`
`EXHIBIT 2008
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page1 of 22
`
`CHARLES K. VERHOEVEN (Bar. No. 170151)
`charlesverhoeven@quinnemanuel.com
`SEAN PAK (Bar No. 219032)
`seanpak@quinnemanuel.com
`JENNIFER A. KASH (Bar No. 203679)
`jenniferkash@quinnemanuel.com
`MARY H. MCNEILL (Bar No. 261500)
`marymcneill@quinnemanuel.com
`HOWARD Y. CHEN (Bar No. 265015)
`howardchen@quinnemanuel.com
`QUINN EMANUEL URQUHART & SULLIVAN, LLP
`50 California Street, 22nd Floor
`San Francisco, California 94111
`Telephone:
`(415) 875-6600
`Facsimile:
`(415) 875-6700
`
`Attorneys for Defendant MicroStrategy Inc.
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`VASUDEVAN SOFTWARE, INC.,
`CASE NO. 11-CV-06637-RS-PSG
`
`Plaintiff,
`
`v.
`
`MICROSTRATEGY INC.,
`
`Defendant.
`
`MICROSTRATEGY INC.’S OPPOSITION
`TO PLAINTIFF VASUDEVAN
`SOFTWARE, INC.’S MOTION FOR
`SANCTIONS
`Date: January 24, 2013
`Time: 1:30 pm
`Courtroom 3, 17th Floor
`Judge: Hon. Richard Seeborg
`
`1        
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`04706.51984/5099364.9
`
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO PLAINTIFF VSI’s MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page2 of 22
`
`TABLE OF CONTENTS
`
`Page
`
`I.
`
`II.
`
`III.
`
`IV.
`
`V.
`
`BACKGROUND ...................................................................................................................2
`
`VSI’S MOTION MUST BE DENIED BECAUSE MICROSTRATEGY’S
`PETITION IS NOT OBJECTIVELY BASELESS................................................................5
`
`VSI FAILS TO SUPPORT ITS CLAIM THAT MICROSTRATEGY’S
`REEXAMINATION PETITION IS FOR AN IMPROPER PURPOSE ...............................8
`
`THE PROPER FORUM FOR VSI’S ALLEGATIONS IS THE PTO................................10
`
`THE REMEDIES VSI SEEKS ARE IMPROPER ..............................................................12
`
`A.
`
`B.
`
`C.
`
`The Court Should Not Enjoin MicroStrategy From Petitioning the PTO ...............12
`
`The Court Should Not Give VSI’s Unsupported Jury Instruction...........................12
`
`The Court Should Not Order MicroStrategy to Pay Attorneys’ Fees......................13
`
`VI.
`
`THE COURT SHOULD AWARD MICROSTRATEGY ITS FEES IN
`RESPONDING TO THIS MOTION...................................................................................15
`
`CONCLUSION................................................................................................................................15
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-i-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page3 of 22
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Page
`
`3M Co. v. Kinik Co., No. Civ. 04-123,
`2004 WL 1328268 (D. Minn. June 15, 2004)..............................................................................3
`
`BE & K Constr. Co. v. NLRB,
`536 U.S. 516 (2002).................................................................................................................5, 7
`
`B.K.B. v. Maui Police Dept.,
`276 F.3d 1091 (9th Cir. 2002) .....................................................................................................7
`
`In re Baker Hughes Inc.,
`215 F.3d 1297 (Fed. Cir. 2000)....................................................................................................5
`
`Bill Johnson's Restaurants, Inc. v. NLRB,
`461 U.S. 731 (1983)...............................................................................................................7, 12
`
`Bridge C.A.T. Scan Assoc. v. Technicare Corp.,
`710 F.2d 940 (2d Cir. 1983).........................................................................................................6
`
`C 5658,
`2002 WL 1433717 (N.D. Ill. July 2, 2002)..................................................................................7
`
`Cali. Motor Transport Co. v. Trucking Unlimited,
`404 U.S. 508 (1972).....................................................................................................................5
`
`Edwards v. Marin Park, Inc.,
`91 F. App'x 14, 16-17 (9th Cir. 2004)........................................................................................14
`
`Fidelity Nat. Title Ins. Co. of New York v. Intercounty Nat. Title Ins. Co.,
`No. 00...........................................................................................................................................7
`
`Fuoco v. Wells,
`No. 8:03-cv-161 2005 WL 2317750 (M. D. Fla. Jul. 25, 2005)..................................................7
`
`GP Indus., Inc. v. Eran Indus., Inc.,
`500 F.3d 1369 (Fed. Cir. 2007)................................................................................................6, 7
`
`Galanis v. Szulik,
`841 F. Supp. 2d 456 (D. Mass. 2011) ..........................................................................................7
`
`George v. Indus. Maintenance Corp.,
`305 F. Supp. 2d 537 (D.V.I. 2002) ..............................................................................................6
`
`Globetrotter Software, Inc. v. Elan Computer Group, Inc.,
`362 F.3d 1367 (Fed. Cir. 2004)....................................................................................................6
`
`Johannson v. Wachovia Mortg., FSB, No. C 11-02822,
`2012 WL 2793204 (N.D. Cal. July 9, 2012).........................................................................13-14
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-ii-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page4 of 22
`
`Kelly v. U.S. Bank,
`No. 08-1421, 2010 WL 2817292 (D. Or. June 25, 2010)..........................................................15
`
`iLOR, LLC v. Google, Inc.,
`631 F.3d 1372 (Fed. Cir. 2011)....................................................................................................6
`
`In re Lonardo,
`119 F.3d 960 (Fed. Cir. 1997)..................................................................................................3, 9
`
`Martin v. Automobili Lamborghini Exclusive, Inc.,
`307 F.3d 1332 (11th Cir. 2002) ...................................................................................................7
`
`Molski v. Mandarin Touch Restaurant,
`347 F. Supp. 2d 860 (C.D. Cal. 2004) ...................................................................................7, 12
`
`Oliveri v. Thompson,
`803 F.2d 1265 (2d Cir. 1986).......................................................................................................7
`
`Patlex Corp.v. Mossinghoff,
`771 F.2d 480 (Fed. Cir. 1985)....................................................................................................11
`
`Pony v. County of Los Angeles,
`433 F.3d 1138 (9th Cir. 2006) ...................................................................................................14
`
`Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc.,
`508 U.S. 49 (1993)..................................................................................................................6, 8
`
`Sosa v. DIRECTV, Inc.,
`437 F.3d 923 (9th Cir. 2006) .......................................................................................................6
`
`In re Swanson,
`540 F.3d 1368 (Fed. Cir. 2008)....................................................................................................9
`
`United Mine Workers v. Pennington,
`381 U.S. 657 (1965)...............................................................................................................5, 14
`
`United States v. Carmichael,
`326 F. Supp. 2d 1267 (M.D. Ala. 2004) ......................................................................................6
`
`Vitronics Corp. v. Conceptronic, Inc.,
`36 F. Supp. 2d 440 (D.N.H. 1997)...............................................................................................9
`
`Zaldivar v. Los Angeles,
`780 F.2d 823 (9th Cir. 1986) .......................................................................................................7
`
`Statutes
`35 U.S.C. § 302..................................................................................................................................1
`
`35 U.S.C. § 302 & 311(a) ........................................................................................................3, 9, 11
`
`35 U.S.C. §§ 303(a) & 304 ................................................................................................................4
`
`37 C.F.R. § 10.20-11.2.....................................................................................................................11
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-iii-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page5 of 22
`
`37 C.F.R. § 11.2...............................................................................................................................11
`
`37 C.F.R. § 1.913...............................................................................................................................3
`
`MPEP § 1.510 ....................................................................................................................................9
`
`MPEP § 2212 .....................................................................................................................................9
`
`MPEP § 2240 .............................................................................................................................11, 14
`
`MPEP § 2601.01 ................................................................................................................................3
`
`MPEP § 2609 .....................................................................................................................................3
`
`Other Authorities
`Anne L. St. Martin & Vincent K. Shier, Singular Reexamination Advances to Favorable
`Conclusion, Patents Post-Grant (Dec. 22, 2009) available at
`http://www.patentspostgrant.com/lang/en/2009/12/singulair-reexamination-advances-to-
`favorable-conclusion..................................................................................................................10
`
`Dan Goodin, EFF Wins Request for Reexamination of Ringtone Patent, The Register (Jan. 7,
`2009), available at http://www.theregister.co.uk/2009/01/07/eff_challenges_music_patent ...10
`
`Laura Heyne, The Disciplinary Function of the PTO's Office of General Counsel, 19 J. Contemp.
`Legal Issues 65 (2010)...............................................................................................................11
`
`Press Release, EFF Wins Reexamination of Bogus Patent (Oct. 23, 2007), available at
`https://www.eff.org/press/archives/2007/10/23.........................................................................10
`
`Press Release, ZipRealty Deploys MicroStrategy for Sales Reporting and Marketing Analytics,
`available at http://www.microstrategy.com/about-us/press/release/?ctry=167&id=1331 ........10
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-iv-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page6 of 22
`
`VSI refuses to focus on the merits of this case. In September, the Court ruled against VSI
`
`on key claim construction disputes, including the phrase “disparate databases.” Dkt. 97. Instead
`
`of squarely addressing the negative substantive impact this ruling had on its case, VSI is
`
`attempting to divert the Court’s and the parties’ attention and resources through sideshow motion
`
`practice. First, VSI moved for sanctions and to strike portions of an errata to the parties’ joint
`
`claim construction statement in an effort to preclude MicroStrategy from seeking summary
`
`judgment on the dispositive term. Dkt. 114. This Court denied VSI’s first motion for sanctions on
`
`the papers because “VSI [] failed to comply with the dictates of [rules] that govern motions for
`
`sanctions. Dkt. 135 (finding “in light of these procedural deficiencies, VSI’s motion is denied to
`
`the extent it seeks sanctions against MicroStrategy”). The Court also denied VSI’s underlying
`
`motion, which it found “violated the rules of the Court” (11/15/12 Tr. at 11) and characterized as
`
`an attempt at “a game of gotcha” that sought to “preclude [it] from considering a potentially case
`
`dispositive issue” Dkt. 141 at 4; see Declaration of Mary McNeill in Support of Opposition to
`
`VSI’s Motion for Sanctions (“McNeill Decl.”), Ex. A. Further, as an end run around Judge
`
`Grewal’s prior rulings denying discovery on non-accused products and in an effort to salvage its
`
`infringement claim, VSI unsuccessfully sought to add fourteen more products to this case by filing
`
`an unsupportable motion to amend its infringement contentions. See Dkt. 141. In denying this
`
`motion, the Court stated that VSI had “failed to demonstrate the diligence required by patent local
`
`rule 3-6” and its motion would “frustrate the purpose of the patent local rules.” Id. at 7.
`
`Moreover, to date, VSI has filed four other discovery motions, prompting Judge Grewal to
`
`chastise VSI for “tak[ing] these extreme positions” (11/13/12 Tr. at 26) and note that “the meet
`
`and confer process has not gone well.” Dkt. 137 at 3; see McNeill Decl., Ex. B. VSI has not been
`
`successful with these distracting motions, and its latest is once again a meritless diversion, this
`
`time premised on the filing of a petition for reexamination of a patent owned by third party Zillow.
`
`This motion, like VSI’s last sanctions request, should be denied because it rests on the
`
`bizarre and novel proposition that a party may be sanctioned for filing a petition for patent
`
`reexamination. That is false. Contrary to VSI’s bluster, the reexamination statute provides that
`
`“[a]ny person at any time may file a request for reexamination.” 35 U.S.C. § 302. Indeed, the
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-1-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page7 of 22
`
`public interest in patent quality by itself justifies submission of prior art to the Patent and
`
`Trademark Office (“PTO”) for consideration, and VSI cites no cases ever sanctioning such
`
`conduct. VSI likewise fails to cite any authority demonstrating it even has standing to seeks
`
`attorneys’ fees on a third party’s behalf.
`
`VSI’s motion further runs afoul of the petitioning clause of the First Amendment. Under
`
`numerous Supreme Court decisions, petitioning administrative agencies like the Patent Office is
`
`protected unless the petition is objectively baseless. VSI has made no effort to demonstrate that
`
`the challenged reexamination petition is anything but meritorious. The Court should therefore
`
`reject VSI’s invitation to make new law contrary to binding precedent.
`
`Further, MicroStrategy’s lawful conduct at the PTO and the dispute presently pending
`
`before this Court are two entirely separate proceedings. The only evidence VSI offers to imply a
`
`connection between them are statements made in the context of settlement discussions that do not
`
`mention Zillow, its patent, the filing of petitions to reexamine third-party patents, or suggest
`
`improper conduct of any kind. Some greater link is required to turn constitutionally-protected
`
`petitioning into sanctionable conduct to the advantage of an unrelated party in an unrelated matter.
`
`I.
`
`BACKGROUND
`MicroStrategy is a business intelligence software vendor. That software allows people to
`
`analyze large amounts of data to improve business decisions. It has provided business intelligence
`
`software to a variety of clients, including clients in the real estate and mortgage industries.1
`
`VSI filed suit against MicroStrategy on December 22, 2011, alleging infringement of four
`
`patents. Despite the motion tactics of VSI, the parties have, throughout, attempted to amicably
`
`resolve this case. To that end, counsel for MicroStrategy and VSI met on September 10, 2012, to
`
`
`1 Press Release, RE/MAX Selects MicroStrategy as its Global Business Intelligence
`Standard, available at http://www.microstrategy.com/about-us/press/release/?ctry=167&id=2470;
`Press Release, ZipRealty Deploys MicroStrategy for Sales Reporting and Marketing Analytics,
`available at http://www.microstrategy.com/about-us/press/release/?ctry=167&id=1331; Press
`Release, Providing Extranet Reporting to 30,000+ Escrow Officers, Real Estate Agents, and
`Mortgage Brokers, available at http://www.microstrategy.com/about-us/customers/success-
`story/index.asp?id=327.
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-2-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page8 of 22
`
`discuss settlement. The parties were not, however, able to reach a resolution, and MicroStrategy
`
`subsequently petitioned the PTO to reexamine VSI’s asserted patents on September 14, 2012.
`
`Dkt. 145-5; 145-6; 145-7; 145-8.
`
`Following the filing of MicroStrategy’s petition, VSI moved for Rule 11 sanctions against
`
`MicroStrategy based on a claim construction filing. Dkt. 114. The Court denied the motion in its
`
`entirety—including denying VSI’s request for sanctions against MicroStrategy without oral
`
`argument because of its “procedural deficiencies.” See Dkt. 135 & 141. The Court also
`
`specifically noted that VSI’s motion was premised on the assumption that if it successfully struck
`
`MicroStrategy’s claim construction filing, MicroStrategy would be precluded from arguing non-
`
`infringement based on a key claim term. Dkt. 141 at 4. That position, the Court noted, was
`
`unsupported, “divorced from the purpose of” the Local Patent Rules, and an attempt at a “game of
`
`gotcha.” Dkt. 141 at 4.
`
`On October 26, 2012, shortly before the Court denied VSI’s sanctions motion,
`
`MicroStrategy petitioned the PTO to reexamine a patent owned by third-party Zillow, Inc. See
`
`Dkt. 135, Dkt. 145-9. The Zillow patent relates to computerized methods for valuing real estate.
`
`Dkt. 145-10. Although the Zillow patent is not presently being asserted against MicroStrategy, the
`
`patent reexamination statute and regulations notably do not have a standing requirement. In re
`
`Lonardo, 119 F.3d 960, 966 (Fed. Cir. 1997) (“Any person at any time may file a request for
`
`reexamination…”). They permit any third party to request inter partes reexamination of any
`
`patent filed after November 29, 1999. 35 U.S.C. § 302 & 311(a); MPEP 2609; 37 CFR § 1.913.
`
`MicroStrategy’s petition remains pending in the PTO and, until it is granted, requires no response
`
`or incursion of any expense on Zillow’s part. See MPEP 2601.01. The Zillow patent also remains
`
`enforceable until the reexamination concludes. See 3M Co. v. Kinik Co., No. Civ. 04-123, 2004
`
`WL 1328268, at *5 (D. Minn. June 15, 2004) (patents are enforceable during pendency of
`
`reexamination).2
`
`
`2 VSI also attaches as exhibits petitions that MicroStrategy filed for reexamination of the
`patents in suit. VSI does not contend that the filing of these asserted patents was improper.
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-3-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page9 of 22
`
`The first time VSI even mentioned the Zillow reexam was during a scheduling conference
`
`with this Court on November 1, 2012. As stated by counsel for MicroStrategy during that call, it
`
`had no idea what Plaintiff’s counsel was even referring to. See Declaration of Jennifer Kash in
`
`Support of Opposition to VSI’s Motion for Sanctions (“Kash Decl.”), ¶ 2. Counsel for VSI did
`
`not contact counsel for MicroStrategy at any time thereafter, despite frequent contact on actual
`
`case related topics. Kash Decl., ¶ 3. Then, on November 20, 2012, only a week after this Court
`
`denied VSI’s first motion for sanctions (Dkt. 141), VSI sent MicroStrategy a draft of its current
`
`motion for sanctions. Dkt. 145-4; see also Kash Decl., ¶¶ 3-4, Ex. E. In a cover letter, counsel for
`
`VSI threatened that if MicroStrategy did not stipulate to, among other things, payment of
`
`attorneys’ fees and an adverse jury instruction, VSI would file the motion on December 11, 2012.
`
`Dkt. 145-4. At no point did VSI ask for a meet and confer on the topic. Kash Decl., ¶¶ 3-4, Ex. E.
`
`MicroStrategy did not agree that filing meritorious petitions for reexamination is sanctionable.
`
`VSI then filed this motion on December 12, 2012.
`
`Argument
`VSI’s motion is unprecedented. VSI contends that truthful petitioning of a federal agency
`
`for redress—in this case, the PTO—can be sanctioned regardless of the merits of that petition.
`
`That position has been squarely rejected by the Supreme Court. Yet VSI does not even attempt to
`
`argue that MicroStrategy’s reexamination petition is anything but meritorious or that the Zillow
`
`patent is not invalid in light of the prior art cited by MicroStrategy. VSI motion is therefore
`
`contrary to law.
`
`VSI asks the Court to ignore the PTO’s mechanisms for regulating the filing of
`
`reexamination petitions. The PTO has its own disciplinary procedures and may discipline patent
`
`agents and attorneys that it finds file baseless or improper reexamination requests. If VSI has
`
`actual concerns regarding MicroStrategy’s filing, it may seek redress with the PTO. Further, a
`
`PTO officer must determine that each and every reexamination petition raises a substantial new
`
`question of patentability before the patentee is required to respond or incur any expense, thereby
`
`adding an additional layer of protection against any improper filings. 35 U.S.C. §§ 303(a) & 304.
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-4-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page10 of 22
`
`The Court should decline VSI’s invitation to circumvent the proper agency procedures for
`
`regulating the conduct of patent reexaminations.
`
`VSI also ignores MicroStategy’s and the public’s interest in a proper determination of the
`
`validity of the Zillow patent. As the Federal Circuit has explained, “the public interest lies in
`
`having valid patents upheld and invalid patents rendered invalid, and hence patents should be
`
`reexamined when a substantial question of patentability is raised.” In re Baker Hughes Inc., 215
`
`F.3d 1297, 1302 (Fed. Cir. 2000). The filing of a meritorious petition for reexamination is
`
`therefore in the public interest and not for an improper purpose.
`
`Finally, the remedies VSI seeks are wholly unsupported, contrary to law, and in violation
`
`of this Court’s Local Rules. VSI has not satisfied any of the requirements for seeking attorneys’
`
`fees, has not shown it has standing to seek remedies on behalf of Zillow, and cites no applicable
`
`authority awarding the type of sanctions it requests. For these reasons, VSI’s motion should be
`
`denied.
`
`II.
`
`VSI’S MOTION MUST BE DENIED BECAUSE MICROSTRATEGY’S PETITION
`IS NOT OBJECTIVELY BASELESS
`
`VSI fails to even articulate or apply the appropriate legal standard. The petitioning of
`
`federal agencies is protected under the First Amendment, regardless of motive or intent, unless the
`
`petitioning activity is objectively baseless. VSI does not attempt to argue—and therefore
`
`apparently concedes—that MicroStrategy’s reexamination petition is not baseless. Its motion
`
`should therefore be denied.
`
`The Supreme Court has held on numerous occasions that, under the Noerr-Pennington
`
`doctrine, the First Amendment protects the right to petition all branches of the government,
`
`including the federal courts and agencies.3 Although the Noerr-Pennington doctrine originated as
`
`
`
`3 BE & K Constr. Co. v. NLRB, 536 U.S. 516, 525-26 (2002) (petitioning of NLRB protected
`by First Amendment regardless of intent or purpose unless objectively baseless); Cali. Motor
`Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972) (First Amendment right to petition
`extends to administrative agencies); United Mine Workers v. Pennington, 381 U.S. 657 (1965)
`(extending protection to lobbying activities directed toward executive branch officials).
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-5-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page11 of 22
`
`a bar to claims under the antitrust laws, the Supreme Court, Federal Circuit, and Ninth Circuit
`
`have extended it beyond that context. See Sosa v. DIRECTV, Inc., 437 F.3d 923, 929-32 (9th Cir.
`
`2006) (“Recognizing the constitutional foundation of the doctrine, the Supreme Court has applied
`
`Noerr-Pennington principles outside the antitrust field.”). The Federal Circuit has, for example,
`
`extended the doctrine to limit a court’s ability to award attorneys’ fees for filing a lawsuit in bad
`
`faith. iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1376-77 (Fed. Cir. 2011). Even a court’s
`
`inherent power, including the power to sanction, is subject to the limitations imposed by the First
`
`Amendment.4
`
`As a result of this First Amendment protection, petitioning activity cannot be sanctioned or
`
`subject to liability unless the petition is objectively baseless, regardless of any allegedly improper
`
`subjective motivation. See, e.g. id. (in light of First Amendment, court may award attorneys fees
`
`under exceptional case statute, absent misconduct, only if litigation is objectively baseless);
`
`Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367, 1375 (Fed. Cir. 2004)
`
`(holding that First Amendment “protects the right to petition the government” and “bad faith is not
`
`supported when the information is objectively accurate”).5 A petition is objectively baseless for
`
`purposes of the First Amendment only when “no reasonable litigant could realistically expect
`
`success on the merits.” Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508
`
`
`4 See Bridge C.A.T. Scan Assoc. v. Technicare Corp., 710 F.2d 940, 945-46 (2d Cir. 1983)
`(holding that the inherent power to prohibit abuse of judicial process is limited by First
`Amendment); United States v. Carmichael, 326 F. Supp. 2d 1267, 1274, 1277-80 (M.D. Ala.
`2004) (holding that the “inherent authority to control actions of parties, attorneys, and witnesses
`that impact proceedings before the Court” limited by First Amendment); George v. Indus.
`Maintenance Corp., 305 F. Supp. 2d 537, 538 (D.V.I. 2002) (holding that inherent power to
`regulate use of evidence wrongfully obtained is limited by First Amendment).
`5 First Amendment protection also extends to pre-petitioning communications related to the
`subsequent petition. See GP Indus., Inc. v. Eran Indus., Inc., 500 F.3d 1369, 1374-77 (Fed. Cir.
`2007) (letters threatening litigation subject to liability only if objectively baseless); Sosa v.
`DIRECTV, Inc., 437 F.3d 923, 934-35 (9th Cir. 2006) (“[C]ommunications between private parties
`are sufficiently within the protection of the Petition Clause to trigger the Noerr-Pennington
`doctrine, so long as they are sufficiently related to petitioning activity.”). Therefore, even alleged
`threats to file a petition for reexamination cannot be sanctioned unless the petition is objectively
`baseless.
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-6-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page12 of 22
`
`U.S. 49, 60 (1993). See also GP Indus., 500 F.3d at 1374 (“We have recently determined that a
`
`bad faith standard cannot be satisfied in the absence of a showing that the claims asserted were
`
`objectively baseless.”); Zaldivar v. Los Angeles, 780 F.2d 823, 832 (9th Cir. 1986) (filing of
`
`complaint cannot be sanctioned if not objectively baseless, even if filed with improper motive).
`
`Indeed, none of the cases cited by VSI impose sanctions for petitioning a government agency
`
`where that petitioning activity was not objectively baseless.6
`
`B.K.B. v. Maui Police Dept., 276 F.3d 1091 (9th Cir. 2002), cited by VSI, is not to the
`
`contrary. VSI cites B.K.B. for the proposition that filing a lawsuit is sanctionable if “motivated by
`
`vindictiveness, obduracy, or mala fides.” Id. at 1108. This was, however, dicta because B.K.B.
`
`did not concern an award of sanctions for filing of lawsuit or other First Amendment petitioning
`
`activity. In B.K.B., the district court sanctioned the defendant for introducing improper evidence
`
`of the plaintiff’s sexual history and making misleading statements to the court. Id. at 1106.
`
`B.K.B. therefore did not address the First Amendment limitations on the district court’s inherent
`
`powers. Further, to the extent VSI argues that B.K.B. stands for the proposition that petitioning
`
`activity need not be objectively baseless to be sanctionable if the petition was for an improper
`
`purpose, that position is contrary to numerous Supreme Court decisions. See BE & K Constr., 536
`
`U.S. at 534-36 (lost or withdrawn suit may not be found to violate the National Labor Relations
`
`Act consistent with the First Amendment, even if retaliatory, unless objectively baseless); Bill
`
`
`6 None of the cases cited by VSI involve conduct remotely comparable to filing an
`objectively reasonable petition for patent reexamination, and to the extent they did, they would be
`contrary to Supreme Court precedent. See, e.g., Martin v. Automobili Lamborghini Exclusive,
`Inc., 307 F.3d 1332, 1336 n.2 (11th Cir. 2002) (misleading court about real party in interest,
`engaging in discovery abuse, filing documents with forged signatures, and extorting settlements
`for cases without any intent of filing suit); Oliveri v. Thompson, 803 F.2d 1265, 1272 (2d Cir.
`1986) (sanctions are only appropriate if the claims were “entirely without color”); Galanis v.
`Szulik, 841 F. Supp. 2d 456 (D. Mass. 2011) (filing of frivolous lawsuit); Fuoco v. Wells, No.
`8:03-cv-161 2005 WL 2317750, at *1 (M. D. Fla. Jul. 25, 2005) (filing false affidavit and criminal
`extortion); Molski v. Mandarin Touch Restaurant, 347 F. Supp. 2d 860, 865 (C.D. Cal. 2004)
`(serial vexatious litigant who filed complaints that were contrived and not credible); Fidelity Nat.
`Title Ins. Co. of New York v. Intercounty Nat. Title Ins. Co. No. 00 C 5658, 2002 WL 1433717, at
`*13 (N.D. Ill. July 2, 2002) (sending anonymous threatening letters, lying under oath, causing
`attorney to make false statements to the court, and improperly influencing witness testimony).
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`04706.51984/5099364.9
`
`-7-
`Case No. 11-CV-06637-RS-PSG
`MICROSTRATEGY’S OPPOSITION TO VSI’s, MOTION FOR SANCTIONS
`
`

`

`Case3:11-cv-06637-RS Document150 Filed01/04/13 Page13 of 22
`
`Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731, 733-37 (1983) (filing of well-founded lawsuit
`
`may not be enjoined, consistent with the First Amendment, even if retaliatory).
`
`VSI has made no effort to satisfy the “objectively baseless” standard. VSI does not
`
`contend that the Zillow patent is not invalid, and it does not argue that the prior art cited by
`
`MicroStrategy in the reexamination petition does not raise a substantial question of patentability.
`
`Nor could it. The petition contains nearly sixt