IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
INLINE CONNECTION
CORPORATION,
Plaintiff,
v.
VERIZON INTERNET SERVICES, INC.,
et al.,
Defendants.
Civil Action No. 05-866-JJF
CONSOLIDATED
BROADBAND TECHNOLOGY
INNOVATIONS, LLC, AND PIE
SQUARED, LLC,
Plaintiffs,
v.
VERIZON INTERNET SERVICES, INC.
et al.,
Defendants.
Civil Action No. 06-291-JJF
UNITED ACCESS’ REPLY SUPPORTING ITS MOTION TO SUBSTITUTE,
MOTION TO REOPEN, AND MOTION FOR PRE-TRIAL COORDINATION
In its Response, Verizon primarily argues that (i) the Verizon cases are “formally” closed,
despite the lack of a final order or judgment, and (ii) the Court should dismiss the lawsuits as a
matter of equity. But the instant cases are only administratively closed, equity supports reopen-
ing the cases (especially in light of Verizon’s unclean hands), and Verizon’s other arguments are
meritless. For these reasons, and the reasons in United Access’ original motion, the Court should
grant United Access’ requested relief.
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 1 of 11 PageID #: 3234
I. The Verizon Cases Remain Administratively Closed
The WRS and Penn West cases show that the Third Circuit requires a district court to en-
ter an order and judgment to finally close a case:
The potential for uncertainty is significant in cases involving administrative clos-
ings with built-in timetables for dismissal without the entry of an order of dis-
missal. . . . Parties need a definitive way of knowing if and when their case has
been dismissed. Accordingly, we hold that although an administrative closure
may mature into a final order of dismissal, the district court (or bankruptcy
court) must enter an order so providing. Without such an entry, the case
simply remains administratively closed.
WRS Inc. v. Plaza Entm’t Inc., 402 F.3d 424, 429 (3d Cir. 2005) (emphasis added); see Penn W.
Assocs., Inc. v. Cohen, 371 F.3d 118, 128 & n.10 (3d Cir. 2004) (requiring a separate judgment
under Rules 54 and 58). Verizon claims that the Court “formally closed” the cases on August 22,
2013, citing Exhibit H to the Wyss Declaration:
Resp. at 3. Exhibit H, however, is not an order formally closing the case, as required by WRS,
and is not a judgment, as required by Penn West. Instead, Exhibit H shows that the Clerk’s office
entered a “remark” removing the ADMINCLOSING flag from the case:
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 2 of 11 PageID #: 3235
Wyss Dec., Ex. H. WRS and Penn West are clear: to finally close a case, the Court must enter a
separate order and judgment.
1
The Court did not do so here. As a result, “the case[s] simply re-
main[] administratively closed.” See WRS, 402 F.3d at 429.
Further, as shown in the excerpt above, Verizon claims that Judge Farnan’s Order includ-
ed a “built-in condition and timetable.” Resp. at 3. This is incorrect—the Order does not include
a “built-in timetable under which the administrative closing may automatically expire,” as sug-
gested
2
by Penn West, 371 F.3d at 148. The entire text of the Order appears on the next page:
ECF No. 159. Judge Farnan did not enter a final order dismissing the case or a final judgment.
Under Third Circuit law, the case remains administratively closed. As contemplated by Penn
1
WRS supported its analysis with a Second Circuit case: “[The Second Circuit held] that even
‘self-executing orders’ require the court issuing them to enter a final judgment.” WRS, 402 F.3d
at 429 (citing Bogaerts v. Shapiro, 316 F.3d 113, 118 (2d Cir. 2003)). Bogaerts also advised de-
fendants to seek a final judgment, which Verizon failed to do: “In addition, PNL, for whom fi-
nality of the decision was perhaps of greatest importance, could have easily have asked the court
on August 17, 2000, to enter a final (Rule 58) judgment.” 316 F.3d at 119.
2
Although Penn West suggests, in dicta, that an automatically executing order might formally
close a case, the Third Circuit required a separate order in WRS. Compare Penn W., 371 F.3d at
128, with WRS, 402 F.3d at 429. Further, Penn West requires a separate judgment to finally close
a case. 371 F.3d at 128 n.10 (citing United States v. Indrelunas, 411 U.S. 216, 221-22 (1973)
(the separate-document requirement must be applied “mechanically”)).
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West, United Access now “returns to the [district court] to re-open [the] administratively closed
cases.” 371 F.3d at 129.
3
II. Equity Supports Reopening the Cases
Verizon claims that the Court should refuse to reopen the cases as a matter of equity.
Verizon cites a number of equitable principles in shotgun fashion, but fails to apply any single
principle to the facts of this case or cite any authority refusing to reopen a case in similar circum-
stances. See Resp. at 14-15 (“UAT is barred from reopening . . . based on . . . equitable principles
of laches, acquiescence, waiver, unclean hands, or judicial estoppel.”). If Verizon truly believed
that a particular equitable principle supported denying the motion, Verizon should have at least
identified the elements of that principle and analyzed its application to the present case. Verizon
failed to do so.
Ideally, United Access and Verizon would have notified the Court of EarthLink’s resolu-
tion (and provided a plan on how to proceed) in early 2013, after United Access raised substitu-
tion with Verizon. But between discussions with Verizon and its ultimate refusal to consent to
the substitution, the dismissal of the CenturyTel matter, the ensuing Federal Circuit appeal, and
United Access’ change of counsel, neither United Access nor Verizon alerted the Court to
EarthLink’s resolution, nor provided a plan on how to proceed.
Equity nevertheless supports United Access’ motion. Verizon is not prejudiced by the
parties’ failure to alert the Court in 2013 of how they wished to proceed—United Access’ patents
expired in 2009, so the parties’ failure to alert the Court sooner did not extend the period of Ver-
3
Verizon also claims an “agreement” that the cases are finally closed. See Resp. at 3 (“[W]ith
the affirmative acquiescence and agreement of all parties . . .”). Verizon points to no such
agreement, nor could such agreement satisfy WRS and Penn West. Verizon also does not attempt
to explain how retrieving sealed documents satisfies WRS and Penn West. To prevail, Verizon
must point to a final order and a judgment. Verizon cannot do so.
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izon’s infringement. Conversely, if the Court denies United Access’ motion, it would effectively
insulate Verizon from its years of patent infringement—if United Access were to refile the law-
suit tomorrow, United Access likely could not seek patent damages resulting from Verizon’s in-
fringement through 2009, due to 35 U.S.C. § 286 (“no recovery shall be had for any infringement
committed more than six years prior to the filing of the complaint”). Cf. WRS, 402 F.3d at 430
n.10 (in balancing the equities, a court may consider “the unlikelihood that [a litigant] would
have knowingly forfeited [a multi-million-dollar] claim”).
Verizon represents that United Access never told Verizon that the EarthLink case had
concluded. Resp. at 9. (“UAT’s counsel . . . contacted counsel for the Verizon Defendants . . . .
he never revealed that [EarthLink] had been terminated almost six months prior”). This is not
true. On February 20, 2013, United Access notified Verizon that the EarthLink case had con-
cluded in an email to Verizon’s Delaware counsel, Jeffrey Bove:
Mr. Bove,
I write as a follow-up to our call earlier today. We represent United Access Tech-
nologies, LLC, which currently owns the patents-in-suit in the case styled Inline
Connection Corporation et al. v. Verizon Internet Services Inc. . . . That case was
stayed pending the outcome of C.A. No. 02-272-MPT (the “EarthLink case”).
Since the EarthLink case has finally resolved, we would like to discuss enter-
ing a stipulation to substitute United Access Technologies, LLC as the sole plain-
tiff in this case while keeping in place the current stay. To that end, could you
please forward me the contact information from Verizon’s counsel in this matter?
Olejko Dec. Ex. F. (emphasis added). Mr. Bove promptly forwarded the email to John Wyss,
Verizon’s lead counsel. See id. A second email from United Access’ counsel (Daniel Olejko) to
Mr. Wyss, later that same day, attached the following draft stipulation,
4
which stated that the
EarthLink case ended six months prior:
4
Mr. Wyss admits that he received a draft stipulation on February 20, 2013. Wyss Dec. ¶ 3.
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 5 of 11 PageID #: 3238
* * *
Olejko Dec. Ex. G. Verizon thus knew, by February 2013, that EarthLink had concluded.
Verizon seeks equity from the Court. But Verizon claimed in its briefing, repeatedly, that
Verizon did not know that the EarthLink case had concluded—statements that are demonstrably
false in light of the emails referenced above. Compare Resp. at 9 (“UAT’s counsel . . . contacted
counsel for the Verizon Defendants . . . . he never revealed that [EarthLink] had been termi-
nated”.); id. at 14 (“UAT’s counsel kept the Verizon Defendants’ counsel in the dark regard-
ing final termination [of EarthLink]”); id. at 2 (“The record clearly shows that UAT . . . failed
to tell the Verizon Defendants about the termination [of EarthLink]”); id. at 4, 5, 11 (three
other similar statements); and Wyss Dec. ¶ 4; with Olejko Ex. F (email from United Access to
Verizon stating “the EarthLink case has finally resolved”); Olejko Ex. G (draft stipulation sent
to Verizon stating “the district court entered final judgment in the EarthLink action on Sep-
tember 5, 2012”) (emphases added throughout). The Court has broad discretion to refuse equity
to those with unclean hands. Monsanto Co. v. Rohm & Hass Co., 456 F.2d 592, 598 (3d Cir.
1972) (“[W]hile equity does not demand that its suitors shall have led blameless lives . . . it does
require that they shall have acted fairly and without fraud or deceit as to the controversy at is-
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 6 of 11 PageID #: 3239
sue.”); Gaudiosi v. Mellon, 269 F.2d 873, 881 (3d Cir. 1959) (“The clean hands maxim gives
wide sweep to the equity court’s exercise of discretion in refusing to aid the unclean litigant.”).
In light of Verizon’s misrepresentations, the Court should exercise its discretion to deny Veri-
zon’s recourse to equity. See Monsanto, 456 F.2d at 598.
Further, Verizon ignores that Judge Farnan’s Order puts the onus on all parties (including
Verizon) to update the Court about the status of the EarthLink case (a matter of public record)
and provide a plan on how to proceed. ECF No. 159. Verizon thus shares the blame—all parties
are responsible for not providing Judge Farnan with a plan on how to proceed at the close of the
EarthLink matter. Verizon should not benefit from its own inaction.
In sum, accommodating the parties’ failure to provide a going-forward plan to the Court
in 2013 does not materially prejudice Verizon, while denying United Access’ motion would se-
verely prejudice United Access. A balance of the equities thus supports reopening the cases, es-
pecially in light of (i) Verizon’s unclean hands and (ii) Verizon’s independent duty to provide a
plan on how to proceed after the EarthLink matter had concluded.
III. Verizon’s Other Arguments Fail
United Access briefly addresses Verizon’s remaining arguments below.
Transfer of the Patents. Verizon essentially argues that no one can reopen the instant
cases because Plaintiffs transferred their interests in the patents during the pendency of the litiga-
tion. Resp. at 13 (“Inline, BBTI, and Pie Squared divested themselves of standing in May 2010
and this Court no longer has subject matter jurisdiction over their claims.”). Although Verizon
emphasizes delay, Verizon argues that any period of time when the named Plaintiffs do not own
the patents must result in dismissal. This is not the law—federal courts allow the substitution of
plaintiffs, mid-lawsuit, when ownership of the lawsuit or the asset at issue changes, to “facilitate
the conduct of the litigation” and ensure that “the efforts of the Court and the parties up until this
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 7 of 11 PageID #: 3240
time [are not] for naught.” Abbott Labs. v. Roxane Labs., Inc., No. 12-457, 2013 WL 2322770, at
*4 (D. Del. May 28, 2013); Gen. Battery Corp. v. Globe-Union, Inc., 100 F.R.D. 258, 262 (D.
Del. 1982); Fed. R. Civ. P. 25(c); see also United Access Techs. LLC v. EarthLink, Inc., No. 02-
272, ECF No. 710 (D. Del. Dec. 9, 2010) (allowing United Access to substitute for Plaintiffs
months after receiving its interest in the patents). Here, Plaintiffs sold their interests in the pa-
tents to United Access, who now seeks to substitute under Rule 25(c). The transfer of the patents
does not implicate standing and should not result in dismissal.
Rule 25(c) and Closed Cases. Verizon argues that Rule 25(c) has no application to
closed cases. But, as explained above, the instant cases are administratively closed, not finally
closed, which has “no effect other than to remove a case from the court’s active docket.” Penn
W., 371 F.3d at 127. Because the cases are not finally closed, the Court may substitute United
Access in for Plaintiffs under Rule 25(c). See Pi-Net Int’l, Inc. v. Citizens Fin. Grp., Inc., No. 12-
355, 2015 WL 1284243, at *1 (D. Del. Mar 19, 2015) (granting motion to substitute while the
case was stayed); see also Mot. at 8.
Standing. Verizon requests that the Court postpone ruling on subject-matter jurisdiction.
Resp. at 16 (“The Court need not and should not address any standing issues in the Verizon Del-
aware Actions, unless those cases can be properly reopened . . .”). Whether the Court addresses
subject-matter jurisdiction at this point or later, standing is proper. As shown in United Access’
motion, (i) at the inception of each lawsuit, each co-owner plaintiff had Article III standing, and
(ii) the substitution of United Access will address any concerns with prudential standing. Mot. at
8-9.
5
5
Israel Bio-Engineering and Ethicon (cited by Verizon) do not state otherwise. In Israel Bio-
Engineering, the Federal Circuit did not require all co-owners to be joined at the time of filing
(as Verizon claims), but instead stated “Where one co-owner possesses an undivided part of the
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 8 of 11 PageID #: 3241
Purchase Agreement. In its “Supplemental Opposition,” (filed only in the Broad-
band/Verizon matter, No. 06-291, ECF No. 36) Verizon claims that United Access does not own
the right to pursue the Broadband/Verizon action. The Asset Purchase Agreement dated May 28,
2010, provides that right to United Access, and United Access is prepared to file the agreement
under seal at the Court’s direction. Further, the “Assignment and Confirmation of Ownership”
evidences the assignment of both Verizon cases. While the No. 06-291 case is not listed at sub-
section 3(c), the consolidated case is listed (No. 05-866). Garza Dec. Ex. C ¶ 3(c). The Assign-
ment (signed by all Plaintiffs in both Verizon cases) also shows that United Access received “all
rights” in the patents and the “right to . . . enforce” the patents. Id. ¶¶ 3, 3(b).
Coordination. Verizon speculates that United Access will use coordination to “evade”
Plaintiffs’ prior discovery responses. Resp. at 17. United Access fully intends to comply with its
discovery obligations, and will do so in accordance with the Federal Rules and the Court’s Or-
ders. Notably, Verizon did not address the natural parallels between the Verizon cases and the
AT&T, CenturyTel, and Frontier cases—for example, common claim construction, invalidity
cases, and damages cases. To prevent the Court from duplicating efforts over multiple lawsuits
(which all remain in their infancy), the Court should coordinate all four lawsuits under Rule
42(a).
entire patent, that joint owner must join all the other co-owners to establish standing.” Israel
Bio-Eng’g Project v. Amgen, 475 F.3d 1256, 1264 (Fed. Cir. 2007) (emphasis added); accord
Mentor H/S Inc. v. Med. Device Alliance, Inc., 240 F.3d 1016, 1018-19 (Fed. Cir. 2001) (enter-
taining a motion to join a co-owner on appeal). Ethicon dealt with a situation where a co-owner
(Mr. Choi) had licensed the defendant, preventing a patent-infringement suit. Ethicon, Inc. v.
U.S. Surgical Corp., 135 F.3d 1456, 1468 (Fed. Cir. 1998) (“[O]ne co-owner has the right to im-
pede the other co-owner’s ability to sue infringers by refusing to voluntarily join in such a suit.”).
As no co-owners have licensed Verizon (or have otherwise withheld consent to suit), Ethicon is
inapplicable here.
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 9 of 11 PageID #: 3242
IV. Conclusion
The Court should grant United Access’ motions in their entirety.
Dated: November 6, 2015
ANTHONY GARZA (admitted pro hac vice)
agarza@ccrglaw.com
CHARHON CALLAHAN
ROBSON & GARZA, PLLC
3333 Lee Parkway, Suite 460
Dallas, Texas 75219
Telephone: (214) 521-6400
Telecopier: (214) 764-8392
Attorneys for United Access Technologies,
LLC
Respectfully submitted,
/s/ Stamatios Stamoulis
Stamatios Stamoulis (#4606)
stamoulis@swdelaw.com
Richard C. Weinblatt (#5080)
weinblatt@swdelaw.com
STAMOULIS & WEINBLATT LLC
Two Fox Point Centre
6 Denny Road, Suite 307
Wilmington, DE 19809
Telephone: (302) 999-1540
Attorneys for United Access Technologies,
LLC
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 10 of 11 PageID #: 3243
CERTIFICATE OF SERVICE
I hereby certify that on November 6, 2015, I electronically filed the foregoing document
with the Clerk of Court using the CM/ECF system which will send notification of such filing via
electronic mail to all counsel of record.
/s/ Stamatios Stamoulis
Stamatios Stamoulis #4606
Case 1:05-cv-00866-LPS Document 170 Filed 11/06/15 Page 11 of 11 PageID #: 3244
