Case: 1:10-cv-00715 Document #: 553 Filed: 06/04/14 Page 1 of 4 PageID #:24452
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`Case No. 10 C 715
`(Consolidated with:
`10 C 716, 10 C 718,
`10 C 720, 10 C 721,
`10 C 726, 10 C 882,
`10 C 883, 10 C 884,
`10 C 885, 10 C 929,
`10 C 931)
`
`Judge Virginia M. Kendall
`Magistrate Geraldine S. Brown
`
`Case No. 10 C 718
`
`Judge Virginia M. Kendall
`
`))))))))))) ))))))))))))
`
`TRADING TECHNOLOGIES
`INTERNATIONAL, INC.
`
`Plaintiff,
`
`v.
`
`BCG PARTNERS, INC.,
`
`Defendant.
`
`TRADING TECHNOLOGIES
`INTERNATIONAL, INC.
`
`Plaintiff,
`
`v.
`
`CQG, Inc. and CQGT, LLC,
`
`Defendants.
`
`CQG’S POSITION STATEMENT REGARDING
`TD AMERITRADE’S MOTION TO STAY
`On May 19-20, 2014, the TD Ameritrade Defendants (“TD Ameritrade”) filed Covered
`
`Business Method (“CBM”) petitions with the U.S. Patent and Trademark Office (“PTO”)
`
`seeking to invalidate 5 patents at issue in this consolidated case. On May 22nd, TD Ameritrade
`
`filed a motion to stay these consolidated proceedings under Section 18(b) of the America Invents
`
`Act (Dkt. # 545). The CQG Defendants (“CQG”) submit this position statement to address this
`
`recent filing.
`
`Page 1 of 24
`
`TRADING TECH EXHIBIT 2064
`IBG ET AL. v. TRADING TECH
`CBM2015-00182
`
`

`
`Case: 1:10-cv-00715 Document #: 553 Filed: 06/04/14 Page 2 of 4 PageID #:24453
`
`Without addressing the substance of TD Ameritrade’s CBM petitions, CQG does not
`
`object to TD Ameritrade’s request to stay this case pending the outcome of the PTO’s review of
`
`the CBM petitions.
`
`As indicated by SunGard’s position statement (Dkt. # 548), TT recently asked the
`
`defendants whether they would agree to be estopped from asserting in this case any invalidity
`
`arguments made by TD Ameritrade in its CBM petitions. Because CQG did not join or assist in
`
`the filing of the CBM petitions, if the PTO issues a final written decision under 35 U.S.C. §
`
`328(a), then only TD Ameritrade will be estopped from asserting invalidity positions raised in
`
`the CBM petitions, not CQG. See Leahy-Smith America Invents Act, Pub. L. No. 112-29, §
`
`18(a)(1)(D), 125 Stat. 284, 330 (2011) (providing estoppel for petitioner where a final written
`
`decision has been issued).
`
`Contrary to TT’s suggestion, a non-petitioning defendant like CQG need not consent to a
`
`broad estoppel in order for this Court to grant TD Ameritrade’s motion to stay (Dkt. # 545). In
`
`fact Courts frequently grant stays without estopping the non-petitioning parties. See Progressive
`
`Cas. Ins. Co. v. Safeco Ins. Co., No. 1:10CV01370, 2013 U.S. Dist. LEXIS 54899, *18 (N.D.
`
`Ohio Apr. 17, 2013) (granting a stay pending CBM review of the patent without requiring
`
`estoppel from non-petitioning party); Emp’t Law Compliance, Inc. v. Compli, Inc., No. 3:13-CV-
`
`3574-N, slip op. at 4-5 (N.D. Tex. May 27, 2014) (granting a stay pending inter partes
`
`reexamination of the patent after applying similar factors without requiring estoppel for other
`
`defendants); and Evolutionary Intelligence, LLC v. LivingSocial, Inc., No. 13-cv-047205-WHO,
`
`2014 U.S. Dist. LEXIS 6804, *9 (N.D. Cal. Jan. 17, 2014) (granting a stay with no estoppel to
`
`2
`
`Page 2 of 24
`
`

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`Case: 1:10-cv-00715 Document #: 553 Filed: 06/04/14 Page 3 of 4 PageID #:24454
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`non-petitioning party pending inter partes reexamination)1. Accordingly, at this time, CQG does
`
`not consent to be bound by any ruling on TD Ameritrade’s CBM petitions.
`
`Date:
`
`June 4, 2014
`
`Respectfully submitted,
`
`LOEB & LOEB LLP
`
`By:
`
`/s/ Adam G. Kelly___
`One of Their Attorneys
`
`Adam G. Kelly
`William J. Voller III
`J. Simone Jones
`Loeb & Loeb LLP
`321 N. Clark Street, Suite 2300
`Chicago, Illinois 60654
`Tel.: (312) 464-3100
`Fax: (312) 464-3111
`Attorneys for CQG, Inc. and CQGT, LLC
`
`1 Copies of unpublished decisions are included in Exhibit A.
`
`3
`
`Page 3 of 24
`
`

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`Case: 1:10-cv-00715 Document #: 553 Filed: 06/04/14 Page 4 of 4 PageID #:24455
`
`CERTIFICATE OF SERVICE
`
`I, Adam G. Kelly, certify that CQG’S POSITION STATEMENT REGARDING TD
`AMERITRADE’S MOTION TO STAY was served on all counsel of record on June 4, 2014
`via CM/ECF system.
`
`June 4, 2014
`
`By:
`
`/s/ Adam G. Kelly
`
`Adam G. Kelly
`William J. Voller III
`J. Simone Jones
`Loeb & Loeb LLP
`321 North Clark Street
`Suite 2300
`Chicago, IL 60654
`Attorneys for Defendants
`CQG, Inc. and CQGT, LLC
`
`Page 4 of 24
`
`

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`Case: 1:10-cv-00715 Document #: 553-1 Filed: 06/04/14 Page 1 of 20 PageID #:24456
`
`
`
`EXHIBIT A
`
`
`
`
`
`
`
`
`
`
`Page 5 of 24
`
`

`
`Case: 1:10-cv-00715 Document #: 553-1 Filed: 06/04/14 Page 2 of 20 PageID #:24457
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`Page 1
`
`PROGRESSIVE CASUALTY INSURANCE COMPANY, Plaintiff, v. SAFECO
`INSURANCE COMPANY OF ILLINOIS, et al., Defendants. PROGRESSIVE
`CASUALTY INSURANCE COMPANY, Plaintiff, v. ALLSTATE INSURANCE
`COMPANY, et al., Defendants. PROGRESSIVE CASUALTY INSURANCE
`COMPANY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE
`COMPANY, Defendant. PROGRESSIVE CASUALTY INSURANCE COMPANY,
`Plaintiff, v. HARTFORD FIRE INSURANCE COMPANY, et al., Defendants.
`
`CASE NO. 1:10CV01370,CASE NO. 1:11CV00082,CASE NO. 1:12CV01068,CASE
`NO. 1:12CV01070
`
`UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
`OHIO, EASTERN DIVISION
`
`2013 U.S. Dist. LEXIS 54899
`
`April 17, 2013, Decided
`April 17, 2013, Filed
`
`PRIOR HISTORY: Progressive Cas. Ins. Co. v. Allstate
`Ins. Co., 2011 U.S. Dist. LEXIS 84482 (N.D. Ohio, Aug.
`2, 2011)
`
`COUNSEL:
`[*1] For Progressive Casualty Insurance
`Company, Plaintiff (1:11-cv-00082-BYP): Anthony T.
`Jacono, James R. Wooley, Meredith M. Wilkes, Patrick J.
`Norton, James L. Wamsley, III, John Charles Evans,
`LEAD ATTORNEYS, Sheryl H. Love, Calvin P.
`Griffith, Jones Day - Cleveland, Cleveland, OH.
`
`For Allstate Insurance Company, Allstate Fire and
`Casualty
`Insurance
`Company,
`Defendants
`(1:11-cv-00082-BYP): Garret A. Leach, PRO HAC
`VICE, Jordan M. Heinz, Luke L. Dauchot, Meredith L.
`Krannich, Robin A. McCue, Kirkland & Ellis - Chicago,
`Chicago, IL; Robert J. Herberger , Jr., Roth, Blair,
`Roberts, Strasfeld & Lodge, Youngstown, OH.
`
`Illinois, Safeco
`For Safeco Insurance Company of
`Insurance Company
`of America, Liberty Mutual
`Insurance Company, Liberty Mutual Fire Insurance
`Company,
`Defendants,
`Counter-Claimants
`
`LEAD
`James R. Myers,
`(1:11-cv-00082-BYP):
`ATTORNEY, Amanda F. Wieker, Darrell W. Stark,
`Nicole M.
`Jantzi, Ropes & Gray - Washington,
`Washington, DC; Megan
`F. Raymond, LEAD
`ATTORNEY, PRO HAC VICE, Ropes & Gray -
`Washington, Washington, DC; Shannon Capone Kirk,
`LEAD ATTORNEY, PRO HAC VICE, Ropes & Gray -
`Boston, Boston, MA;
`John S. Cipolla, Mark W.
`McDougall, Calfee, Halter & Griswold - Cleveland, [*2]
`Cleveland, OH; Joshua V. Vanhoven, Shvarts & Leiz,
`Palo Alto, CA.
`
`For Drive Trademark Holdings, LP, Counter-Defendant
`(1:11-cv-00082-BYP): David E. Wilks, Wilks, Lukoff &
`Bracegirdle, Wilmington, DE.
`
`For Allstate Fire and Casualty Insurance Company,
`Allstate
`Insurance
`Company,
`Counter-Claimants
`(1:11-cv-00082-BYP): Garret A. Leach, Meredith L.
`Krannich, PRO HAC VICE, Jordan M. Heinz, Luke L.
`Dauchot, Robin A. McCue, Kirkland & Ellis - Chicago,
`Chicago,
`IL; Robert J. Herberger, Jr., Roth, Blair,
`Roberts, Strasfeld & Lodge, Youngstown, OH.
`
`Page 6 of 24
`
`

`
`Case: 1:10-cv-00715 Document #: 553-1 Filed: 06/04/14 Page 3 of 20 PageID #:24458
`
`2013 U.S. Dist. LEXIS 54899, *2
`
`Page 2
`
`Company,
`Insurance
`Casualty
`Progressive
`For
`Counter-Defendants (1:11-cv-00082-BYP): Anthony T.
`Jacono, James R. Wooley, Meredith M. Wilkes, Patrick J.
`Norton, LEAD ATTORNEYS, John Charles Evans,
`Sheryl H. Love, Calvin P. Griffith,
`Jones Day -
`Cleveland, Cleveland, OH.
`
`For Progressive Casualty Insurance Company, Plaintiff
`(1:12-cv-01068-BYP): James R. Wooley, Patrick J.
`Norton, LEAD ATTORNEYS, Anthony T. Jacono,
`James L. Wamsley, III, John Charles Evans, Sheryl H.
`Love, Calvin P. Griffith,
`Jones Day - Cleveland,
`Cleveland, OH.
`
`For State Farm Mutual Automobile Insurance Company,
`Defendant, Counter-Claimant
`(1:12-cv-01068-BYP):
`Benjamin C. Sasse, Robert C. [*3] Tucker, Tucker Ellis -
`Cleveland, Cleveland, OH; Corrine M. Saylor, Winston
`& Strawn - Washington, Washington, DC; Harry D.
`Cornett, Jr., Tucker, Ellis & West, Cleveland, OH; James
`F. Hurst, Julia Mano Johnson, Raymond C. Perkins,
`Winston & Strawn - Chicago, Chicago, IL; Jonathan M.
`Redgrave, Washington, DC.
`
`Company,
`Insurance
`Casualty
`Progressive
`For
`James R.
`(1:12-cv-01068-BYP):
`Counter-Defendant
`Wooley, Patrick J. Norton, LEAD ATTORNEYS, James
`L. Wamsley, III, Sheryl H. Love, Calvin P. Griffith,
`Jones Day - Cleveland, Cleveland, OH.
`
`For Progressive Casualty Insurance Company, Plaintiff
`(1:12-cv-01070-BYP): Anthony T. Jacono, James R.
`Wooley, Patrick J. Norton, LEAD ATTORNEYS, James
`L. Wamsley, III, John Charles Evans, Sheryl H. Love,
`Calvin P. Griffith, Jones Day - Cleveland, Cleveland,
`OH.
`
`Insurance Company, Hartford
`For Hartford Fire
`of
`the Midwest, Hartford
`Insurance Company
`Underwriters
`Insurance
`Company,
`Defendants
`(1:12-cv-01070-BYP):
`Arwyn
`Carroll,
`LEAD
`ATTORNEY, Ropes & Gray - Boston, Boston, MA;
`Jamie L. Lucia, LEAD ATTORNEY,
`INVALID
`ADDRESS - Ropes & Gray, New York, NY; Stuart W.
`Yothers, PRO HAC VICE, Leslie M. Spencer, LEAD
`ATTORNEY, Ropes & Gray - New York, New York,
`NY;
`[*4] Robert C. Scheinfeld, LEAD ATTORNEY,
`PRO HAC VICE, Baker Botts - New York, New York,
`NY; Amanda M. Knapp, George W. Rooney, Jr., Roetzel
`& Andress - Cleveland, Cleveland, OH.
`
`For Hartford Underwriters Insurance Company, Hartford
`Insurance Company of
`the Midwest, Hartford Fire
`Insurance
`Company,
`Counter-Claimants
`(1:12-cv-01070-BYP):
`Arwyn
`Carroll,
`LEAD
`ATTORNEY, Ropes & Gray - Boston, Boston, MA;
`Jamie L. Lucia, LEAD ATTORNEY,
`INVALID
`ADDRESS - Ropes & Gray, New York, NY; Stuart W.
`Yothers, PRO HAC VICE, Leslie M. Spencer, LEAD
`ATTORNEY, Ropes & Gray - New York, New York,
`NY; Robert C. Scheinfeld, LEAD ATTORNEY, PRO
`HAC VICE, Baker Botts - New York, New York, NY;
`George W. Rooney, Jr., Roetzel & Andress - Cleveland,
`Cleveland, OH.
`
`Company,
`Insurance
`Casualty
`Progressive
`For
`(1:12-cv-01070-BYP): Anthony T.
`Counter-Defendant
`Jacono, James R. Wooley, Patrick J. Norton, LEAD
`ATTORNEYS, James L. Wamsley, III, Sheryl H. Love,
`Calvin P. Griffith, Jones Day - Cleveland, Cleveland,
`OH.
`
`JUDGES: Benita Y. Pearson, U.S. District Judge.
`
`OPINION BY: Benita Y. Pearson
`
`OPINION
`
`ORDER [Resolving ECF No. 98]
`
`ORDER [Resolving ECF No. 118]
`
`ORDER [Resolving ECF No. 36]
`
`ORDER [Resolving ECF No. 48]
`
`Each of the defendants in the four related [*5] patent
`cases on this Court's docket--Liberty Mutual1 (Case Nos.
`1:10CV01370 and 1:11CV00082), State Farm Mutual
`Automobile Insurance Company ("State Farm") (Case
`and Hartford2
`No.
`1:12CV01068),
`(Case No.
`1:12CV01070)--have moved to stay the actions against
`them in light of recent proceedings instituted by the
`Patent Trial and Appeal Board ("PTAB")3 for transitional
`Covered Business Method ("CBM")
`review of
`the
`patents-in-suit. The plaintiff in the four cases, Progressive
`Casualty Insurance Company ("Progressive"), opposes
`these motions. On Progressive's motion, the Court held
`oral argument on April 11, 2013. After weighing the
`arguments raised during the hearing and in the briefs, and
`applying the law established by statute,
`the Court
`
`Page 7 of 24
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`

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`
`2013 U.S. Dist. LEXIS 54899, *5
`
`Page 3
`
`concludes that the cases will be stayed.
`
`1 The name "Liberty Mutual" is used to refer,
`collectively,
`to Liberty Mutual Group,
`Inc.,
`Liberty Mutual
`Insurance Company, Liberty
`Mutual
`Fire
`Insurance Company,
`Safeco
`Corporation, Safeco Insurance Company of
`America, Safeco Insurance Company of Illinois,
`the Ohio Casualty Insurance Company, and Open
`Seas Solutions, Inc. Liberty Mutual Group, Inc.,
`is
`the
`parent
`corporation
`of
`the
`subsequently-named entities.
`2
`The [*6] name "Hartford" is used to refer,
`collectively, to Hartford Fire Insurance Company,
`Hartford Insurance Company of the Midwest, and
`Hartford Underwriters Insurance Company.
`3
`The PTAB is an administrative adjudicatory
`body of the United States Patent and Trademark
`Office ("PTO"). See 35 U.S.C. § 6.
`
`I. Facts
`
`Progressive has sued Liberty Mutual, State Farm,
`and Hartford for allegedly infringing upon Progressive's
`patents
`relating
`to
`certain
`usage-based
`insurance
`technologies (the "970," "598," and "358" patents) and
`online servicing technologies (the "088" and "269"
`patents).4 ECF No. 64 in Case No. 1:10CV01370; ECF
`No. 6 in Case No. 1:11CV00082; ECF No. 4 in Case No.
`1:12CV01068; ECF No. 1 in Case No. 1:12CV01070.
`The two lawsuits against Liberty Mutual were filed in
`June 18, 2010, and January 12, 2011. The lawsuits
`against State Farm and Hartford were both filed on April
`30, 2012. After conducting, on December 14, 2012, a
`case management conference with all of the parties, the
`Court issued an order consolidating the four cases for
`pretrial proceedings, setting the cases on a complex track,
`and adopting a common pretrial schedule. See, e.g., ECF
`No. 104 in Case No. 1:11CV00082. At that time, [*7]
`the Court denied, without prejudice, motions to stay filed
`by Liberty Mutual and Hartford.5 The Court permitted,
`however, Liberty Mutual and Hartford to move the Court
`to revisit the matter of staying the cases if and when the
`PTAB determined that an administrative trial would
`proceed on any of Liberty Mutual' petitions to the PTO
`for CMB review of the patents-in-suit. ECF No. 85 in
`Case No. 1:12CV01070; ECF No. 105 in Case No.
`1:11CV00082; ECF No. 34 in Case No. 1:12CV01070.
`
`Progressive alleges that Liberty Mutual and
`4
`State Farm have infringed upon all
`five
`
`patents-in-suit, and that Hartford has infringed
`upon the usage-based patents (970, 598, and 358).
`5 State Farm did not join these initial motions to
`stay.
`
`Since that ruling, the PTAB has authorized CBM
`review of every claim of each of the five patents-in-suit
`asserted by Progressive against Liberty Mutual. See ECF
`No. 102 at 2 in Case No. 1:10CV01370. As part of the
`PTAB's authorization, panels of
`three administrative
`patent judges have preliminarily determined that "it is
`more likely than not
`that" every claim asserted by
`Progressive against Liberty Mutual is "unpatentable." See
`ECF No. 102 at 2 in Case No. 1:10CV01370. The PTAB
`[*8] has scheduled trials for all five patents-in-suit, and,
`each of the proceedings are scheduled to be fully briefed,
`argued, and submitted for decision by November 13,
`2013. ECF No. 102 at 2 Case No. 1:10CV01370.
`
`Now, to avoid the potential for costly and duplicative
`litigation in two fora, Liberty Mutual, State Farm, and
`Hartford, all move to stay the lawsuits brought against
`them by Progressive in this Court. ECF No. 98 in Case
`No. 1:10CV01370; ECF No. 118 in Case No.
`1:11CV00082; ECF No. 36 in Case No. 1:12CV01068;
`ECF No. 48 in Case No. 1:12CV01070.
`
`II. The Leahy-Smith America Invents Act ("AIA")
`
`the
`by
`governed
`are
`stay
`to
`The motions
`Leahy-Smith America Invents Act ("AIA"). Section 18 of
`the AIA created a new transitional program authorizing
`persons who have been sued for infringing a CBM
`review" from the PTO
`patent6 to seek "post-grant
`regarding the validity of the patent. AIA § 18(a)(1) P.L.
`112-29, 125 Stat. 284, 329-30 (2011). The AIA was
`signed into law on September 16, 2011, and § 18, the
`CBM review procedure component, was implemented a
`year later, on September, 16, 2012.7 AIA § 18(a)(1), P.L.
`112-29, 125 Stat. 284, 329 (2011); see 37 C.F.R. §
`42.300. Under the AIA, a party [*9] may seek to stay a
`patent infringement action in federal district court where
`a "transitional proceeding for
`that patent" has been
`instituted. AIA § 18(b)(1), P.L. 112-29, 125 Stat. 284,
`331. The AIA asks district courts to decide whether a stay
`should be granted based on a four-factor test:
`
`(1) whether a stay, or the denial thereof,
`will simplify the issues in question and
`streamline the trial;
`
`Page 8 of 24
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`

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`
`2013 U.S. Dist. LEXIS 54899, *9
`
`Page 4
`
`(2) whether discovery is complete and
`whether a trial date has been set;
`
`the denial
`(3) whether a stay, or
`thereof, would unduly prejudice
`the
`nonmoving party or present a clear tactical
`advantage for the moving party; and
`
`the denial
`(4) whether a stay, or
`burden
`of
`thereof, will
`reduce
`the
`litigation on the parties and on the court.
`
`AIA § 18(b)(1), P.L. 112-29, 125 Stat. 284, 331 (2011).
`
`A CBM patent is "a patent that claims a
`6
`method
`or
`corresponding
`apparatus
`for
`performing data processing or other operations
`used
`in
`the
`practice,
`administration,
`or
`management of a financial product or service,
`except that the term does not include patents for
`technological inventions." 37 C.F.R. § 42.301(a).
`7 The CBM review at issue was initiated after
`Progressive had filed each of
`the lawsuits
`involved herein.
`
`It [*10] has been observed that "[t]his statutory test
`resembles the stay analysis courts have applied in
`assessing a motion to stay pending inter partes or ex
`parte reexamination by the [PTO]." Market-Alerts Pty.
`Ltd. v. Bloomberg Finance, L.P., 922 F. Supp. 2d 486 ,
`2013 U.S. Dist. LEXIS 15300, 2013 WL 443973 at *2 (D.
`Del. 2013). "The substantial difference between the test
`set forth in [AIA] § 18(b)(1) and that employed by courts
`in the ordinary patent
`reexamination context
`is the
`inclusion of a fourth factor, which requires the court to
`consider 'whether a stay, or the denial thereof, will reduce
`the burden of litigation on the parties and on the court.'"
`Id.; see, e.g., ImageVision.Net, Inc. v. Internet Payment
`Exchange, Inc., 2012 U.S. Dist. LEXIS 124979, 2012 WL
`5599338 at *2 (D. Del. 2012) (applying test comprising
`first three factors of AIA § 18(b)(1)).
`
`Although legislative history is not law, it is, at times,
`helpful
`to consider discussions had during a law's
`development. For that purpose, the Court has considered
`comments made by one of the sponsors of § 18, Senator
`Charles Schumer, who explained that
`the transitional
`program for reviewing CBM patents was proposed in
`response to the large number of poor quality business
`method patents engendered, [*11] in part, by permissive
`court rulings, and the concomitant "cottage industry" of
`
`business method patent litigation. 157 Cong. Rec. S1363.
`According to Senator Schumer, while federal courts have
`begun to address this problem by crafting more restrictive
`standards for
`issuing business method patents,
`this
`development has nevertheless left "in limbo" many
`patents issued by the PTO that are not in fact valid. Id.
`Senator Schumer also offered that:
`
`Litigation over invalid patents places a
`substantial burden on U.S. courts and the
`U.S.
`economy.
`Business-method
`inventions generally are not and have not
`been patentable in countries other than the
`United States.
`In order
`to reduce the
`burden placed on courts and the economy
`by this back-and-forth shift
`in judicial
`precedent,
`the Schumer-Kyl
`transitional
`proceeding
`authorizes
`a
`temporary
`administrative alternative for
`reviewing
`business method patents.
`
`Id.
`
`Senator Schumer stated that the amendment which
`was the precursor to AIA § 18 was "designed to provide a
`cheaper, faster alternative to district court litigation over
`the validity of business-method patents" and, to that end,
`the legislation "places a very heavy thumb on the scale in
`favor of
`[*12] a stay being granted." 157 Cong. Rec.
`S1363. Senator Schumer identified the fourth § 18(b)(1)
`factor as being consistent with this purpose:
`
`the
`employs
`amendment
`The
`other
`than
`test,
`rather
`[four-factor]
`tests
`employed by other
`multi-factor
`district courts [in deciding stay motions
`filed in response to PTO reexamination
`proceedings] because this test properly
`emphasizes a fourth factor that is often
`ignored by the courts: 'whether a stay will
`reduce the burden of litigation on the
`parties and on the court.' Too many district
`courts
`have
`been
`content
`to
`allow
`litigation
`to
`grind
`on while
`a
`reexamination is being conducted, forcing
`the parties to fight in two fora at the same
`time. This is unacceptable, and would be
`contrary to the fundamental purpose of the
`Schumer-Kyl amendment
`to provide a
`cost-efficient alternative to litigation.
`
`Page 9 of 24
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`

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`
`2013 U.S. Dist. LEXIS 54899, *12
`
`Page 5
`
`157 Cong. Rec. S1364.
`
`In sum, the test established by the AIA is designed to
`increase the likelihood that a stay will be granted when
`transitional CBM review, in comparison with an ordinary
`PTO reexamination, has been instituted.
`
`III. Analysis
`
`A. Factor #1: Whether a stay, or denial thereof, will
`simplify the issues in question and streamline the trial.
`
`Three-judge [*13] panels of administrative patent
`judges at the PTAB have determined, with respect to
`every claim of every one of the five patents asserted by
`Progressive against Liberty Mutual, that "it is more likely
`than not that" the claims are "unpatentable."8 ECF No.
`102 at 2 in Case No. 1:10CV01370; see ECF Nos. 98-2;
`98-3; 98-4; 98-5; 98-6; 102-1 in Case No. 1:10CV01370.
`Based on these preliminary determinations, Liberty
`Mutual argues that it is probable that the patent claims
`asserted by Progressive against Liberty Mutual will be
`declared invalid, and, if any patent claims do survive, it is
`likely that
`their
`terms will be different
`from those
`presently asserted. ECF No. 98-1 at 2 in Case No.
`1:10CV01370. According to Liberty Mutual,
`it
`is
`therefore wasteful
`to continue litigating Progressive's
`patent claims in this Court during the pendency of the
`PTAB trials: if the claims are invalidated, the lawsuits
`against Liberty Mutual may be dismissed; if Progressive
`amends the claims, as it has already proposed to do for
`some, then different claims will be at issue. See ECF No.
`98-1 at 6 in Case No. 1:10CV01370. State Farm and
`Hartford assert similar arguments. State Farm claims that
`there is no need [*14] for the Court and the parties to
`devote substantial time and resources litigating the claim
`construction, non-infringement, and invalidity issues
`when, by the end of the year, these claims will either be
`invalidated or amended. ECF No. 36 at 4 in Case No.
`1:12CV01068. Hartford argues that
`the scope of the
`asserted claims is likely to change during CBM review,
`and awaiting those changes would simplify the issues in
`this case. ECF No. 48 at 3 in Case No. 1:12CV01070.
`
`8 These determinations were made in the course
`of the PTAB deciding whether to proceed with
`CBM review of the claims at issue. See, e.g., ECF
`No. 98-2 at 3 in Case No. 1:10CV01370.
`
`From Progressive's
`
`perspective,
`
`staying
`
`the
`
`proceedings would not simplify or streamline the issues
`for trial. First, Progressive claims that CBM review "will
`not address invalidity based on 35 U.S.C. §§ 101, 111,
`112, 115, 116, and 133" and will also not address
`equitable defenses
`such as unclean hands,
`laches,
`estoppel, waiver or acquiescence. ECF No. 100 at 8 in
`Case No. 1:10CV01370. Second, although Liberty
`Mutual will be estopped from re-litigating the same
`arguments it makes to the PTAB in the federal court
`litigation, estoppel will not apply [*15] to State Farm
`and Hartford because they are not participants of the
`transitional CBM program. ECF No. 100 at 8 in Case No.
`1:10CV01370. Third, according to Progressive, the lack
`of highly technical
`language in the patents-in-suit
`militates against staying the cases. ECF No. 100 at 9 in
`Case No. 1:10CV01370. Progressive also argues that,
`unless the PTAB invalidates all of the patent claims at
`issue, there will almost certainly remain issues to be tried
`by this Court that were not addressed by the PTAB. ECF
`No. 100 at 8 in Case No. 1:10CV01370.
`
`At least one district court has observed that staying a
`patent case pending administrative review of the patent's
`validity can simplify litigation in federal court in the
`following ways:
`
`(1) all prior art presented to the court at
`trial will have been first considered by the
`PTO with its particular expertise, (2) many
`discovery problems relating to the prior art
`can be alleviated, (3) if [the] patent
`is
`declared invalid,
`the suit will
`likely be
`dismissed,
`(4)
`the
`outcome
`of
`the
`[administrative review] may encourage a
`settlement without further involvement of
`the
`court,
`(5)
`the
`record
`of
`the
`[administrative review] would probably be
`entered at
`trial,
`[*16]
`reducing the
`complexity and the length of the litigation,
`(6) issues, defenses, and evidence will be
`more
`easily
`limited
`in
`pre-trial
`conferences . . . .
`
`Gioello Enterprise Ltd. v. Mattel, Inc., 2001 U.S. Dist.
`LEXIS 26158, 2001 WL 125340 at *1 (D. Del. 2001).
`
`Based on the preliminary determinations made by the
`PTAB, it appears that each claim in contention between
`Progressive
`and Liberty Mutual,
`across
`the
`five
`patents-in-suit, is "more likely than not" to be invalidated.
`
`Page 10 of 24
`
`

`
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`
`2013 U.S. Dist. LEXIS 54899, *16
`
`Page 6
`
`The PTAB issued highly detailed reports spanning
`hundred of pages to justify its initial evaluation of the
`patent claims. See, generally, in Case No. 1:10CV01370,
`ECF Nos. 98-2; 98-3; 98-4; 98-5; 98-6; 102-1; see also
`ECF No. 112 at 54. And, prior to issuing its decisions, the
`PTAB reviewed 777 pages of detailed arguments
`submitted by Progressive. ECF No. 112 at 53-54, 73 in
`Case No. 1:10CV 01370; see 37 C.F.R. § 42.207(a)
`(permitting patent owner to file preliminary responses to
`petition for post-grant review). Progressive does not
`contest statistics showing that in inter partes proceedings,
`the PTO cancels all claims of a patent 42% of the time
`and either cancels or amends claims 89% of the time.
`ECF No. 75-1 at 4 in Case No. 1:10CV01370; see [*17]
`also ECF No. 75-8 (PTO statistics based on total inter
`partes reexamination certificates issued between 1999
`and June 30, 2012). Because it appears virtually certain
`that the landscape of the litigation will be significantly
`different following the PTAB proceedings, it is wasteful
`to now engage in litigation over patent claims that are
`likely to be altered or invalidated in the course of CBM
`review. Moreover, while Hartford and State Farm are not
`participants in the CBM review program,
`the patent
`claims asserted by Progressive against them overlap the
`claims at issue in the Liberty Mutual cases. ECF No. 36
`at 1 in Case No. 1:12CV01068 (PTAB,
`in deciding
`Liberty Mutual's petitions for CMB review, "has issued
`decisions spanning over 300 pages rejecting as likely
`invalid every single one of
`the 131 claims
`that
`Progressive has asserted against State Farm" [emphasis
`added]); ECF No. 52 at 4 in Case No. 1:12CV01070
`("[t]here is a high probability that the issues in [the case
`against Hartford] will be simplified, if not eliminated
`altogether, by the CBM proceedings").
`
`Progressive's arguments against a stay, on this first
`factor, is weak. Progressive claims that the 89% statistic
`is misleading [*18] because it also shows the high
`likelihood that at least some claims will survive and,
`therefore, a stay would not preserve many resources. ECF
`No. 100 at 8 in Case No. 1:10CV01370. This argument is
`unavailing. Progressive has asserted over 130 patent
`claims against Liberty Mutual and State Farm. ECF No.
`112 at 42 and 49 in Case No. 1:10CV01370. That a few
`of those claims may survive without amendment does not
`mean that the issues will not be significantly streamlined.
`Similarly, that the PTAB may not address every single
`ground of invalidity and every art reference that might be
`raised in federal court, does not mean CBM review will
`not drastically simplify the issues presented to the Court.
`
`If a claim is invalidated or amended, it will not matter
`whether the PTAB addressed every ground of invalidity.
`Of importance is that, as a result of the CBM review, the
`scope and substance of the issues before the Court will be
`refined. While estoppel will not automatically apply to
`State Farm and Hartford because they have not sought
`CMB review, Hartford has agreed to be estopped from
`asserting invalidity arguments based on 35 U.S.C. §§ 102
`and 103 on which the PTAB issues a final, written
`decision.
`[*19] See ECF No. 52 at 6 in Case No.
`1:12CV01070. Lastly, the lack of technical language in
`the patents-in-suit does not mean that the PTAB will fail
`to resolve complex issues.
`
`An assessment of the parties' arguments with respect
`to the first factor weighs in favor of staying the actions.
`
`B. Factor #2: Whether discovery is complete and
`whether a trial date has been set.
`
`Discovery has commenced--initial disclosures have
`been exchanged and the defendants have provided initial
`invalidity and unenforceability contentions and certain
`paper discovery. See ECF No. 100 at 11 in Case No.
`1:10CV01370. Discovery is, however, far from complete
`and no trial date has yet been set for these consolidated
`cases. As of this writing, no documents have been
`produced beyond those required with the parties' initial
`contentions, no depositions have been noticed or taken,
`no expert reports have been exchanged, and no subpoenas
`have been served. ECF No. 52 at 9 in Case No.
`1:12CV01070; see ECF No. 112 at 60, 70 in Case No.
`1:10CV01370. The stage of discovery may fairly be
`characterized as "early." Staying a case at an early
`juncture advances judicial efficiency and "will maximize
`the likelihood that neither the Court [*20] . . . nor the
`parties expend their assets addressing invalid claims."
`Gioello Enterprises Ltd. v. Mattel, Inc., 2001 U.S. Dist.
`LEXIS 26158, 2001 WL 125340 at *2.
`
`The second factor weighs in favor of staying the
`proceedings.
`
`C. Factor #3: Whether a stay, or the denial thereof,
`would unduly prejudice the nonmoving party or
`present a clear tactical advantage for the moving
`party.
`
`the
`staying
`that
`Liberty Mutual maintains
`proceedings will not cause prejudice to Progressive
`because money damages will adequately compensate
`
`Page 11 of 24
`
`

`
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`
`2013 U.S. Dist. LEXIS 54899, *20
`
`Page 7
`
`Progressive if it is later determined that Liberty Mutual
`has infringed upon any of Progressive's patents. ECF No.
`102 at 4 in Case No. 1:10CV01370. Hartford points to
`Progressive's licensing agreement with another insurance
`company, Allstate, as evidence that money damages will
`provide adequate relief to Progressive. ECF No. 52 at 3 in
`Case No. 1:12CV01070. State Farm maintains that a stay
`will benefit, rather than prejudice, Progressive because all
`parties will benefit from more certainty about what
`claims will be litigated. ECF No. 36 at 4 in Case No.
`1:12CV01068.
`
`Progressive emphasizes that this is Liberty Mutual's
`third motion to stay the proceedings, and this Court has
`stayed the matter once before [*21] in each of the
`Liberty Mutual cases. See ECF No. 49 in Case No.
`1:10CV01370 (stay granted on November 12, 2010);
`ECF No. 86 in Case No. 1:11CV00082 (stay granted on
`August 2, 2011). According to Progressive, Liberty
`Mutual's present motion to stay is an attempt to gain a
`tactical advantage by keeping the lawsuits dormant until
`one of Progressive's patents--specifically,
`the 970
`patent--expires in less than three years. ECF No. 100 at
`13 in Case No. 1:10CV01370. This strategy, claims
`Progressive, is an attempt by Liberty Mutual to avoid a
`permanent injunction on the 970 patent. ECF No. 100 at
`13 in Case No. 1:10CV01370. Progressive also stresses
`that Liberty Mutual, State Farm, and Hartford are all
`competitors in the market, which "raises a presumption"
`that Progressive will be prejudiced by any stay. ECF No.
`100 at 12 in Case No. 1:10CV01370; ECF No. 41 at 3 in
`Case No. 1:12CV01068; ECF No. 49 at 6 in Case No.
`1:12CV01070.
`
`Without question, Progressive will be somewhat
`prejudiced by another stay. The salient question posed by
`the third factor, however, is whether Progressive will be
`unduly prejudiced. In determining whether a plaintiff
`might be unduly prejudiced by a stay, courts have [*22]
`turned to considerations including "the timing of the stay
`request, the timing of the administrative review request,
`the status of the review proceedings, and the relationship
`of the parties." Market-Alerts Pty. Ltd. v. Bloomberg
`Finance L.P., 2013 WL 443973 at *5. Here, there is no
`indication that Liberty Mutual engaged in dilatory tactics
`in either petitioning for CBM review or filing its motions
`to stay. To the contrary, Liberty Mutual immediately filed
`its administrative petitions when the transitional CBM
`program became available in September, 2012; see ECF
`No. 112 at 43 in Case No. 1:10CV01370; see also Table,
`
`attached as Appendix A, provided by Liberty Mutual
`during the December 14, 2012 case management
`conference (showing that CBM petitions were filed
`between September 16, 2012, and November 19, 2012);
`and it moved to stay the district court proceedings as soon
`as the