Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 1 of 12
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`SIPCO LLC, and
`IP CO., LLC (d/b/a INTUS IQ)
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`Plaintiffs,
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`v.
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`Civil Action No. 6:15-CV-907-JRG-KNM
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`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
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`REPLY IN SUPPORT OF DEFENDANTS’
`MOTION TO DISMISS OR TRANSFER THIS ACTION
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`Plaintiffs’ Opposition to the present motion fails to address the single most important
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`EMERSON ELECTRIC CO., EMERSON
`PROCESS MANAGEMENT LLLP,
`FISHER-ROSEMOUNT SYSTEMS, INC.,
`ROSEMOUNT INC., BP, p.l.c., BP
`AMERICA, INC., and BP AMERICA
`PRODUCTION COMPANY,
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`
`
`
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`Defendants.
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`issue facing this Court: If the plaintiffs’ approach is adopted, and this Court neither dismisses
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`nor transfers this action, two federal courts will be forced to decide substantially similar cases
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`involving the same parties, the same accused products, and related patents. Though claim
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`language differences may exist, all of the patents at issue in both this action and the Georgia
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`action are directed to wireless communication networks, or the routing of data messages within
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`those networks, and each and every one of the products plaintiffs accuse of infringement in this
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`action are already accused of infringement in the Georgia action. Moreover, because many
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`claim terms are common to patents at issue within these two actions, it makes sense to have all of
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`the disputed claim terms construed by the same court. In short, these two cases substantially
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`overlap and it should be the first-filed Georgia action, and the Georgia court only, that should
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 2 of 12
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`proceed. At the very minimum, this Court should transfer the case to provide the Georgia court
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`the opportunity to decide the first-filed issue.
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`A.
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`The First-Filed Rule Promotes Judicial Efficiency, and
`Federal Comity and Protects the Judicial Process Itself
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`Emerson’s alleged “abandonment” of its claims is not only factually inaccurate, it fails to
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`justify putting federal comity at risk by forcing two district courts to proceed with wasteful,
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`duplicative actions at the same time. Beyond protecting the first filer against forum shopping
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`and the multiplicity of proceedings, the first-filed rule was created to promote judicial efficiency
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`and “to avoid the waste of duplication, to avoid rulings which may trench upon the authority of
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`sister courts, and to avoid piecemeal resolution of issues that call for a uniform result.” West
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`Gulf Maritime Ass’n v. ILA Deep Sea Local 24, 751 F.2d 721,729 (5th Cir. 1985); see also Merial
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`LTD. v. Cipla Ltd., 681 F.3d, 1299 (Fed. Cir. 2012) (first-filed rule “intended to avoid conflicting
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`decisions and promote judicial efficiency). Even if plaintiffs’ “abandonment” allegations were
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`true, and they are not, they do not justify maintaining two wasteful, largely duplicative, parallel
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`actions that might yield inconsistent results. Federal comity is jeopardized when two
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`substantially overlapping actions proceed in parallel before different courts. Under the facts
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`presented in this case, only one of these two actions should proceed – the parties to these actions
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`cannot waive the protections the first-filed rule provides the judicial process itself.
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`B.
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`Emerson’s Conduct Does Not Create An Exception To The First-Filed Rule
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`Nor is it fair to characterize Emerson’s actions in Georgia an “abandonment” of its claims
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`that creates an equitable exception to the first-to-file rule. (Doc. 24 at 6-7). As noted in
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`Emerson’s opening motion, Emerson realized that it was not possible to try a patent case
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`involving eight patents, even where those patents are all interrelated as they are here. (Doc. 10 at
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`3). Emerson’s first Georgia complaint presented claims as to one claim for each of eight patents
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 3 of 12
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`because the parties had exchanged contentions for those particular claims during pre-filing
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`efforts to resolve this dispute. Critically, there was no race to the courthouse and Emerson sued
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`SIPCO in its home court. But as this Court is no doubt aware, a patent infringement action
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`involving eight patents is unwieldy. Even with just one claim each, it is practically impossible to
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`try an action involving eight patents. Moreover, Emerson realized that it was unlikely that
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`SIPCO or IPCO (collectively “SIPCO”) would limit their responsive Georgia pleading to just the
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`two claims Emerson had put at issue.1
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`Accordingly, Emerson narrowed the challenged patents to just one representative patent
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`from each patent family, the ‘062 patent from the IPCO patent family, and the ‘511 patent from
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`the SIPCO patent family. Under plaintiffs’ strained logic, Emerson’s efforts to streamline that
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`action into a manageable proceeding should be treated as evidence of bad faith that creates an
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`exception to the first-to-file rule. (Doc. 24 at 6-7). Emerson’s efforts, however, should be
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`encouraged, not punished. If SIPCO believed that other patents from these families were more
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`representative, or needed to be included in the Georgia action for some other reason, SIPCO was
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`free to counterclaim as to any of the other patents in either patent family. SIPCO did not do so.
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`Instead, SIPCO opted in favor or waiting for 9 months and then filing a parallel action in this
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`District asserting eleven additional patents from the same two patent families.2
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`1 SIPCO asserted a total of 28 claims from just the two patents at issue in Georgia.
`2 Plaintiffs also suggest that Emerson’s decision to take a license for products sold by its White
`Rogers Division somehow also evidences bad faith. Doc. 24 at 6. Rather than evidencing bad
`faith, Emerson’s actions demonstrate its good faith - it will take a license when warranted by the
`merits or sometimes when necessary to obtain a cost effective resolution. The industrial plant
`process management products at issue in both this and the Georgia action have no relationship to
`the home thermostats sold by White Rogers under license.
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`-3-
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 4 of 12
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`If SIPCO felt that this dispute should be heard here, not SIPCO’s home court in Georgia,
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`it should have filed this action much sooner and promptly moved the first-filed Georgia court for
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`an order transferring that action to this District. Alternatively SIPCO could have simply asked
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`the Georgia court to transfer the action. SIPCO did neither. Instead, SIPCO waived those
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`options by waiting 9 months before filing an action in this District in an effort to obtain the same
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`result or, at a minimum, compound the dispute. If equity is to play any role in this analysis, it is
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`the plaintiffs’ litigation tactics that are just plain wrong.
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`C.
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`The Overlap Between This And The Georgia Action Is Substantial
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`SIPCO argues against dismissal or transfer on the grounds that the overlap between this
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`action and the Georgia action is insubstantial. (Doc. 24 at 8-10). As support, plaintiff asserts that
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`“Emerson relies solely on the fact that all the patents are part of the same patent families.” Id. at
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`9. That assertion is not only wrong, it ignores the actual arguments Emerson presented in its
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`opening memorandum. In that memorandum, Emerson identified a non-exhaustive list of claim
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`terms common to patents in both actions (Doc. 10 at 7-8) and advised this Court that the same
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`products are at issue in both cases and that the same witnesses will be called upon to testify.
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`(Doc. 10 at 6). Plaintiffs simply ignore these points, fail to address the fact that numerous claim
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`terms are common to patents at issue in both actions, and simply assert the obvious, that different
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`patent claims have different limitations. (Doc. 24 at 8). As support for its argument that the
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`cases do not overlap, plaintiffs present a comparison of a handful or patent claims.
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`Plaintiffs’ claim comparisons muddle the issue. For example, page 3 of 7 of plaintiffs’
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`Exhibit B compares the language of claim 1 of the ‘842 patent with the language of claim 2 of
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`the ‘062 patent, but the ‘062 patent (at issue in Georgia) is from the IPCO patent family while the
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`‘842 patent (asserted here) is from the SIPCO patent family. (Doc. 24-2). Of course the two
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 5 of 12
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`claims differ – they are taken from different patent families. (Doc. 24-2). A comparison of a
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`claim from an IPCO patent with a claim from a SIPCO patent fails to inform this Court and
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`muddles the issue.
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`But the existence of different limitations is not the key to the analysis. Rather, the proper
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`focus must be on the extent of similarities, or overlap, presented within the same patent families
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`and the use of common claim terms. Although plaintiffs do not concede any overlap or
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`similarity, that overlap plainly exists and even plaintiffs’ limited comparison demonstrates that
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`overlap. For example, plaintiffs’ comparison between claim 1 of the ‘471 patent and claim 2 of
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`the ‘062 patent establishes that both claims are directed to “[a] wireless network system,” and
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`further, that both claims require a “server including a server controller and a server radio
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`modem,” with each server implementing the same “server process,” and a “plurality of clients
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`each including a client controller and a client radio modem” with each client controller
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`implementing a “client process” that, among other things, “initiates and selects a radio
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`transmission path to said server.” (Doc. 24-2, p. 6/7). The fact that the ‘471 patent claim
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`requires more of the claimed “server” that the ‘062 patent does nothing to diminish the
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`substantial overlap that plainly exists. Indeed, the claim limitation directed to the client
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`controller selecting its path to the server is a key claim limitation that permeates the claims of the
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`IPCO family and it requires construction by the court.
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`Any differences that may exist between these claims are overshadowed by their
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`similarity. That similarity is further demonstrated by how the plaintiffs have applied these
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`claims. Specifically, given the similarity of claims, the products accused of infringement in this
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`action are already accused of infringement in the Georgia action. The reverse is also true. The
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`products accused of infringement in Georgia are also accused of infringement in this action. See
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 6 of 12
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`Exh. K (Toohey Decl. ¶¶ 2-4). Moreover, with minor variations, SIPCO has asserted each of its
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`patents against the vast majority of all of Emerson’s Smart Wireless products. See Counts I
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`through XXV of the Amended Complaint. (Doc. 19). These facts are critical because they
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`establish the similarity of the claims at issue, both in this District and in Georgia, and they
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`distinguish the facts of this case from those at issue in Document Generation Corp. v. Allscripts,
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`LLC, 2009 WL 2824741 (E.D. Tex. Aug. 27, 2009), Datamize, Inc. v. Fidelity Brokerage
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`Services, Inc., 2004 WL 1683171 (E.D. Tex. April 22, 2004), upon which plaintiffs rely.
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`Neither of these cases supports denial of Emerson’s motion. In Datamize, although
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`related patents were asserted in two different actions, the moving defendants were not parties to
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`the first-filed action and the accused infringer in the first filed action was not a party to the
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`second-filed action. Moreover, the Datamize court found no overlap on the further ground that
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`“different products in different industries are accused of infringing” in the two cases. Id. at *5.
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`Similarly, in Document Generation, the court denied a motion to transfer to the first-filed court
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`on the grounds that the overlap between the cases was insubstantial. Document Generation 2009
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`WL 2824741, at *2. Unfortunately, there was no discussion of the products accused of
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`infringement in the competing forums. Further, that court relied upon, without discussion, the
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`fact that plaintiff patentee had “asserted different patents against only some of the same
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`defendants” in the two actions. Id. 3
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`Here, irrespective of any claim difference plaintiffs may be able to identify, the same
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`products are accused of infringing patents at issue in both proceedings. Whatever differences
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`3 The Document Generation court further found that concern for judicial economy did not weigh
`in favor of transfer because the first-filed action had been stayed. Id. Of course, that second
`determination presents the inconsistency problem the first-filed rule was created, in part, to
`avoid. The first-filed court determined that its action should be stayed while the second-filed
`court opted against staying the later-filed, related action.
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`-6-
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 7 of 12
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`may exist from patent to patent, the claims of the SIPCO/IPCO patent families are similar
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`enough for the plaintiff to read claims from all 13 of those patents on the same accused Emerson
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`products. To the extent that any evidence regarding the development, structure, function,
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`operation, marketing or sale of the accused products is relevant, that same evidence, including
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`any witness testimony, would be relevant in both cases. These two cases overlap substantially.
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`Plaintiffs submit several claim constructions from this District to support their assertion
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`that the case should be heard here, where the Court is more familiar with the patents. See Doc.
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`24-1 at 3- 77. The citation to this Court’s prior experience with one of the eleven patents it
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`asserts in this action does not present a compelling reason to keep this case here, undercuts
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`plaintiffs’ assertion any overlap is insubstantial, and demonstrates the plaintiffs’ forum shopping
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`tendencies.4 Only one of the three Orders plaintiff relies upon to argue that this Court has
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`significant prior experience with the patents asserted in this action was entered in the Marshall
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`Division. The fact that other judges (or former judges) within this District may have experience
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`with one or more of the presently asserted patents is irrelevant as that knowledge cannot be
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`imputed to any other judge of this Court. Moreover, as the claim construction order entered in
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`SIPCO v. Amazon demonstrates, SIPCO felt that its patents were similar enough that the ‘511
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`patent (at issue in Georgia) should be grouped in one lawsuit with the ‘492 patent (at issue here).
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`Doc. 24-1 at 3. SIPCO’s previous assertion of these two patents in a single action undermines its
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`present contention that the overlap between these cases is insubstantial.
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`Finally, SIPCO’s own licensing practice demonstrates why these patent claims should not
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`be tried separately. When SIPCO licenses these patents, it groups all of the patents in the both
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`4 Beyond filing earlier actions in its home court in Georgia, SIPCO has not been consistent even
`in the filings it has made in this District, on some occasions choosing the Tyler Division while on
`others filing in this Division.
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 8 of 12
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`the SIPCO and the IPCO patent families together and licenses them as a group SIPCO calls the
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`“Essential Wireless Mesh™ (‘EWM’) Patent Portfolio.” See Exh. L (SIPCO Press Release
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`announcing a new licensee under the “EWM Patent Portfolio”). As Emerson explained in its
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`opening memorandum, when SIPCO approached Emerson in 2013, SIPCO presented a
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`collection eight patents, divided between patents within both the SIPCO and IPCO patent
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`families. It was for that reason that Emerson initially included all eight patents in the declaratory
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`judgment filing it made in Georgia. SIPCO’s current protestation that infringement claims
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`involving different patents from its EWM Patent Portfolio do not substantially overlap is a
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`litigation-inspired tactic. Many claim terms are common to patents in both actions, the same
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`products are accused of infringement both here and in Georgia, the same evidence will be
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`presented in both actions, and SIPCO itself has historically grouped these patents together, both
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`in prior litigations and in its licensing practice. The requested dismissal/transfer is warranted by
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`the substantial overlap between this and the Georgia action.
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`D.
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`A Section 1404(a) Analysis Does Not Control The First-to-File Issue
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`The plaintiffs cite Sanofi-Aventix Deutschland GmbH v. Novo Nordisk, Inc., 614 F. Supp.
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`2d 772 (E.D. Tex. 2009) as support for the proposition that the first-filed rule is to be evaluated
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`as though it were a request for transfer under § 1404(a). (Doc. 24 at 4). Plaintiffs rely upon that
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`assertion to circumvent the fact that the Georgia action was indisputably the first filed action.
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`Plaintiffs’ reliance is misplaced. The first-to-file analysis was created to promote judicial
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`economy, federal comity, and to avoid piecemeal resolution of issues that call for a uniform
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`result. The first-to-file rule is not followed “only where there is ‘sound reason that would make
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`it unjust or inefficient to continue the first-filed action.’” Sanofi-Aventix, 614 F. Supp. at 775,
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 9 of 12
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`citing Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 938 (Fed. Cir. 1993). The plaintiffs have
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`failed to demonstrate why it would be unjust or inefficient to defer to the first-filed action here.
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`Plaintiffs’ reliance on Sanofi-Aventis is misplaced. First and foremost, in Sanofi-Aventis,
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`the court in the second-filed case ordered a stay of the case and a conditional transfer until the
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`first-filed forum determined certain issues, including jurisdiction. Id. at 782. Not only does that
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`holding directly contradict SIPCO’s position in this case, that court gave too much weight to the
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`arguments made by the plaintiff in the second-filed action by misconstruing the Federal Circuit’s
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`holding in Micron Technology, Inc. v. Mosaid Technologies, Inc., 518 F.3d 897 (Fed. Cir. 2008).
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`Contrary to the Sanofi-Aventis court’s assertion, the Federal Circuit has not found that a Section
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`1404(a) analysis trumps the first-to-file rule. Sanofi-Aventis, 614 F. Supp. 2d at 775-76.
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`In Micron Technology, the district court had dismissed the declaratory judgment action
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`filed on the grounds that plaintiff there had not satisfied the Federal Circuit’s “reasonable
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`apprehension or suit” standard. Micron Technology, 518 F.3d at 900. Because the Supreme
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`Court had rejected the Federal Circuit’s “reasonable apprehension” standard, the Federal Circuit
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`was forced to reverse that dismissal. Id. at 902. The key to the Federal Circuit’s analysis in that
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`case was the fact that “[t]he word ‘may’ within the language of the Declaratory Judgment Act
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`means that a court has discretion to accept” jurisdiction over the case. Id. at 903. It was in that
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`context, and the Federal Circuit’s concern regarding the newly-created “ease of achieving
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`declaratory judgment jurisdiction,” that the Federal Circuit counseled the first-filed district court
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`that it was proper to consider Section 1404(a) factors. Id. at 902-03.
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`Critically, unlike here, the Federal Circuit was advising the court handling the first-filed
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`action, that it should consider Section 1404(a) factors in deciding whether to exercise its
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`discretionary jurisdiction over a declaratory judgment action. Moreover, the Federal Circuit
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 10 of 12
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`analysis makes clear that even that analysis applies only where the two actions were filed “within
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`relatively short time frames.” None of those facts are present here. The first-filed action is
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`pending in Georgia. It is that court that could have evaluated whether it wanted to exercise its
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`discretion over the declaratory judgment Emerson filed. Not only did SIPCO/IPCO not file a
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`motion to not exercise that discretion in favor of another forum, the Georgia court already
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`accepted jurisdiction over Emerson’s declaratory judgment action and SIPCO/IPCO brought its
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`own non-discretionary patent infringement claims under the ‘062 and ‘511 patents in that court.
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`E.
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`The Addition Of Other Parties Does Not Impact The First-to-File Analysis
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`Plaintiffs filed an Amended Complaint after the Emerson defendants filed this motion in
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`which it seeks to add four additional parties, one related Emerson limited liability partnership
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`and three BP entities. See Doc. 19. None of these additions alters the application of the first-
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`filed analysis. Micron Tech., Inc., 518 F.3d at 903 (noting that if a patent holder could
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`artificially broaden an infringement suit by naming additional defendants or patents to the later
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`filed action, “the Supreme Court’s more lenient standard for the declaratory judgment plaintiff
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`would lose its primary intended effect”). Moreover, SIPCO sued the BP entities for infringement
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`but limited the scope of those allegations to the Emerson Smart Wireless products purchased and
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`used by BP. See Doc. 19, pp. 16-18 (Count II identifying the Emerson Smart Wireless products
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`as the accused products). But SIPCO could have made the same allegations against any one of
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`Emerson customers. The real parties in interest in this dispute are Emerson and SIPCO. BP is
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`an innocent purchaser of product. Under circumstances such as these, courts routinely stay
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`infringement allegations against purchasers of accused products under the well-established
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`customer suit exception even when the customer suit was the first-filed action. See In re
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`Nintendo of America, Inc., 756 F.3d 1363, 1365 (Fed. Cir. 2014).
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`-10-
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 11 of 12
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`IV. CONCLUSION
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`For the foregoing reasons, Emerson respectfully request that this Court dismiss this
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`action or transfer it to the Norther District of Georgia for consolidation with the first-filed action.
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`Dated: January 26, 2016
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`Respectfully submitted,
`
`/s/_Melissa R. Smith
`Melissa R. Smith
`State Bar No. 24001351
`GILLAM & SMITH, LLP
`303 South Washington Avenue
`Marshall, Texas 75670
`Telephone: (903) 934-8450
`Facsimile: (903) 934-9257
`Email: melissa@gillamsmithlaw.com
`
`Donald L. Jackson
`James D. Berquist
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON &
`GOWDEY, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
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`Attorneys for Defendants Emerson Electric
`Co., Fisher-Rosemount Systems, Inc., and
`Rosemount Inc.
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`-11-
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`Case 1:16-cv-02690-AT Document 36 Filed 01/26/16 Page 12 of 12
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that on this 26th day of January, 2016, a true and correct
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`copy of the foregoing document has been served via the Court’s ECF system to all counsel of
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`record.
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`/s/ Melissa R. Smith______________
`Melissa R. Smith
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`-12-
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