SEVEN Networks, LLC v. Google LLC

RESPONSE to Motion re MOTION to Stay Proceedings Pending Resolution of Motions to Dismiss and Transfer

E.D. Tex.December 13, 2017

United States District Court for the Eastern District of Texas Marshall Division SEVEN Networks, LLC, Plaintiff, v. Google Inc., Defendant. Civil Action No. 2:17-cv-442 PATENT CASE Jury Trial Demanded Response to Google LLC’s Motion to Stay (ECF No. 99) Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 1 of 13 PageID #: 2424 – ii – Table of Contents Table of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii Legal Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 A. None of the cases Google cites supports a stay. . . . . . . . . . . . . . . . . . . . . . . 2 B. Google has not met its burden to show that a stay is necessary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Google’s proposed stay would prejudice SEVEN. . . . . . . . . . . . . . . . . . . 4 1. Google will not be prejudiced if its motion is denied. . . . . . . . . . . . . . . . . . 5 2. A stay would undermine judicial efficiency. . . . . . . . . . . . . . . . . . . . . . 6 3. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Certificate of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 2 of 13 PageID #: 2425 – iii – TABLE OF AUTHORITIES Cases Ambato Media, LLC v. Clarion Co., No. 2:09–cv–242, 2012 WL 194172 (E.D. Tex. Jan. 23, 2012) . . . . . . . . . . . . . . . . . 4 Astec Am., Inc. v. Power-One, Inc., No. 6:07-cv-464, 2008 WL 1734833 (E.D. Tex. Apr. 11, 2008) . . . . . . . . . . . . . . . . 5 Coastal (Bermuda) Ltd. v. E.W. Saybolt & Co., Inc., 761 F.2d 198 (5th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 EchoStar Techs. Corp. v. TiVo, Inc., No. 5:05-cv-81, 2006 WL 2501494 (E.D. Tex. July 14, 2006) . . . . . . . . . . . . . . . . . 2 Esquivel v. BP Co. N. Am., Inc., No. B-10-227, 2010 WL 4255911 (S.D. Tex. Oct. 14, 2010) . . . . . . . . . . . . . . . . . . 3 GATX Aircraft Corp. v. M/V Courtney Leigh, 768 F.2d 711 (5th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 In re EMC Corp., 501 F. App’x 973 (Fed. Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 In re Flopam Inc., No. 2018-107, 2017 WL 5952756 (Fed. Cir. Nov. 27, 2017) . . . . . . . . . . . . . . . . . . 3 In re Fusion-IO, Inc., 489 F. App’x 465 (Fed. Cir. 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 In re Google Inc., No. 2015-138, 2015 WL 5294800 (Fed. Cir. July 16, 2015) . . . . . . . . . . . . . . . . . . 3 In re Horseshoe Entm’t, 337 F.3d 429 (5th Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3 In re Nintendo Co., 544 F. App’x 934 (Fed. Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Konami Digital Entm’t Co. v. Harmonix Music Sys., Inc., No. 6:08-cv-286, 2009 WL 781134 (E.D. Tex. Mar. 23, 2009) . . . . . . . . . . . . . . . . 5 Landis v. N. Am. Co., 299 U.S. 248 (1936). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 4, 6 Lockyer v. Mirant, 398 F.3d 1098 (9th Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Meinhart v. Halliburton Energy Servs., Inc., No. H–011–0073, 2011 WL 1463600 (S.D. Tex. Apr. 4, 2011) . . . . . . . . . . . . . . . . . 2 Nguyen v. BP Expl. & Prod., Inc., No. H-10-2484, 2010 WL 3169316 (S.D. Tex. Aug. 9, 2010) . . . . . . . . . . . . . . . . . 3 Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 3 of 13 PageID #: 2426 – iv – Nike, Inc. v. Adidas Am., Inc., 479 F. Supp. 2d 664 (E.D. Tex. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Norman IP Holdings, LLC v. Lexmark Int’l, Inc., No. 6:11-cv-495, 2012 WL 3307942 (E.D. Tex. Aug. 10, 2012) . . . . . . . . . . . . . . . . 6 Ohio Willow Wood Co. v. Thermo-Ply, Inc., No. 9:07-cv-274, 2008 WL 8793604 (E.D. Tex. Mar. 26, 2008). . . . . . . . . . . . . . . . 2 RPost Holdings, Inc. v. Readnotify.com Pty Ltd., No. 2:11-cv-16, 2012 WL 2524237 (E.D. Tex. June 29, 2012) . . . . . . . . . . . . . . . . . 6 Secure Axcess, LLC v. Nintendo of Am., No. 2:23-cv-32 (E.D. Tex.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Solid State Storage Solutions, Inc. v. STEC, Inc., No. 2:11-cv-391 (E.D. Tex.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Soverain Software LLC v. Amazon, Inc., 356 F. Supp. 2d 660 (E.D. Tex. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 4 Wedgeworth v. Fibreboard Corp., 706 F.2d 541 (5th Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Rules Local Rule cv–26(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 4 of 13 PageID #: 2427 – 1 – Google filed motions to dismiss for lack of venue (ECF No. 49) and to transfer venue to the Northern District of California (ECF No. 61) on September 12 and October 2, respectively. After it filed those motions, Google joined SEVEN and Samsung in submitting a Joint Motion for Entry of Docket Control Order (ECF No. 71), which the Court entered on October 12 (ECF No. 81). Remarkably, just weeks later, Google now asks the Court stay the deadlines the Court set in accordance with the parties’ joint motion. Pushing back those previously uncontested deadlines, however, would not only force the Court and the parties to revise the docket, it would also likely affect the Court’s trial setting, thus prejudicing SEVEN’s right to enforce its patent rights and frustrating the Court’s effort to manage this case efficiently. For these reasons, as well as others set forth below, Google has not met its burden to justify staying this case. In fact, Google has not offered a reasonable basis for granting a stay. LEGAL STANDARD In the Fifth Circuit, “the moving party bears a heavy burden to show why a stay should be granted absent statutory authorization.” Coastal (Bermuda) Ltd. v. E.W. Saybolt & Co., Inc., 761 F.2d 198, 203 n.6 (5th Cir. 1985) (citation omitted, emphasis added). “Where a discretionary stay is proposed, something close to genuine necessity should be the mother of its invocation.” Id. (emphasis added). As the U.S. Supreme Court articulated in its foundational opinion governing stays, “the suppliant for a stay must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay for which he prays will work damage to some one else.” Landis v. N. Am. Co., 299 U.S. 248, 255 (1936) (emphasis added); see also GATX Aircraft Corp. v. M/V Courtney Leigh, 768 F.2d 711, 716 (5th Cir. 1985) (citing Landis in affirming Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 5 of 13 PageID #: 2428 – 2 – district court’s denial of stay); Ohio Willow Wood Co. v. Thermo-Ply, Inc., No. 9:07–cv–274, 2008 WL 8793604, at *1 (E.D. Tex. Mar. 26, 2008) (quoting Landis in denying motion to stay). When determining whether to stay an action, courts “must weigh competing interests and maintain an even balance.” Landis, 299 U.S. at 254–55. Specifically, courts consider three factors: (i) the potential undue prejudice or clear tactical disadvantage to the non-movant that the stay would cause; (ii) the hardship to the movant if the stay is denied; and (iii) judicial efficiency, including whether a stay will simplify the issues in question and trial of the case, whether discovery is complete, and whether a trial date has been set. See, e.g., Soverain Software LLC v. Amazon, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005). “Essentially, courts determine whether the benefits of a stay outweigh the inherent costs based on these factors.” EchoStar Techs. Corp. v. TiVo, Inc., No. 5:05-cv-81, 2006 WL 2501494, at *1 (E.D. Tex. July 14, 2006). ARGUMENT A. None of the cases Google cites supports a stay. None of the decisions Google relies on suggests, much less holds, that cases must be stayed whenever a motion for transfer is filed. Rather, they stand for the unsurprising proposition that transfer motions should be resolved promptly. The leading case here is In re Horseshoe Entertainment, 337 F.3d 429 (5th Cir. 2003). In Horseshoe Entertainment, the district court waited thirteen months to rule on the defendant’s transfer motion. See id. at 433. In vacating the district court’s denial of the motion, the Fifth Circuit held: “[I]n our view disposition of that motion should have taken a top priority in the handling of this case.” Id. The Federal Circuit decisions Google relies on all quote this language. In In re Google, for example, the Federal Circuit cited it where the district court had “pressed forward with the case” for approximately eight months without ruling on Google’s motion to transfer. In re Google Inc., No. 2015-138, 2015 WL 5294800, Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 6 of 13 PageID #: 2429 – 3 – at *1 (Fed. Cir. July 16, 2015). In In re Fusion-IO, Inc., 489 F. App’x 465 (Fed. Cir. 2012), the Federal Circuit quoted it again, where the transfer motion had been pending for nearly a year with no ruling.1 See Mot. to Stay at 1, Solid State Storage Solutions, Inc. v. STEC, Inc., No. 2:11-cv- 391 (E.D. Tex. Dec. 26, 2012), ECF No. 284. In contrast, the briefing on Google’s venue motions in this case was completed less than one month ago.2 See SEVEN’s Surreply to Google’s Motion to Transfer Venue, ECF No. 96 (filed Nov. 15, 2017). Because it must balance numerous factors under the standards of both sections 1406 and 1404(a) and review the evidence submitted by the parties, the Court cannot be expected to rule on Google’s motions instantaneously, but must be permitted adequate time to exercise its discretion. And although Google’s venue motions should be given “top priority,” it does not necessarily follow that the Court must enter a stay until it rules on those motions. See Horseshoe Entm’t, 337 F.3d at 433. 1 See also In re EMC Corp., 501 F. App’x 973, 975 (Fed. Cir. 2013) (quoting same); In re Nintendo Co., 544 F. App’x 934, 941 (Fed. Cir. 2013) (quoting same); In re Flopam Inc., No. 2018- 107, 2017 WL 5952756, at *1 (Fed. Cir. Nov. 27, 2017) (quoting same). Notably, the Federal Circuit did not order the district courts to enter a stay in any of these three cases. 2 The district court cases Google cites are also easily distinguished. See Esquivel v. BP Co. N. Am., Inc., No. B-10-227, 2010 WL 4255911, at *3 (S.D. Tex. Oct. 14, 2010) (granting stay of case arising out of the Deep Water Horizon disaster pending resolution of MDL request); Nguyen v. BP Expl. & Prod., Inc., No. H-10-2484, 2010 WL 3169316, at *1 (S.D. Tex. Aug. 9, 2010) (same); Order, Solid State (E.D. Tex. Jan. 3, 2013), ECF No. 292 (issuing a stay in accordance with Federal Circuit order, after the transfer issue had been pending for nearly a year (see Mot. to Stay at 1, Solid State (E.D. Tex. Dec. 26, 2012), ECF No. 284)); Order, Secure Axcess, LLC v. Nintendo of Am., No. 2:23-cv-32 (E.D. Tex. Feb. 10, 2014), ECF No. 133 (issuing stay with respect to retail defendants who were only peripherally involved in the action (see Mot. to Stay at 2, Secure Axcess (E.D. Tex. Nov. 27, 2013), ECF No. 120)). Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 7 of 13 PageID #: 2430 – 4 – B. Google has not met its burden to show that a stay is necessary. Google’s proposed stay would prejudice SEVEN. 1. A stay must be denied if “there is even a fair possibility that the stay” will damage the non- movant. Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983) (quoting Landis, 299 U.S. at 255). There is much more than a “fair possibility” that SEVEN would be damaged by a stay; damage to SEVEN is a virtual certainty. Google asserts that SEVEN would not be damaged because a delay “will not alter any potential relief to which SEVEN might be entitled if it is successful.” Mot. at 4. Google is mistaken. First, a stay “would unduly prejudice [SEVEN]’s ability to protect its property rights in the patents at issue.” See Soverain, 356 F. Supp. 2d at 662; see also Ambato Media, LLC v. Clarion Co., No. 2:09-cv-242, 2012 WL 194172, at *1 (E.D. Tex. Jan. 23, 2012) (“[A] stay would unduly prejudice the patentee, who has an interest in the timely enforcement of its patent rights.”). Further, SEVEN, Samsung, and Google submitted a Joint Motion for Entry of Docket Control Order (ECF No. 71) that the Court entered on October 12 (ECF No. 81). In other words, as recently as two months ago—after Google filed its motion to dismiss and after Google filed its motion to transfer—Google did not oppose the deadlines in the Docket Control Order. And under that unopposed Docket Control Order, the parties have already exchanged their infringement and invalidity contentions, as well as proposed claim terms under P.R. 4–1. They have also exchanged initial disclosures and engaged in substantive discovery, including serving and answering interrogatories and requests for production. Despite all this, Google now wants a do-over and asks the Court to stay those deadlines. Doing so, however, would prejudice not just SEVEN, but also the Court. A stay would push back the claim-construction deadlines, including the date for the Markman hearing, and create a Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 8 of 13 PageID #: 2431 – 5 – domino effect that would likely impact the Court’s trial setting. See Konami Digital Entm’t Co. v. Harmonix Music Sys., Inc., No. 6:08-cv-286, 2009 WL 781134, at *7 (E.D. Tex. Mar. 23, 2009) (“The parties have served infringement contentions and exchanged documentary evidence. Should this case now be transferred, both parties would suffer the delay and prejudice of losing both the Markman and trial dates currently set.”). This factor weighs against a stay. Google will not be prejudiced if its motion is denied. 2. Google claims that it “faces the risk of duplicative merits litigation in this Court and the transferee court if a resolution of its motion to dismiss or transfer is not decided before substantive proceedings and rulings in this case.” Mot. at 4–5. Google is mistaken. Denying a stay would not require Google to duplicate discovery or any other pretrial matters, as discovery and Markman will be completed regardless of the venue. Google does not explain why litigating in this Court would be more prejudicial than litigating in the Northern District of California. Indeed, the Northern District of California has local patent rules that are essentially the same as the patent rules here.3 There is simply no justification for Google’s request to put off disclosures that are required in both districts, as there is no prejudice in requiring Google to continue with standard patent litigation practice, including discovery. 3 See, e.g., Astec Am., Inc. v. Power-One, Inc., No. 6:07-cv-464, 2008 WL 1734833, at *7 (E.D. Tex. Apr. 11, 2008) (recognizing that the local patent rules in the Northern District of California “are similar to those in this district”); Nike, Inc. v. Adidas Am., Inc., 479 F. Supp. 2d 664, 667 n.2 (E.D. Tex. 2007) (“The Local Patent Rules of the Eastern District of Texas were modeled on the rules of the Northern District of California. This court considers interpretations of those rules by courts of the Northern District of California as persuasive authority.”). Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 9 of 13 PageID #: 2432 – 6 – On the contrary, Local Rule cv–26(a) not only anticipates that litigation will continue despite pending transfer motions, it expressly provides that such a motion is no excuse to dodge discovery obligations. L.R. cv–26(a) (“No Excuses. Absent court order to the contrary, a party is not excused from responding to discovery because there are pending motions to dismiss, to remand, or to change venue.”) (emphasis added); see also Lockyer v. Mirant, 398 F.3d 1098, 1112 (9th Cir. 2005) (“[B]eing required to defend a suit, without more, does not constitute a ‘clear case of hardship or inequity’ within the meaning of Landis.”). Google faces a heavy burden to overcome this Court’s default rule, and Google has not met that burden. Whether this litigation remains in Texas where it belongs or is transferred to California, the claims will remain the same and the parties will undoubtedly seek the same discovery. A stay will merely delay the inevitable expenditures associated with patent litigation no matter where it proceeds. This factor weighs against a stay. A stay would undermine judicial efficiency. 3. Staying this case would not conserve judicial resources, it would waste them. SEVEN’s action against Google has been consolidated with SEVEN’s case against Samsung for all purposes except transfer motions and trial, and the consolidated cases are governed by the same Docket Control Order. Granting Google’s motion for stay would fracture the efficiencies in the consolidated action. See, e.g., RPost Holdings, Inc. v. Readnotify.com Pty Ltd., No. 2:11-cv-16, 2012 WL 2524237, at *2 (E.D. Tex. June 29, 2012) (“Judicial economy is best served by allowing this case to proceed without a stay so that the court can meaningfully coordinate this case with the related cases.” Norman IP Holdings, LLC v. Lexmark Int’l, Inc., No. 6:11-cv-495, 2012 WL 3307942, at *4 (E.D. Tex. Aug. 10, 2012). Judicial economy is therefore best served by allowing Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 10 of 13 PageID #: 2433 – 7 – this case to proceed without a stay so that the Court can meaningfully coordinate this case with the related case. This factor also weighs against granting a stay. CONCLUSION For each of the reasons stated above, Google’s motion should be denied. SEVEN therefore respectfully requests that the Court deny Google’s motion to transfer. SEVEN also requests any further relief to which it may be entitled. Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 11 of 13 PageID #: 2434 – 8 – Dated: December 13, 2017 Respectfully submitted, /s/ Max Ciccarelli Bruce S. Sostek State Bar No. 18855700 Bruce.Sostek@tklaw.com Max Ciccarelli State Bar No. 00787242 Max.Ciccarelli@tklaw.com Herbert J. Hammond State Bar No. 08858500 Herbert.Hammond@tklaw.com Richard L. Wynne Jr. State Bar No. 24003214 Richard.Wynne@tklaw.com Adrienne E. Dominguez State Bar No. 00793630 Adrienne.Dominguez@tklaw.com Vishal Patel State Bar No. 24065885 Vishal.Patel@tklaw.com Nadia E. Haghighatian State Bar No. 24087652 Nadia.Haghighatian@tklaw.com Austin Teng State Bar No. 24093247 Austin.Teng@tklaw.com Matthew Cornelia State Bar No. 24097534 Matt.Cornelia@tklaw.com THOMPSON & KNIGHT LLP One Arts Plaza 1722 Routh St., Suite 1500 Dallas, Texas 75201 214.969.1700 214.969.1751 (Fax) ATTORNEYS FOR PLAINTIFF SEVEN NETWORKS, LLC. Samuel F. Baxter Texas State Bar No. 01938000 sbaxter@mckoolsmith.com MCKOOL SMITH, P.C. 104 E. Houston Street, Suite 300 Marshall, Texas 75670 Telephone: (903) 923-9000 Facsimile: (903) 923-9099 Theodore Stevenson, III Texas State Bar No. 19196650 tstevenson@mckoolsmith.com Eric S. Hansen Texas State Bar No. 24062763 ehansen@mckoolsmith.com MCKOOL SMITH, P.C. 300 Crescent Court, Suite 1500 Dallas, Texas 75201 Telephone: (214) 978-4000 Telecopier: (214) 978-4044 ATTORNEYS FOR PLAINTIFF SEVEN NETWORKS, LLC. Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 12 of 13 PageID #: 2435 – 9 – CERTIFICATE OF SERVICE I certify that on December 13, 2017, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF, which sent notification of such filing to all counsel of record. /s/ Max Ciccarelli Max Ciccarelli Case 2:17-cv-00442-JRG Document 102 Filed 12/13/17 Page 13 of 13 PageID #: 2436