Stragent, LLC v. BMW of North America, LLC et al

REPLY to Response to Motion re MOTION to Dismiss for Lack of Jurisdiction in view of disclaimer of all patents in suit

E.D. Tex.March 21, 2019

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION STRAGENT, LLC, Plaintiff, v. BMW OF NORTH AMERICA, LLC, and BMW MANUFACTURING CO., LLC, Defendants. Civil Action No. 6:16-cv-00446-RWS-KNM LEAD CASE STRAGENT, LLC, Plaintiff, v. MERCEDES-BENZ USA, LLC, MERCEDES-BENZ U.S. INTERNATIONAL, INC., and DAIMLER NORTH AMERICA CORPORATION, Defendants. Civil Action No. 6:16-cv-00447-RWS-KNM STRAGENT, LLC, Plaintiff, v. VOLVO CARS OF NORTH AMERICA, LLC, Defendant. Civil Action No. 6:16-cv-00448-RWS-KNM PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF JURISDICTION Case 6:16-cv-00446-RWS-KNM Document 115 Filed 03/21/19 Page 1 of 7 PageID #: 4653 1 Plaintiff Stragent LLC (“Plaintiff”) hereby replies to the opposition filed by the BMW Defendants (“BMW”), Docket Doc. 113. THE COURT LACKS JURISDICTION TO ENTER SUMMARY JUDGMENT BMW does not dispute that Plaintiff has disclaimed, pursuant to 35 U.S.C. § 253, the two patents which are the subject of BMW’s motion for summary judgment of invalidity and non- infringement, U.S. Patent Nos. 8,209,705 and 8,566,843 (Dkt. 109). Thus, the two patents no longer exist. BMW also has not cited any authority contradicting the plain established law cited in Plaintiff’s Motion (Dkt. 111) that the Court lost subject matter jurisdiction to enter any order regarding U.S. patents, once those patents were disclaimed and no longer exist. Instead, BMW cites distinguishable cases, and asks the Court to manufacture jurisdiction, where none exists, simply to confirm BMW’s right to seek attorney fees – effectively invoking the proverbial tail wagging the dog outcome. BMW’s arguments are false and misleading, and do not justify any entry of summary judgment. A. Plaintiff’s Disclaimer of Its Patents Were Proper BMW first asserts that Plaintiff has “attempted to manipulate jurisdiction in this case by disclaiming the asserted patents.” (Dkt. 113 at p. 2). That is nonsense. Federal law, 35 U.S.C. § 253 expressly allows any patentee to “make disclaimer of any complete claim.” Even without reference to the statute, a party has the right to terminate a litigation by filing a covenant or disclaimer that ends the underlying controversy between the parties. See Already, LLC v. Nike, Inc., 568 U.S. 85 (2013) (Court lost jurisdiction when Defendant terminates conduct and disclaims a repeat of challenged conduct). Case 6:16-cv-00446-RWS-KNM Document 115 Filed 03/21/19 Page 2 of 7 PageID #: 4654 2 In this case, the Patent Trial And Appeal Board of the United States Patent And Trademark Office had determined that the relevant patent claims were unpatentable. Although Plaintiff had argued against the invalidity rulings and considered them to be erroneous, Plaintiff also recognized the futility of pursuing appeals from such decisions. Thus, Plaintiff properly disclaimed the challenged patents to avoid any needless wasting of resources by all concerned. Plaintiff’s conduct was laudatory, and not in any way challengeable. One effect of the disclaimer, however, is that the challenged patents no longer exist, and, thus, there can be no “live” case or controversy, and, thus, no jurisdiction under Article III of the Constitution for the Court to enter rulings as to non-existent patents. B. BMW’s Legal Arguments Are Meritless BMW mis-cites several cases for the proposition that Plaintiff’s disclaimer does not moot the case. 1. The Appellate Cases Cited By BMW Are Entirely Inapposite The appellate cases cited by BMW are entirely distinguishable, and, in fact, support Plaintiff’s position. In Chafin v. Chafin, 568 U.S. 165 (2013), the Court held that a father's appeal from order entered by the district court under the International Child Abduction Remedies Act (ICARA), directing his daughter's return to Scotland as her country of habitual residence, was not rendered “moot” by fact that mother had returned with daughter to Scotland, because the father continues to contend that his daughter resides in the United States, while the mother maintains that Scotland is home. Thus, a live controversy existed as to whether the child legally resided in the U.S. or Scotland. In Los Angeles Cty. v. Davis, 440 U.S. 625 (1979), the Court dismissed an appeal as moot, and, thus, that case does not support BMW. In City of Erie v. Pap's A.M., 529 U.S. 277, 287 (2000), the court held that a case was not moot where a party Case 6:16-cv-00446-RWS-KNM Document 115 Filed 03/21/19 Page 3 of 7 PageID #: 4655 3 voluntarily ceased the challenged operations, but could legally resume them in the future. Similarly, in United States v. W. T. Grant Co., 345 U.S. 629, 632 (1953) the Court noted that mootness does not arise where a party’s voluntary cessation allows the “defendant is free to return to his old ways.” None of these cases support the proposition that Article III jurisdiction can be established where, as in the present case, the Plaintiff cannot “return to its old ways,” because the challenged patents are permanently terminated and cannot be resuscitated. 2. The Hopkins Case is Distinguishable And, Further, Is Bad Law BMW cites the district court decision in Hopkins Mfg. Corp. v. Cequent Performance Prod., Inc., 223 F. Supp. 3d 1194, 1203 (D. Kan. 2016). Preliminarily, the Hopkins case is distinguishable, because there is no evidence that the patentee in that case had filed a statutory disclaimer under 35 U.S.C. § 253, which finally and permanently terminated the challenged patents as a matter of law. Instead, the patentee plaintiff patentee relied upon a cancellation of claims that would be entered upon an adverse PTO decision. The distinction may be important, because Hopkins made its ruling on the basis that “Plaintiff has not cited any authority supporting its assertion that a case is moot upon a cancellation of claims in the USPTO office.” 223 F. Supp. 3d at 1199–200. On the other hand, Plaintiff cited several cases in its opening memorandum, which BMW does not challenge, that establish that a case is moot under Article III and that a district court loses subject matter jurisdiction when a Plaintiff patentee files a statutory disclaimer of the challenged patents. (Dkt. 111 at 1-2) In any event, Hopkins is bad law. Hopkins did not cite any controlling authority to support its position; and did not cite any of the cases found in Plaintiff’s opening memorandum. (Dkt. 111 at 1-2). See, Vectra Fitness, Inc. v. TNWK Corp., 162 F.3d 1379, 1383 (Fed.Cir.1998); Case 6:16-cv-00446-RWS-KNM Document 115 Filed 03/21/19 Page 4 of 7 PageID #: 4656 4 SHFL Entm't, Inc. v. DigiDeal Corp., 729 F. App'x 931, 934 (Fed. Cir. 2018); Foster v. Carson, 347 F.3d 742, 745 (9th Cir. 2003); Target Training Int’l, Ltd. v. Extended Disc N. Am., Inc., 645 Fed.Appx. 1018, 1023 (Fed. Cir. 2016); and Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1340 (Fed. Cir. 2013). See also Hologic, Inc. v. Minerva Surgical, Inc., 325 F. Supp. 3d 507, 518 (D. Del. 2018). Yet, these cases are controlling and directly contradict the Hopkins rationale. Hopkins essentially viewed subject matter jurisdiction as discretionary. The Court decided that defendant should be able to claim attorney fees under 35 U.S.C. § 285, and, therefore, artificially created the necessary pathway by entering summary judgment of the invalidity of patent claims which no longer existed. This is fundamental error. Sanctions and attorney fees are a collateral issues in a case, which, when appropriate, can be considered after a judgment and even if the Courts lose subject matter jurisdiction. See, for example, Willy v. Coastal Corp., 503 U.S. 131, 137–38 (1992). However, these are collateral issues and do not create a basis for jurisdiction. In particular, 35 U.S.C. § 285 authorizes attorney fees to a prevailing party in a case, but does not grant any jurisdiction to a court to determine validity of non-existent patent claims merely to permit the grant of fees. See Samsung Elecs. Co. v. Rambus, Inc., 523 F.3d 1374, 1380 (Fed. Cir. 2008) (dismissing claims for attorney fees under 35 U.S.C. § 285 when the Court lacked jurisdiction); Dobyns v. United States, 915 F.3d 733, 738 (Fed. Cir. 2019) (“Courts typically retain jurisdiction to rule on collateral issues, such as sanctions or attorney’s fees, even after they lose jurisdiction over the merits decision”). In short, Hopkins cited no authority in support of its ruling, and Supreme Court and Federal Circuit jurisprudence directly contradicts Hopkins’ rationale. The case is bad law, which this Court need not follow and should not follow. Case 6:16-cv-00446-RWS-KNM Document 115 Filed 03/21/19 Page 5 of 7 PageID #: 4657 5 CONCLUSION The challenged patents no longer exist, and, thus, the Court has no subject matter jurisdiction to issue summary judgments of the invalidity or non-infringement of such non- existent patent claims. BMW’s claims for attorney fees are collateral issues as a matter of law, and can be considered after the case is dismissed. However, such collateral issues cannot artificially create subject matter jurisdiction where none otherwise exists. Dated: March 21, 2019 Respectfully submitted, Of Counsel: Thomas F. Meagher tmeagher@meagheremanuel.com Alan Christopher Pattillo cpattillo@meagheremanuel.com MEAGHER EMANUEL LAKS GOLDBERG & LIAO, LLP One Palmer Square, Suite 325 Princeton, NJ 08542 (609) 454-3500 /s/George Pazuniak Sean T. O’Kelly (DE No. 4349) sokelly@oeblegal.com George Pazuniak (Admitted Pro Hac Vice) gp@del-iplaw.com O’KELLY, ERNST & JOYCE, LLC 901 N. Market Street, Suite 1000 Wilmington, Delaware 19801 (302) 478-4230 Christopher M. Joe State Bar No. 00787770 Chris.Joe@BJCIPLaw.com Michael D. Ricketts State Bar No. 24079208 Mickey.Ricketts@BJCIPLaw.com BUETHER JOE & CARPENTER, LLC 1700 Pacific Avenue Suite 4750 Dallas, Texas 75201 Telephone: (214) 466-1272 Facsimile: (214) 635-1828 Attorneys for Plaintiff Stragent, LLC Case 6:16-cv-00446-RWS-KNM Document 115 Filed 03/21/19 Page 6 of 7 PageID #: 4658 CERTIFICATE OF SERVICE The undersigned hereby certifies that all counsel of record who are deemed to have consented to electronic service are being served with a copy of this document via the Court’s CM/ECF system per Local Rule CV-5(a) on this 21st day of March 2019. Any other counsel of record will be served by facsimile transmission and first class mail. /s/George Pazuniak George Pazuniak (Admitted Pro Hac Vice) Case 6:16-cv-00446-RWS-KNM Document 115 Filed 03/21/19 Page 7 of 7 PageID #: 4659