Case 1:15-cv-00311-RGA Document 129 Filed 05/03/16 Page 1 of 3 PageID #: 4028
`
`M O R R I S , N I C H O L S , A R S H T & T U N N E L L L L P
`1201 NORTH MARKET STREET
`P.O. BOX 1347
`WILMINGTON, DELAWARE 19899-1347
`
`
`
`STEPHEN J. KRAFTSCHIK
`(302) 351 9378
`(302) 498 6233 fax
`skraftschik@mnat.com
`
`
`
`The Honorable Richard G. Andrews
`United States District Court
`844 North King Street
`Wilmington, DE 19801
`
`(302) 658-9200
`(302) 658-3989 FAX
`
`May 3, 2016
`
`VIA ELECTRONIC FILING
`
`Re:
`
`Acceleration Bay LLC; C.A. Nos. 15-228 (RGA); 15-282 (RGA); and 15-311 (RGA)
`
`Dear Judge Andrews:
`
`I.
`
`Introduction
`
`Defendants’ Motion to Dismiss for Lack of Standing presents a serious question whether
`this Court has subject matter jurisdiction over the three cases. At the hearing, Plaintiff for the
`first time stated that it knew that Boeing would not join this suit. Thus, if the Court grants
`Defendants’ Motion, these cases must be dismissed. Defendants have already been forced to
`expend countless hours and millions of dollars defending these cases and should not be forced to
`expend further resources until the issue is finally and fully resolved. Defendants request that the
`Court stay the cases pending the resolution of Defendants’ motion to dismiss.
`
`II.
`
`The Cases Should Be Stayed
`
`Federal courts have frequently granted stays of discovery in patent suits where subject
`matter jurisdiction is in doubt. See, e.g., Wyers Prods. Group v. Cequent Performance Prods.,
`Inc., 2013 WL 2466917, at *2-3 (D. Colo. June 7, 2013) (granting stay pending decision on
`defendant’s motion to dismiss for lack of standing due to inadequate transfer of patent
`ownership) (citing Gilbert v. Ferry, 401 F.3d 411, 415–16 (6th Cir.2005) (finding stay
`permissible pending ruling on a dispositive motion asserting a jurisdictional issue)); DDB Techs.,
`L.L.C. v. MLB Advanced Media, L.P., 676 F.Supp.2d 519, 533 (W.D. Tex. 2009) (granting
`certification for interlocutory appeal on the issue of patent ownership and staying litigation
`pending appeal); Bradley v. L’Oreal USA, Inc., 2010 WL 3463203, at *4 (S.D. Ill. Aug. 30,
`2010) (granting stay pending appellate decision in parallel litigation on the issue of standing,
`citing interest of judicial economy and lack of undue burden or great prejudice on the parties);
`San Francisco Tech., Inc. v. Adobe Sys. Inc., 2010 WL 1463571, at *4 (N.D. Cal. Apr. 13, 2010)
`(“Mere delay in any eventual monetary recovery is not sufficient to require going forward where
`the threshold issue of standing can be conclusively resolved by waiting for the Federal Circuit to
`
`

`

`Case 1:15-cv-00311-RGA Document 129 Filed 05/03/16 Page 2 of 3 PageID #: 4029
`
`The Honorable Richard G. Andrews
`May 3, 2016
`Page 2
`
`rule.”); Moss v. Moss Tubes, Inc., 1997 WL 727611, at *5 (N.D.N.Y. Aug. 21, 1997) (granting
`stay pending decision in parallel state litigation on the issue of patent ownership).
`
`Courts in the Third Circuit recognize it is appropriate to stay discovery while evaluating a
`motion to dismiss where its resolution would render “discovery futile.” Mann v. Brenner,
`375 F. App’x 232, 239 (3d Cir. 2010).1 “Parties who file motions which may present potentially
`meritorious and complete legal defenses to civil actions should not be put to the time, expense
`and burden of factual discovery until after these claimed legal defenses are addressed by the
`court.” Payne v. Wetzel, 2013 WL 1935356, at *2 (M.D. Pa. May 9, 2013). This is plainly the
`case here. If the Court finds that Plaintiff lacks prudential standing, the cases will be dismissed.
`Therefore, all discovery expenses that have been and continue to be incurred by the multiple
`Defendants will have been futile.2
`
`Defendants’ timely filings on the standing issues and the requested stay weigh against a
`finding of prejudice. Discovery opened in early October, and Defendants’ promptly served
`discovery on this issue to both Plaintiff and Boeing. Boeing finally produced the Patent
`Purchase Agreement on January 15, 2016. Defendants quickly secured additional discovery on
`the issue by moving to compel the Hamilton Capital loan agreement on February 10, 2016.
`Plaintiff produced the loan agreement on February 22, 2016. After receiving confirmation from
`Plaintiff’s counsel that there were no additional agreements, Defendants brought its Motion on
`March 1, 2016. Defendants promptly asked for a stay after Plaintiff represented that Boeing
`would not join the case and attempt to cure the standing problem. If Plaintiff had produced the
`Agreement in a timely fashion, Defendants’ Motion could have been brought in 2015, thus
`saving the parties, the Court, and the Special Master significant resources. Under the
`circumstances, there can be no inference that Defendants are attempting to or will gain any unfair
`tactical advantage from the requested stay.
`
`The status of the cases favor a stay as well. Kaavo, 2015 WL 1737476, at *1.
`Depositions, claim construction and email discovery have not commenced – but each of these
`expensive and time consuming activities is on the immediate horizon. The engineers who would
`be required to testify are key people, critical to creating Defendants’ games and making sure they
`are published on time against very tight production schedules. Losing these top engineers for
`even a few days can jeopardize Defendants’ ability to publish on time, which can have serious,
`irreparable effects. Proceeding with depositions at this point is both unfair and inefficient.
`Moreover, because Defendants brought this motion to stay as soon as they could have, the
`potential benefit of the stay is maximized. If the case is not stayed, the parties will incur
`significant additional costs in the next 60-90 days, including depositions, electronic discovery
`
`1 Kaavo Inc. v. Cognizant Tech. Solutions Corp., 2015 WL 1737476, at *1 (D. Del. 2015) (“A
`court has discretionary authority to grant a motion to stay.”). Other factors include: (1) “whether
`a stay will simplify the issues for trial,” (2) “whether a stay would unduly prejudice or present a
`clear tactical disadvantage to the non-moving party,” and (3) “whether discovery is complete and
`a trial date has been set.” Kaavo, 2015 WL 1737476, at *1.
`2 Plaintiff’s lack of constitutional standing, as asserted in Defendants’ motion, goes only to
`certain claims.
`
`

`

`Case 1:15-cv-00311-RGA Document 129 Filed 05/03/16 Page 3 of 3 PageID #: 4030
`
`The Honorable Richard G. Andrews
`May 3, 2016
`Page 3
`
`and claim construction. Accordingly, all of these expenses may be avoided until the standing
`issue is resolved. In contrast, if this case is allowed to proceed before the issue is fully resolved,
`including any related appeals, Defendants may be required to litigate their cases only to find out
`at trial that Plaintiff never had standing and should not have been permitted to bring these cases
`in the first place. This factor weighs strongly in favor of granting Defendants’ motion for stay.
`
`There is an opportunity to save significant costs without prejudice or tactical delay.
`While entering a stay will delay the progress of the litigation by the time necessary to decide
`Defendants’ dispositive motion, this “alone does not warrant a finding that [Plaintiff] will be
`unduly prejudiced.” Enhanced Sec. Research, LLC v. Cisco Sys., Inc., 2010 WL 2573925, at *3
`(D. Del. June 25, 2010). Rather, Plaintiff must particularize why the stay would unduly
`prejudice its rights to enforce the Asserted Patents. See id., at *3; see also Celorio v. On Demand
`Books LLC, 2013 WL 4506411, at *1 (D. Del. Aug. 21, 2013) (explaining that mere possibility
`of a resulting delay is not dispositive and insufficient to establish undue prejudice; listing
`following sub-factors to determine undue prejudice: timing of the stay request, relationship
`between the parties, and whether plaintiff may be compensated through money damages).
`
`Plaintiff cannot show undue prejudice. The Asserted Patents were more than nine years
`old before Plaintiff initiated this suit. All the Defendants are well known and have been
`operating visible and successful companies since well before the patents issued. Activision has
`even been selling World of Warcraft, one of the Accused Products, since 2004. Accordingly,
`Plaintiff/Boeing cannot demonstrate that there is any particular urgency. Instead, their delay in
`bringing these suits illustrate the lack of prejudice that would result from a stay. See Kaavo, 2015
`WL 1737476, at *4 n.9 (finding that plaintiff waiting over two years between issuance of patent
`and filing of law suit weighed against a finding of undue prejudice).
`
`Further, Plaintiff has represented that it and Defendants do not compete. Tr. (3/16/16)
`(D.I. 118-2, Exh. G) at 48:1-2. The absence of a direct competitive relationship means that the
`rationales which might counsel against a stay—protection of market share and good will—are
`not implicated in this case. Celorio, 2013 WL 4506411, at *1. Thus, this is not a case between
`competitors where irreparable harm can be claimed, or where an injunction would be remotely
`appropriate. In short, there will be no prejudice to Plaintiff if the requested stay is granted.
`
`Defendants request that the Court stay the cases pending the resolution of Defendants’
`motion to dismiss. Plaintiff has forced Defendant to spend substantial resources to discover that
`these cases should not have been filed in the first place. Plaintiff acknowledged, in open court,
`that the jurisdictional defect could not have been corrected at the outset because Boeing would
`not agree to join in these lawsuits, even though Plaintiff’s counsel admits that Boeing knew
`Plaintiff planned to assert the patents against the Defendants.
`
`
`
`
`
`
`
`
`SJK/bac
`cc:
`All Counsel of Record
`
`
`
`
`
`
`
`
`
`
`
`
`
`Respectfully,
`/s/ Stephen J. Kraftschik
`Stephen J. Kraftschik (#5623)
`
`