2d 257, 267 (5th
Cir. 1977) (“By filing [its] petition less than one month after learning of their interest in this
case, the appellants discharged their duty to act quickly.”).2
Further, no party will be prejudiced by permitting ARM to intervene. ARM has moved
to intervene prior to any significant proceedings in the case. The timing of ARM’s motion will
thus cause no prejudice whatsoever to TPL, which will have ample time to respond to ARM’s
pleadings.3 ARM has begun to collect documents for discovery.
By contrast, ARM is threatened with substantial prejudice if its motion is denied. If
TPL is successful in obtaining a declaration from this Court that the chips containing the
accused ARM Products are infringing, ARM would suffer significant impact to its business.
See infra Section I.C; see also Espy, 18 F.3d at 1207 (finding prejudice to would-be intervenor
2 The Fifth Circuit considers four factors in determining whether a motion to intervene is
timely: “(1) the length of time during which the would-be intervenor actually knew or
reasonably should have known of its interest in the case before it sought to intervene; (2) the
prejudice that existing parties to the litigation may suffer as a result of the would-be
intervenor’s failure to apply for intervention as soon as it knew or reasonably should have
known of its interest in the case; (3) the prejudice that the would-be intervenor may suffer if
intervention is denied; and (4) whether unusual circumstances militate for or against a
determination that the application is timely.” Heaton, 297 F.3d at 422-23. These factors are
merely “a framework” and “[a] motion to intervene may still be timely even if all the factors do
not weigh in favor of a finding of timeliness.” John Doe # 1 v. Glickman, 256 F.3d 371, 376
(5th Cir. 2001). In this case, every factor weighs in favor of granting ARM intervention as of
right.
3 See, e.g., John Doe # 1, 256 F.3d at 378 (finding no prejudice to existing parties where
movant “filed its motion to intervene approximately one month after it became aware of its
stake in the [lawsuit] and before trial and any final judgment”); Diaz v. S. Drilling Corp., 427
F.2d 1118, 1125-26 (5th Cir. 1970) (holding intervention as of right to be timely even though
intervenor had known of the suit for a year, when “[a]t the time of the intervention, there had
been no legally significant proceedings . . . other than completion of discovery and a pretrial”).
where its “economic interests . . . are at stake” and where it would otherwise be denied “the
legal rights associated with formal intervention, namely the briefing of issues, presentation of
evidence, and ability to appeal”). Accordingly, ARM’s motion is timely.
B. ARM Has An Interest In The Subject Matter Of This Proceeding.
ARM obviously has a direct and substantial interest in this litigation. TPL has accused
virtually ARM’s entire product line of infringing its patents. ARM’s ability to honor
commitments to its customers are directly threatened by TPL’s Infringement Contentions and
Complaint, which seek a declaration that ARM’s processor cores are infringing products, as
well as an injunction against Toshiba/NEC/MEI chips containing those cores (Complaint,
Prayer for Relief § (d)).
Toshiba's and NEC’s notices that it is their position that TPL's contentions satisfy the
prerequisites of ARM's indemnity obligations further establishes ARM's significant interest in
the present litigation. Moreover, TPL effectively concedes that ARM has a substantial interest
in this litigation by referencing ARM no fewer than eight times in its Infringement Contentions.
As the Fifth Circuit has observed, the “interest” prong is a means of “‘involving as many
apparently concerned persons as is compatible with efficiency and due process.’” Espy, 18
F.3d at 1207 (quoting Ceres Gulf v. Cooper, 957 F.2d 1199, 1203 n.10 (5th Cir. 1992)).
ARM’s present position is clearly aligned with those situations in which other districts have
found intervention to be appropriate:
The motion to intervene filed by [a proposed intervenor] will also be granted, because it
puts a willing manufacturer defendant in the forefront of litigation aimed squarely at its
product. [The proposed intervenor] correctly claims that it has met the test for
intervention as of right under Rule 24(a). Its motion is timely; discovery has not even
begun in the case and case management issues are only now being addressed. It has a
sufficient interest in the litigation; indeed, as a manufacturer of the product component
which is at the heart of these cases, it has a compelling interest. It can rightly claim that
its interests will be impaired or affected, as a practical matter, by the disposition of the
action, unless it is involved in the case directly and able to make its positions known.
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page Finally, because it is uniquely situated to understand and defend its own product, its
interests are not adequately represented by existing parties to the litigation.
Honeywell Int’l Inc. v. Audiovox Comms. Corp., 2005 U.S. Dist. LEXIS 22933, *12-13 (D.
Del. 2005); see also LG Elecs., Inc. v. Q-Lity Computer, Inc. v. Asustek Computer, Inc., 211
F.R.D. 360 (N.D. Cal. 2002)(permitting intervention where plaintiff’s “patent infringement
contentions” identified intervenor’s products sold to existing defendant as the an infringing
product).
[An intervenor] has more than a speculative economic interest, as the products that it
sells will be at the heart of the litigation …. As [the intervenor] sells the computers that
[the plaintiff] alleges infringe its patents, there can be no question that [the
intervenor]has a legally protectable interest in the products that [the plaintiff] seeks to
place at issue in this patent infringement action. An applicant demonstrates a
significantly protectable interest when the injunctive relief sought by the plaintiffs will
have direct, immediate and harmful effects upon its legally protectable interests.
Id. at 364-65.
C. The Court’s Decision In This Case May Impair Or Impede ARM’s Ability
To Protect Its Interests.
Applying the third prong of the intervention-as-of-right test, there is no question that a
judgment finding ARM Products as the basis for Toshiba’s (or other party’s) infringement
“may, as a practical matter, impair or impede” ARM’s interest if intervention is not allowed.
Sierra Club v. Glickman, 82 F.3d 106, 110 (5th Cir. 1996). While formal collateral estoppel
and res judicata of an adverse decision would not apply against ARM, TPL would undoubtedly
attempt to use such results both in future licensing negotiations and litigation against other
ARM licensees, thus severely impairing ARM’s ability to license its products without ARM
ever having its “fair day in court.” ARM therefore easily satisfies the third requirement for
intervention as of right. See also, LG Elecs., 211 F.R.D. at 364-65.
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
D. The Other Defendants Cannot Adequately Protect ARM’s Interests.
Finally, ARM easily satisfies the “‘minimal’” burden of showing “that [its] interest [is]
inadequately represented by the existing parties.” Espy, 18 F.3d at 1207 (quoting Trbovich v.
United Mine Workers, 404 U.S. 528, 538 n.10 (1972)). To satisfy the fourth requirement for
intervention as of right, ARM merely needs to show that “representation by the existing parties
may be inadequate.” Heaton, 297 F.3d at 425 (emphasis added); see also Trbovich, 404 U.S. at
538, n.10 ( a proposed intervenor need only establish that “representation of his interest ‘may
be’ inadequate; and the burden of making that showing should be treated as
minimal”)(emphasis added). As the Infringement Contentions makes clear, TPL’s interests are
squarely adverse to ARM’s interests. Furthermore, while the current defendants may be
capable of defending their own products, they are manifestly incapable of independently
representing ARM’s substantial economic interests in this litigation. For example, ARM’s
“cores” have both substantial similarities to, and substantial differences from, TPL-accused
“cores” made by the current defendants – a situation that clearly may lead to a potential conflict
of interest should ARM not be permitted the right to represent itself in this litigation.
In addition, certain infringement defenses may be available to ARM’s products that are
not available (or not available to the same degree) to other accused products. Indeed, ARM’s
cores are based on long-known technology that pre-dates the asserted patents. Selection of
noninfringement and invalidity theories could clearly differ between the various accused
products. Absent intervention, ARM would be at the mercy of the present defendants to
present theories favorable to ARM. Since those theories may, in fact, be unfavorable to the
present defendants, it is clear that “representation by the existing parties may be inadequate.”
Heaton, 297 F.3d at 425 (emphasis added).
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
When different defenses may be available, Federal Circuit precedent requires
permission of intervention. See Israel Bio-Engineering Project v. Amgen, Inc., 401 F.3d 1299,
1306 (Fed. Cir. 2005)(reversing the district court's denial of a Rule 24 motion to intervene
where the intervening party had a defense not available to other defendants).
Additionally, ARM’s financial interests are clearly different from the existing parties.
For example, TPL has accused several dozen defendant chips of infringement but only eight
chips are accused of infringement based upon the ARM Products. At some point in the
litigation, a defendant might be forced to make the business decision to settle. While such a
settlement decision might be rational when considering that defendant’s business, such
settlement might be completely irrational when considering ARM’s business interests. Given
this indisputable conflict, ARM has the right to be heard in its own name. See Heaton 297 F.3d
at 425; Glickman, 82 F.3d at 110; Espy, 18 F.3d at 1208; John Doe # 1, 256 F.3d at 381.
In addition, ARM brings to this litigation knowledge gleaned not only through
worldwide experience, but also by way of developing sophisticated cores for many, many
years. ARM’s entire business is processor core designs – not consumer products as is the case
with the presently-existing defendants. Thus, ARM has a unique perspective on the technical
nuances of both the ARM Products and the prior art. See, e.g., Nat’l Farm Lines, 564 F.2d at
383 (noting relevance “that petitioners in intervention possess experience and knowledge in a
complex area of business which the [existing party] does not have”). Moreover, ARM is
constantly developing and licensing new products to its customers, and TPL’s Infringement
Contentions are only one salvo in an apparent effort to accuse ARM’s “cores” in many
products of infringing. TPL has similarly accused many other non-parties both in the U.S. and
the rest of the world of infringement resulting from inclusion of ARM Products.
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
Because ARM will apparently be combating TPL’s infringement accusations with many
customers ARM has particular expertise in the factual and technical issues raised by the TPL’s
accusations, ARM brings important expertise and perspective to the issues presented. See, e.g.,
Sw. Ctr. For Biological Diversity v. Norton, 268 F.3d 810, 823 (9th Cir. 2001) (noting that
intervention as of right was appropriate so that the party could “express their own unique
private perspectives” in the litigation).
Because ARM satisfies all four prongs of the Fifth Circuit test, ARM is entitled to
intervention as of right under Fed. R. Civ. P. 24(a).
II. In The Alternative, ARM Satisfies All Of The Requirements For Permissive
Intervention Under Fed. R. Civ. P. 24(b).
In the alternative, if the Court does not find that ARM is entitled to intervention as of
right, ARM easily satisfies the more liberal standard for permissive intervention. Permissive
intervention is allowed when (1) the applicant’s motion to intervene is timely, (2) the
applicant’s claim or defense and the main action have questions of law or fact in common, and
(3) the intervention will not cause undue delay or prejudice the rights of individual parties.
Fed. R. Civ. P. 24(b).
Here, ARM’s request is timely, TPL’s Infringement Contentions depend primarily on
claim construction which would be common to all accused products, and intervention will
conserve judicial resources and allow for the efficient resolution of all related issues in a single
proceeding rather than forcing ARM to defend itself in an apparently never-ending set of TPL
attempts to litigation against ARM by proxy. In addition, intervention will neither cause undue
delay nor prejudice the rights of either TPL or the other defendants. Accordingly, while ARM
is plainly entitled to intervention as of right, ARM also satisfies the requirements for
permissive intervention under Fed. R. Civ. P. 24(b).
Case 2:05-cv-00494-TJW Document 100 Filed 08/25/2006 Page
III. ARM’s Intervention Is Precisely The Action That The Federal Circuit
Recommends Under The Present Circumstances.
The Federal Circuit specifically identified participation in an existing lawsuit as one
method for a party to address allegations of infringement against its products and indemnitees.
[Defendant] also contends that it could be required to indemnify an entity that
potentially could be held liable in a different case for infringing the [asserted] patent. If
[Defendant’s] interests are affected by a different suit regarding the [asserted] patent,
then [Defendant] should join that action as a party, for example, pursuant to Federal
Rule of Civil Procedure 19(a)(2)(i).
Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1345 (Fed. Cir.
2001).
The difference between the Federal Circuit’s Rule 19 suggestion and ARM’s present
Rule 24 motion is merely one of labeling, not substance. In the 5th Circuit, such labels are
meaningless:
For starters, a court is not bound by how a party labels its motion. Obviously, “the relief
sought, that to be granted, or within the power of the court to grant, should be
determined by substance, not a label”. As noted, this principle is more than well
established. In this regard, courts have applied intervention or joinder standards to
motions to amend when plaintiffs have sought, by that means, to add claims of
additional parties.
Effjohn Intl. Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 560 (5th Cir. 2003)
(internal citations omitted). If anything, the substantive burden is less for a Rule 24 movant
than a Rule 19 movant.4 Additionally, the inclusion of ARM in this litigation does not
implicate any of the service, jurisdiction, or venue limitations of Rule 19.
As in Intellectual Prop. Dev. cited above, ARM could be required to indemnify a party
(Toshiba) to the present litigation. Thus, this Court should permit ARM’s attempt to comply
4 Rule 24 permits non-parties to protect their interests while Rule 19 exists largely to give those
parties actually named in a lawsuit a potential defense if they can meet their burden of
establishing that a party, which has not been sued, is indispensable, thereby making its joinder
necessary. See 7 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL
PRACTICE AND PROCEDURE § 1609 (3d ed. 2001).
with the course of action recommended by the Federal Circuit whether labeled as intervention
under Rule 24 or joinder under Rules 19 and/or 20.
CONCLUSION
For the foregoing reasons, ARM respectfully requests that the Court grant ARM’s
Motion to Intervene and (1) allow ARM to intervene as of right pursuant to Fed. R. Civ. P.
24(a); or (2) in the alternative, grant ARM permissive intervention pursuant to Fed. R. Civ. P.
24(b).
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