Stragent, LLC v. BMW of North America, LLC et alMOTION for Summary Judgment of Invalidity and NoninfringementE.D. Tex.February 13, 2019IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION STRAGENT, LLC, Plaintiff, v. BMW OF NORTH AMERICA, LLC, Defendants. ) ) ) ) ) ) ) ) ) ) Case No. 6:16-cv-00446-RWS-KNM LEAD CASE STRAGENT, LLC, Plaintiff, v. MERCEDES-BENZ USA, LLC, et al., Defendants. ) ) ) ) ) ) ) ) ) ) Case No. 6:16-cv-00447-RWS-KNM STRAGENT, LLC, Plaintiff, v. VOLVO CARS OF NORTH AMERICA, LLC, Defendants. ) ) ) ) ) ) ) ) ) ) Case No. 6:16-cv-00448-RWS-KNM MOTION BY BMW DEFENDANTS FOR SUMMARY JUDGMENT OF INVALIDITY AND NONINFRINGEMENT Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 1 of 10 PageID #: 3795 ii STATEMENT OF ISSUES TO BE DECIDED BY THE COURT PURSUANT TO LOCAL RULE 7(a)(1) 1) If the Court should grant summary judgment in favor of Defendants because all claims of all asserted patents have been found invalid and, therefore, cannot be infringed. Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 2 of 10 PageID #: 3796 I. STATEMENT OF UNDISPUTED MATERIAL FACTS A. Summary of the District Court Proceedings On May 20, 2016, Plaintiff Stragent, LLC initially filed this action against BMW of North America, LLC (“BMWNA”), BMW Manufacturing Co., LLC (“BMWMC”), and Bayerische Motoren Werke AG (“BMWAG”),1 asserting claims 1–6 of U.S. Patent No. 8,209,705 and claim 51 of U.S. Patent No. 8,566,843. BMWNA and BMWMC (collectively, “BMW”) moved to dismiss the Complaint on August 3, 2016. Dkt. 11. The Court recommended granting BMW’s motion to dismiss on March 3, 2017 (Dkt. 29), and Stragent then filed a First Amended Complaint on March 17, 2017, on the same claims and the same patents. Dkt. 34. On May 4, 2017, although the Amended Complaint only asserted claims 1–6 of the ’705 patent and claim 51 of the ‘843 patent, Stragent served infringement contentions purporting to assert all claims of the ’705 patent (1–20), all claims of the ’843 patent (1–59), plus all claims of a newly-alleged patent, U.S. Patent No. 9,575,817 (1–42). The ’817 patent was not included in Stragent’s initial Complaint or First Amended Complaint, and Stragent never moved to amend either Complaint to assert the ’817 patent. Then, BMW moved to strike Stragent’s infringement contentions on May 26, 2017, objecting to all allegations regarding the ’817 patent. Dkt. 69. On July 11, 2017, the Court stayed the case, pending resolution of IPR proceedings, as described below. Dkt. 102. On July 6, 2018, the Court denied all pending motions, including BMW’s motion to strike, without prejudice to re-urging within 14 days of any order lifting the stay. Dkt. 105. On November 20, 2018, the Court administratively closed the case and instructed the parties to file a notice when the case is ready to be placed back on the active docket. Dkt. 106. On February 13, 2019, the parties filed a Joint Notice, for the case to be placed back on the active docket. Dkt. 107. This motion has been filed immediately after filing of the Joint Notice. 1 BMWAG was dismissed as a party on March 24, 2017. Dkt. 36. Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 3 of 10 PageID #: 3797 2 B. Summary of the Proceedings at the Patent and Trademark Office 1. The First Round of IPR Petition/Proceedings Following the initial filing of the lawsuit on May 20, 2016, on January 18, 2017, BMWNA filed IPR petitions challenging the validity of claims 1-6 and 20 of the ’705 patent, and claims 51-59 of the ’843 patent, which included all the then-asserted claims, plus additional claims. Those IPRs are IPR2017-00676 (’705 patent) and IPR2017-00677 (’843 patent).2 Thereafter, on June 14, 2018, the PTAB issued a Final Written Decision in IPR2017- 00676 (Paper No. 33), finding claims 1-6 and 20 of the ’705 patent to be unpatentable. Ex. C at 2. Also, on June 13, 2018, the PTAB issued a Final Written Decision in IPR2017-00677 (Paper No. 32), finding claims 51-59 of the ’843 patent to be unpatentable. Ex. D at 2. On August 15, 2018, after Stragent lost both IPR2017-00676 (’705 patent) and IPR2017- 00677 (’843 patent), Stragent filed notices of appeal for both IPR proceedings. Exs. E-F. Stragent’s two appeals for the IPR proceedings were consolidated, and Stragent requested an extension of time to file its opening brief until February 3, 2019.3 Ex. G. The Federal Circuit granted Stragent’s motion for an extension of time and set a deadline of February 4, 2019 for 2 On December 9, 2016, Daimler North America Corp., Mercedes-Benz USA, LLC, and Mercedes-Benz U.S. International, Inc. (collectively, “Mercedes”) filed two petitions for inter partes review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”) challenging the validity of claims 1-7 and 20 of the ’705 patent, and claims 1 and 47–51 of the ’843 patent. Those IPRs are IPR2017-00458 (’705 patent) and IPR2017-00457 (’843 patent). On June 13, 2018, the PTAB issued Final Written Decisions in these IPRs as follows: in IPR2017-00458 (Paper No. 31), finding claims 1-7 and 20 of the ’705 patent unpatentable. Ex. A at 2. in IPR2017-00457 (Paper No. 34), finding claims 1 and 47–51 of the ’843 patent unpatentable. Ex. B at 2. 3 As grounds for the extension of time, Stragent represented that the “same parties . . . are also involved in a series of other proceedings involving different claims of the same two patents which are currently pending before the Board” in which “[t]here is a high likelihood that there will [also] be an appeal.” Ex. G at 2. Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 4 of 10 PageID #: 3798 3 Stragent to file its opening brief. Stragent, LLC v. Daimler N. Am. Corp., No. 18-2292, Dkt. 25 (Fed. Cir. Nov. 28, 2018). Stragent did not file a brief on February 4, 2019. On February 7, 2019, BMWNA filed a Motion to Dismiss the Federal Circuit appeal pursuant to Federal Rule of Appellate Procedure 31(c) and Federal Circuit Rule 31(d) in view of Stragent’s decision not to file a brief. Ex. P. And, on February 11, 2019, the Federal Circuit issued an order pursuant to Federal Circuit Rule 31(d) dismissing the appeals in Case Nos. 2018- 2294 and 2018-2295 for failure to prosecute, and denying BMWNA’s motion to dismiss as moot. Ex. Q.4 2. The Second Round of IPR Petitions/Proceedings Stragent submitted infringement contentions on May 4, 2017, purportedly asserting many more claims of the asserted patents than those enumerated in the initial and First Amended Complaints. Specifically, Stragent’s infringement contentions included all claims of the ’705 patent (1-20) and all claims of the ’843 patent (1-59). Accordingly, on June 6, 2017, BMWNA filed four more IPR petitions so as to challenge all claims of the ’705 and ’843 patents between the two rounds of IPRs.5 Those IPRs are 4 Counsel for Mercedes has indicated that it also plans to file papers requesting dismissal of its Federal Circuit appeals with Stragent as moot. 5 On June 6, 2017, Mercedes also filed three more petitions for IPR challenging additional claims of the ’705 and ’843 patents. Those IPRs are IPR2017-01502 (’705 patent, claims 8-19); IPR2017-01503 (’843 patent, claims 2-46 and 52-59), and IPR2017-01504 (’843 patent, same claims). On December 6, 2018, the PTAB issued a Final Written Decision in these IPRs as follows: in IPR2017-01502 (Paper No. 24), finding claims 8-19 of the ’705 patent unpatentable. Ex. H at 2. in IPR2017-01503 (Paper No. 25), finding claims 2–37, 39–46, and 52–59 of the ’843 patent unpatentable. Ex. I at 2. in IPR2017-01504 (Paper No. 25), finding claims 2–37, 40–46, and 52–59 of the ’843 patent unpatentable. Ex. J at 2. Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 5 of 10 PageID #: 3799 4 IPR2017-01521 (’705 patent, claims 7-19); IPR2017-01522 (’705 patent, claims 7-14 and 16- 19); IPR2017-01519 (’843 patent, claims 1-50); and IPR2017-01520 (’843 patent, claims 1-18 and 20-50). Thereafter, on December 6, 2018, the PTAB issued Final Written Decisions in these IPRs as follows: in IPR2017-01519 (Paper No. 32), finding claims 1-50 of the ’843 patent unpatentable. Ex. K at 2. in IPR2017-01520 (Paper No. 32), finding claims 1–18 and 20–50 of the ’843 patent unpatentable. Ex. L at 2. in IPR2017-01521 (Paper No. 31), finding claims 7–17 and 19 of the ’705 patent unpatentable. Ex. M at 2. in IPR2017-01522 (Paper No. 32) finding claims 7–14 and 16–19 of the ’705 patent unpatentable. Ex. N at 2. After Stragent lost all four of these additional IPR proceedings (with all claims found invalid), Stragent had to February 7, 2019 to file notices of appeal (63 days after the final written decisions issued on December 6, 2018). See 37 C.F.R. § 90.3(a)(1). Stragent did not file notices of appeal. 3. Dismissal of the Appeals of the PTAB Determinations On Thursday, January 24, 2019, counsel for Stragent contacted counsel for BMW and Mercedes, stating that, “[a]lthough Stragent disagrees with the determinations of the PTAB, it is almost guaranteed that the Federal Circuit will affirm the PTAB in these IT type of cases. It would be a waste of the Court’s time and the parties’ resources to continue and/or file new appeals.” Ex. O at 5. The communication further stated that “Stragent intends to seek dismissals of all District Court and Federal Circuit litigations with the parties bearing their own costs and expenses, and will not appeal the most recent IPR decisions. This is all without prejudice to any actions that Stragent may take with respect to any new patents that may issue.” Id. Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 6 of 10 PageID #: 3800 5 On Friday, January 25, 2019, counsel for BMW responded that BMW would consider Stragent’s proposal and would respond the following week. Id. at 4.6 Subsequently, the next week, on February 1, 2019, counsel for BMW responded to counsel for Stragent, and (1) agreed to a stipulated dismissal of the appeal; and (2) requested that Stragent either agree to a consent judgment of invalidity in BMW’s favor, or confirm that Stragent will not file any new lawsuits against BMW on any of Stragent’s other patents related to the patents-in-suit here. Id. at 2-3.7 By February 6, 2019, Stragent’s counsel had not responded to BMW, including the offer by counsel for BMW to (1) agree to dismissal the appeals, and (2) jointly lift the stay in this case and enter a consent judgment for BMW. See id. at 2-3. Accordingly, BMW’s counsel then informed Stragent that BMW would move to dismiss the appeal, id. at 2, and BMW did so on February 7, 2019. See id. at 1. On February 7, 2019, Stragent’s counsel responded to BMW, incorrectly stating that BMW rejected Stragent’s proposed stipulated dismissal of the appeals,8 but counsel for Stragent failed to (1) agree to enter a consent judgment for BMW, or (2) confirm or deny Stragent’s intent to sue BMW again on patents related to the patents-in-suit here. Id. at 1. C. Imminent Cancellation of All Claims of All of the Asserted Patents Between the first and second rounds of IPR proceedings, the PTAB found all of the claims of both asserted patents to be unpatentable, on at least one ground. With Stragent’s appeals of the first round of IPRs dismissed, and with Stragent’s deadline to file appeals on the second round of IPRs passed, the Patent Office will soon cancel every claim of both asserted patents. See 35 U.S.C. § 318(b) (“Certificate.— If the Patent Trial and Appeal Board issues a final written decision under subsection (a) and the time for appeal has expired or any appeal has terminated, the Director shall issue and publish a certificate canceling any claim of the patent 6 Counsel for Mercedes echoed BMW’s response. Id. 7 Counsel for Mercedes echoed BMW’s response. Id. at 2. 8 BMW and Mercedes expressly agreed to a stipulated dismissal of the appeals. Id. at 2. Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 7 of 10 PageID #: 3801 6 finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable.”). Both of the asserted patents are to be deemed invalid. Accordingly, as this case is now ripe for adjudication on the merits in BMW’s favor, the parties have concurrently filed a joint notice that the case is ready to be placed back on the active docket, as ordered by the Court. See Dkt. 106; Dkt. 107. And, summary judgment is now ripe for ruling. II. LAW AND ARGUMENT: WITH NO VALID CLAIMS LEFT TO ASSERT (ALL CLAIMS NOW DETERMINED INVALID), THE COURT SHOULD GRANT SUMMARY JUDGMENT OF BOTH NONINFRINGEMENT AND INVALIDITY Under Fed. R. Civ. P. 56, the “court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Moreover, a defendant cannot be liable for infringement of an invalid patent. Commil USA, LLC v. Cisco Sys., Inc., 135 S.Ct. 1920, 1929 (2015) (“if the patent is indeed invalid, and shown to be so under proper procedures, there is no liability” for patent infringement); see also Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1340 (Fed. Cir. 2013) (“when a claim is cancelled, the patentee loses any cause of action based upon that claim, and any pending litigation in which the claims are asserted becomes moot”). Here, there is no dispute that all claims of the asserted ’705 and ’843 patents will be canceled. Invalidity is a given. Also, BMW cannot, as a matter of law, be liable for infringement of the two invalid patents. Accordingly, as a resolution of the patent issues in this case are certain, the Court should enter summary judgment of noninfringement and invalidity for BMW.9 9 Moreover, the Court ruling on summary judgment is necessary to give BMW the imprimatur of final judgment in its favor to ensure that it is the “prevailing party” under 35 U.S. C. § 285 of the Patent Act. See Hopkins Mfg. Corp. v. Cequent Perfomance Prods., Inc., No. 14-2208-JAR, Dkt. 31 at 9-10 (D. Kan. Dec. 12, 2016) (Ex. R). Also, this Court has the authority and Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 8 of 10 PageID #: 3802 7 III. CONCLUSION As all of the asserted claims of the patents at issue will indisputably be cancelled by the Patent Office, there is no question of material fact regarding the noninfringement and invalidity of the ’705 and ’843 patents, and therefore, BMW is entitled to summary judgment, accordingly. Respectfully submitted, Dated: February 13, 2019 /s/ Lionel M. Lavenue Lionel M. Lavenue FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP Two Freedom Square 11955 Freedom Drive Reston, VA 20190 Phone: (571) 203-2700 Fax: (202) 408-4400 ATTORNEY FOR DEFENDANTS BMW OF NORTH AMERICA, LLC AND BMW MANUFACTURING CO., LLC jurisdiction to rule on this motion. See id. at 7-9; see also Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318 (Fed. Cir. 2004) (making no mention of mootness during an appeal of a district court’s decision to reopen a case to enter judgment for the defendant after the Patent Office cancelled the asserted patents in reexamination); Credit Card Fraud Control Corp. v. Maxmind, Inc., No. 14- 3262, 2016 WL 3355163 (N.D. Tex. Apr. 7, 2016) (making no mention of mootness when entering order of dismissal after PTAB cancelled claims of asserted patent claim). Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 9 of 10 PageID #: 3803 CERTIFICATE OF SERVICE I hereby certify that on February 13, 2019, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will send a notification of such filing (“NEF”) to the following counsel of record who have appeared in this case on behalf of the identified parties: /s/ Lionel M. Lavenue Lionel M. Lavenue FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP Two Freedom Square 11955 Freedom Drive Reston, VA 20190 Phone: (571) 203-2700 Fax: (202) 408-4400 ATTORNEY FOR DEFENDANTS BMW OF NORTH AMERICA, LLC AND BMW MANUFACTURING CO., LLC Case 6:16-cv-00446-RWS-KNM Document 109 Filed 02/13/19 Page 10 of 10 PageID #: 3804