Case 3:13-cv-01612-BEN-JLB Document 42-1 Filed 12/24/13 Page 1 of 19
`
`
`JARED BOBROW (Bar No. 133712)
`jared.bobrow@weil.com
`ANDREW L. PERITO (Bar No. 269995)
`andrew.perito@weil.com
`CHRISTOPHER S. GEYER (Bar No. 288527)
`christopher.geyer@weil.com
`WEIL, GOTSHAL & MANGES LLP
`Silicon Valley Office
`201 Redwood Shores Parkway
`Redwood Shores, CA 94065-1134
`Telephone: (650) 802-3000
`Facsimile: (650) 802-3100
`
`Attorneys for Defendant
`eBay Inc.
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF CALIFORNIA
`
`ADVANCED AUCTIONS LLC,
`
`
`
`Plaintiff,
`
`
`v.
`
`EBAY INC.,
`
`
`
`Defendant.
`
`
`
`Civil Action No. 3:13-cv-1612-BEN-
`WMC
`
`EBAY INC.’S MEMORANDUM OF
`POINTS AND AUTHORITIES IN
`SUPPORT OF MOTION TO STAY
`PENDING COVERED BUSINESS
`METHOD REVIEW UNDER
`SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`Date: February 10, 2014
`Time: 10:30 AM
`Location: Courtroom 5A
`Judge: Hon. Roger T. Benitez
`
`NO ORAL ARGUMENT UNLESS
`REQUESTED BY THE COURT
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`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`
`
`
`
`CASE NO. 3:13-cv-1612-BEN-WMC
`
`

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`Case 3:13-cv-01612-BEN-JLB Document 42-1 Filed 12/24/13 Page 2 of 19
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`
`TABLE OF CONTENTS
`
`Page
`
`
`INTRODUCTION ............................................................................................ 1 
`I.
`II. FACTUAL BACKGROUND .......................................................................... 3 
`A.
`The Litigation Is in Its Early Stage. ................................................... 3 
`B. Advanced Auctions Will Not Be Harmed by a Stay. ........................ 4 
`C.
`CBM Review Will Promptly Simplify this Action. ........................... 4 
`III. LEGAL STANDARD ...................................................................................... 5 
`IV. ARGUMENT ................................................................................................... 6 
`A. A Stay Will Simplify or Eliminate Issues. ......................................... 6 
`B.
`This Case Is Still at an Early Stage. ................................................... 9 
`C. A Stay Will Not Unduly Prejudice Advanced Auctions or Afford
`eBay a Clear Tactical Advantage. .................................................... 10 
`D. A Stay Will Reduce the Burden of Litigation on the Parties and the
`Court. ................................................................................................ 11 
`V. CONCLUSION AND RELIEF REQUESTED ............................................. 13 
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`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
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`CASE NO. 3:13-cv-1612-BEN-WMC
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`Case 3:13-cv-01612-BEN-JLB Document 42-1 Filed 12/24/13 Page 3 of 19
`
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`In re: Ameranth Patent Litigation Cases,
`No. 3:11-cv-1810 DMS (WVG), ECF No. 549 (S.D. Cal.
`Nov. 26, 2013) ......................................................................................... 2, 3, 9
`
`Frontline Techs., Inc. v. CRS, Inc.,
`No. 2:07-cv-02457-ER, ECF No. 183 (E.D. Pa. Feb. 19, 2013) .................... 2
`
`Market-Alerts Pty. Ltd. v. Bloomberg Fin. L.P.,
`No. 1:12-cv-00780-GMS, 2013 U.S. Dist. LEXIS 15300 (D. Del.
`Feb. 5, 2013) ........................................................................................... passim
`
`Microlinc, LLC v. Intel Corp.,
`No. 2:07-cv-00488-TJW, 2010 U.S. Dist. LEXIS 99255 (E.D. Tex.
`Sept. 20, 2010) ............................................................................................... 11
`
`Pi-Net Int’l, Inc. v. Citizens Fin. Group, Inc.,
`No. 1:12-cv-00355-RGA, ECF No. 82 (D. Del. June 21, 2013) .................... 2
`
`Progressive Cas. Ins. Co. v. Safeco Ins. Co.,
`No. 1:10-cv-01370-BYP, 2013 U.S. Dist. LEXIS 54899
`(N.D. Ohio Apr. 17, 2013) .................................................................... 2, 8, 10
`
`SAP America, Inc. v. Versata Dev. Group, Inc.,
`No. CBM2012-00001 ...................................................................................... 8
`
`SenoRx, Inc., v. Hologic, Inc.,
`No. 1:12-cv-00173-LPS-CJB, 2013 U.S. Dist. LEXIS 8044 (D. Del.
`Jan. 11, 2013) ................................................................................................ 10
`
`Sightsound Techs., LLC v. Apple, Inc.,
`No. 2:11-cv-01292-DWA, 2013 U.S. Dist. LEXIS 79319 (W.D. Pa.
`June 6, 2013) .......................................................................................... passim
`
`Versata Software, Inc. v. Volusion, Inc.,
`No. 1:12-cv-00893-SS, ECF No. 53, slip op. (W.D. Tex.
`June 20, 2013) ........................................................................................ passim
`
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`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
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`- iii -
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`CASE NO. 3:13-cv-1612-BEN-WMC
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`Case 3:13-cv-01612-BEN-JLB Document 42-1 Filed 12/24/13 Page 4 of 19
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`
`Zillow, Inc. v. Trulia, Inc.,
`No. 2:12-cv-1549-JLR, 2013 U.S. Dist. LEXIS 144919
`(W.D. Wash. Oct. 7, 2013) ................................................................ 2, 8, 9, 12
`
`
`
`Statutes
`
`35 U.S.C. § 101 .......................................................................................................... 3
`
`35 U.S.C. § 103 ...................................................................................................... 4, 7
`
`The Leahy-Smith America Invents Act of 2011 (“AIA”),
`Pub. L. No. 112-29, 125 Stat. 284 (2011) .............................................. passim
`
`
`
`Other Authorities
`
`37 C.F.R. § 42.51 ....................................................................................................... 9
`
`37 C.F.R. § 42.200(c) ................................................................................................ 9
`
`37 C.F.R. § 42.301 ..................................................................................................... 8
`
`157 CONG. REC. S1053 (daily ed. Mar. 1, 2011) ............................................. 1, 9, 11
`
`157 CONG. REC. S1363 (daily ed. Mar. 8, 2011) ............................................... 1, 2, 9
`
`157 CONG. REC. S5408 (daily ed. Sept. 8, 2011) ...................................................... 1
`
`77 Fed. Reg. at 48,756 ......................................................................................... 4, 10
`
`77 Fed. Reg. at 48,757 ..................................................................................... 4, 6, 10
`
`77 Fed. Reg. at 48,765 ..................................................................................... 4, 5, 10
`
`77 Fed. Reg. at 48,768 ............................................................................................... 5
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`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
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`CASE NO. 3:13-cv-1612-BEN-WMC
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`INTRODUCTION
`Plaintiff Advanced Auctions LLC, a non-practicing patent assertion entity,
`has asserted a business method patent – U.S. Patent No. 8,266,000 – against certain
`aspects of defendant eBay’s auction-style method of doing business. On December
`18, 2013, eBay filed a petition with the United States Patent and Trademark Office
`(“USPTO”) that challenges the validity of U.S. Patent No. 8,266,000 (“the ’000
`Patent”) under the Transitional Program for Covered Business Method (“CBM”)
`Patents. See Ex. A (eBay’s CBM petition). The CBM petition contests the validity
`of every claim of the ’000 Patent that plaintiff has asserted against eBay in this
`litigation. Id. at 10. To promote efficient adjudication and to preserve the
`resources of this Court and the parties, eBay respectfully requests that the Court
`stay this action until the Patent Office resolves eBay’s pending CBM petition.
`As part of the America Invents Act (“AIA”), Congress recently created the
`CBM review proceeding at the Patent Office “to help cut back on the scourge of
`business method patents that . . . apply not to novel products or services but to
`abstract and often very common concepts of how to do business” so that
`“businesses acting in good faith do not have to spend the millions of dollars it costs
`to litigate a business method patent in court.” 157 CONG. REC. S5408–09 (daily ed.
`Sept. 8, 2011) (statement of Sen. Schumer) (Ex. B). The CBM review program,
`which became available on September 16, 2012, was created with the intention of
`being “a cheaper, faster alternative to district court litigation over the validity of
`business-method patents.” 157 CONG. REC. S1363-64 (daily ed. Mar. 8, 2011)
`(statement of Sen. Schumer) (Ex. C).
`The CBM review provision of the AIA expressly encourages district courts
`to stay cases while patents are challenged at the Patent Office. See Pub. L. No.
`112-29, § 18(b), 125 Stat. 284, 329-31 (2011). Congress found it “nearly
`impossible to imagine a scenario in which a district court would not issue a stay”
`during a CBM review. 157 CONG. REC. S1053-54 (daily ed. Mar. 1, 2011)
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
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`CASE NO. 3:13-cv-1612-BEN-WMC
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`I.
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`(statement of Sen. Schumer) (Ex. D). “Absent some exceptional circumstance, the
`institution of a business-methods proceeding . . . should serve as a substitute for
`litigation, and result in a stay of co-pending district court litigation.” 157 CONG.
`REC. S1364 (emphasis added) (Ex. C); see also id. at S1363 (“It is congressional
`intent that a stay should only be denied in extremely rare instances.”) (emphasis
`added). As further evidence that Congress intended for a CBM-based stay to be
`denied only in rare instances, the AIA allows for “an immediate interlocutory
`appeal” to the Federal Circuit of any decision denying a motion to stay the
`litigation. AIA § 18(b)(2).
`Consistent with Congress’ intent, a sizable majority of district courts
`confronted with this issue have granted a motion to stay pending resolution of CBM
`review. See, e.g., Versata Software, Inc. v. Volusion, Inc., No. 1:12-cv-00893-SS,
`ECF No. 53, slip op. at 6 (W.D. Tex. June 20, 2013) (granting motion to stay
`pending resolution of CBM review and concluding that the “AIA represents a clear
`decision by Congress to increase involvement of the PTAB in patent litigation
`while simultaneously decreasing the involvement of the courts.”) (Ex. E).1
`Notably, this Court joined the sizable majority of district courts effectuating
`congressional intent when Judge Sabraw issued a stay pending CBM review in In
`
`1 See also Zillow, Inc. v. Trulia, Inc., No. 2:12-cv-1549-JLR, 2013 U.S. Dist.
`LEXIS 144919 (W.D. Wash. Oct. 7, 2013) (granting motion to stay pending CBM
`review); Sightsound Techs., LLC v. Apple, Inc., No. 2:11-cv-01292-DWA, 2013
`U.S. Dist. LEXIS 79319 (W.D. Penn. June 6, 2013) (granting motion to stay
`pending CBM review); Pi-Net Int’l, Inc. v. Citizens Fin. Group, Inc., No. 1:12-cv-
`00355-RGA, ECF No. 82 (D. Del. June 21,, 2013) (granting motion to stay pending
`CBM review) (Ex. F); Progressive Cas. Ins. Co. v. Safeco Ins. Co., No. 1:10-cv-
`01370-BYP, 2013 U.S. Dist. LEXIS 54899 (N.D. Ohio Apr. 17, 2013) (granting
`motion to stay pending CBM review); Frontline Techs., Inc. v. CRS, Inc., No. 2:07-
`cv-02457-ER, ECF No. 183 (E.D. Penn. Feb. 19, 2013) (granting motion to stay
`pending CBM review) (Ex. G); Market-Alerts Pty. Ltd. v. Bloomberg Fin. L.P., No.
`1:12-cv-00780-GMS, 2013 U.S. Dist. LEXIS 15300 (D. Del. Feb. 5, 2013)
`(granting motion to stay pending CBM review).
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`CASE NO. 3:13-cv-1612-BEN-WMC
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`re: Ameranth Patent Litigation Cases, No. 3:11-cv-1810 DMS (WVG), ECF No.
`549 (S.D. Cal. Nov. 26, 2013) (staying case pending Patent Trial and Appeal
`Board’s (“PTAB’s”) final decision on CBM petitions challenging every asserted
`claim) (Ex. H). Moreover, courts have been liberal in granting such stay motions
`even in cases where (1) a claim construction hearing had already taken place,
`Sightsound, 2013 U.S. Dist. LEXIS 79319, at *8-13, (2) the USPTO had not yet
`granted the defendant’s CBM petition, Market-Alerts, 2013 U.S. Dist. LEXIS
`15300, at **7 n.5, and (3) the defendant’s CBM petition asserted only limited
`grounds for invalidity, Versata Software, Inc., No. 1:12-cv-00893-SS, slip op. at 6
`(granting a stay where CBM petition challenged patent only under 35 U.S.C. § 101)
`(Ex. E).
`In light of the strong judicial and congressional support for a stay, including
`this Court’s recent stay in In re: Ameranth, the Court should stay this action
`pending resolution of the CBM review of the ’000 Patent. The AIA’s statutory
`factors heavily favor a stay here. CBM review of all asserted claims of the ’000
`Patent will simplify issues for this Court and could possibly eliminate this case
`altogether. This litigation is still in the relatively early stages, as a no claim
`construction hearing has been held and fact discovery will not close for over six
`months. Advanced Auctions will not be prejudiced by a stay, as it is a non-
`practicing entity that does not compete with eBay. And a stay would reduce the
`burden on the parties and the Court by preventing parallel proceedings, conserving
`the Court’s and the parties’ resources, and avoiding issues that may be moot after
`CBM review. In short, this is not that exceptional case under the AIA where a stay
`should be denied.
`II.
`FACTUAL BACKGROUND
`A. The Litigation Is in Its Early Stage.
`The deadline to complete fact discovery is not until July 1, 2014, and much
`of the most burdensome discovery remains ahead: email has yet to be requested,
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`CASE NO. 3:13-cv-1612-BEN-WMC
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`much less produced, and neither party has yet taken a deposition. Declaration of
`Christopher Geyer (“Geyer Decl.”), Geyer Decl. ¶ 3. The deadline for expert
`discovery is not until September 17, 2014. See Sept. 19, 2013, Case Management
`Conference Order Regulating Discovery and Other Pretrial Proceedings (Dkt. No.
`18) (“eBay CMC Order”). The final Pretrial Conference is not scheduled until
`December 1, 2014, and no trial date has been set. Id.
`B. Advanced Auctions Will Not Be Harmed by a Stay.
`Advanced Auctions is purely a patent-enforcement entity. It does not make
`or sell any product, much less one that embodies the alleged invention. See Ex. I
`(Advanced Auctions’ Responses to eBay’s Second Set of Interrogatories, No. 7)
`(Sept. 9, 2013) (failing to identify any products manufactured or sold by Advanced
`Auctions embodying the alleged invention and referring to Advanced Auctions’
`Local Patent Rule 3-1 Disclosures as purportedly responding to the interrogatory);
`Ex. J (Advanced Auctions’ Local Patent Rule 3-1 Disclosures) (failing to identify
`any products manufactured or sold by Advanced Auctions embodying the alleged
`invention). Accordingly, Advanced Auction does not compete with eBay.
`C. CBM Review Will Promptly Simplify this Action.
`On December 18, 2013, eBay filed its CBM petition, challenging the validity
`of claims 1-7, 10-15, 17-21, and 23-26 (“the Challenged Claims”) under 35 U.S.C.
`§ 103. See Ex. A (eBay’s CBM Petition). The Challenged Claims encompass all
`the claims asserted by Advanced Auctions in this action. CBM review is subject to
`a strict timeline. The PTAB will determine within 6 months whether to grant
`review of the ’000 Patent, which is a decision that will turn on whether the PTAB
`believes it to be more likely than not that at least one claim of the ’000 Patent is
`unpatentable. Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,757,
`48,765 (Aug. 14, 2012) (to be codified at 37 C.F.R. pt. 42)) (affording a patent
`owner three months to respond to a CBM petition and affording the PTAB three
`months following the patent owner’s response to decide whether to grant review)
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`CASE NO. 3:13-cv-1612-BEN-WMC
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`(Ex. K). If the PTAB grants review, the review will conclude (culminating in what
`is sometimes referred to as a trial before the PTAB) within one year of the decision
`granting the review.2 Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,765
`(requiring the PTAB’s scheduling order to set a completion date within one year of
`granting the CBM review) (Ex. K).
`III. LEGAL STANDARD
`Section 18(b)(1) of the AIA sets forth four factors to consider in determining
`whether to grant a stay pending CBM review:
`
`1. Whether a stay, or the denial thereof, will simplify the issues in
`question and streamline the trial;
`2. Whether discovery is complete and whether a trial date has been
`set;
`3. Whether a stay, or denial thereof, would unduly prejudice the
`nonmoving party or present a clear tactical advantage for the
`moving party; and
`4. Whether a stay, or the denial thereof, will reduce the burden of
`litigation on the parties and on the court.
`
`
`In addition to the first three factors, which traditionally have been considered
`by courts in deciding whether to stay a case, Congress included the additional
`fourth factor to place “a very heavy thumb on the scale in favor of a stay being
`granted.” Versata Software, Inc., No. 1:12-cv-00893-SS, slip op. at 3 (citing 157
`CONG. REC. S1363) (Ex. E); see also Market-Alerts, 2013 U.S. Dist. LEXIS 15300,
`at **7 (“This additional [factor] was included, in part, to ease the movant’s task of
`
`
`2 Upon a showing of “good cause,” the PTAB can extend a review for an additional
`six months. Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,768 (Ex. K).
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`CASE NO. 3:13-cv-1612-BEN-WMC
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`demonstrating the need for a stay.”). Therefore, courts have considered the fourth
`factor in light of the suggestion that it was enacted to increase the likelihood that a
`stay would be granted. See Sightsound, 2013 U.S. Dist. LEXIS 79319, at *10.
`A stay is available from the moment a CBM petition is filed. The AIA states
`that “[i]f a party seeks a stay of a civil action . . . relating to a transitional
`proceeding for that patent, the court shall decide whether to enter a stay.” AIA
`§ 18(b)(1). The USPTO has recognized that “the proceedings begin with the filing
`of a petition.” Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,757 (Ex. K).
`Therefore, the stay provisions apply when a CBM petition is first filed. See
`Market-Alerts, 2013 U.S. Dist. LEXIS 15300, at **7 n.5. In general, courts have
`chosen to stay cases before the PTAB rules on a CBM petition. See, e.g., Versata
`Software, Inc., No. 1:12-cv-00893-SS, slip op. at 3–4 (Ex. E); Market-Alerts, 2013
`U.S. Dist. LEXIS 15300, at **7 n.5, **30; Sightsound, 2013 U.S. Dist. LEXIS
`79319, at *10-11. This Court is not required to consider the merits of eBay’s CBM
`petition in order to grant a stay. See Sightsound, 2013 U.S. Dist. LEXIS 79319, at
`*5 & n.1 (granting a stay while declining to speculate about the likelihood of
`success of a CBM petition).
`IV. ARGUMENT
`Each of the four factors for determining whether to grant a stay pending
`CBM review strongly weighs in favor of staying this case.
`CBM review of the ’000 Patent will simplify issues for this Court and could
`possibly resolve this case altogether. The case is in the early stages, and no
`prejudice to Advanced Auctions will result from the stay. Finally, a stay would
`reduce the burden on and conserve the resources of the parties and the Court.
`A. A Stay Will Simplify or Eliminate Issues.
`Courts, including those in this district, have recognized that staying a case
`pending patent review proceedings can be an effective way to simplify or
`streamline issues for trial. See, e.g., Market-Alert Pty. Ltd., 2013 U.S. Dist. LEXIS
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
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`15300, at **16 (E.D. Del. Feb. 5, 2013) (Sleet, C.J.) (invalidation or amendment of
`even a single claim “would have simplifying effects” on the litigation).
`1. eBay’s CBM Petition Is Likely to Result in the Cancellation or
`Amendment of the Asserted Claims.
`eBay’s CBM petition will simplify the issues for trial because it will most
`likely lead to the invalidation or amendment of one or more asserted claims of the
`’000 Patent. To the extent that the CBM review invalidates any asserted claims, no
`issues regarding those claims will need to be litigated. Because all asserted claims
`are included in the CBM review, it is possible the review could obviate the need for
`trial.
`There is a high likelihood that the USPTO will invalidate or significantly
`amend the claims of the ’000 Patent on the basis of obviousness combinations that
`each employ a reference not considered during prosecution, and that such an
`outcome will terminate or simplify this litigation. eBay’s CBM petition challenges
`the validity of every asserted claim of the ’000 Patent under 35 U.S.C. § 103. See
`Ex. A (eBay’s CBM Petition) at 10. eBay has identified several combinations of
`references, with priority dates preceding that of the ’000 Patent, that render all
`asserted claims of the ’000 Patent obvious, including Friedland (U.S. Patent No.
`6,449,601) in view of Fisher (U.S. Patent No. 5,835,896), Lin-Hendel (U.S. Patent
`No. 7,542,920) in view of Fisher, and Rackson (U.S. Patent No. 6,415,270) in view
`of admitted prior art. Each combination is an independent and complete basis for
`determining invalidity. The references include disclosure of two-mode auctions
`that are virtually identical to those disclosed in the ’000 Patent. Thus,
`simplification of the issues by the CBM review will almost certainly occur. If the
`PTAB ultimately declares all the claims invalid, this case will be resolved entirely.
`See Versata Software, Inc., No. 1:12-cv-00893-SS, slip op. at 3 (“[A] stay in this
`case might not only streamline the trial, it might resolve the case entirely.”) (Ex. E).
`And “[e]ven if only some claims are ultimately held invalid, the number of asserted
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
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`claims in this case will necessarily decrease and the issues for trial will be
`simplified.” Id. at 4.
`That the PTAB has not yet granted CBM review does not weigh against a
`stay. See Zillow, Inc., 2013 U.S. Dist. LEXIS 144919 (granting motion to stay even
`though the USPTO had not yet granted CBM review); see also Market-Alerts, 2013
`U.S. Dist. LEXIS 15300, at **7 n.5, **30; Versata, No. 1:12-cv-00893-SS, slip op.
`at 3-4. Given that the PTAB has instituted a trial in response to eighteen of the
`twenty-three CBM petitions that it has considered through early November, it is
`highly likely that the PTAB will grant review of the ’000 Patent. See Patent Trial
`and Appeal Board’s AIA Progress Statistics (as of 11/7/2013) (Ex. L). And if a
`CBM review is granted, the “necessary prerequisite finding . . . suggests at least
`some claims will be held invalid even if the [patent is] ultimately sent back for
`trial.” Versata, No. 1:12-cv-00893-SS, slip op. at 4. However, even if eBay’s
`CBM petition is denied and the PTAB does not grant review, issues in this case will
`still be simplified. The PTAB typically provides a detailed patentability analysis in
`granting or denying CBM petitions. See SAP America, Inc. v. Versata Dev. Group,
`Inc., No. CBM2012-00001, Paper 36, slip op. 29-31, 36-42 (PTAB January 9,
`2013) (Ex. M). Such an analysis from “specialized experts will refine the issues
`and create a record that would inform, assist, and expedite any subsequent
`litigation.” See Progressive, 2013 U.S. Dist. LEXIS 54899, at *26.
`2. The CBM Review Process Is a Fast and Cost-Effective
`Alternative to District Court Litigation.
`The AIA requires the CBM review procedures to be speedy and cost-
`effective. As Congress intended, the CBM review will simplify or streamline
`issues for trial, tilting this factor strongly in favor of issuing a stay. Unlike the pre-
`AIA reexamination proceedings, which could drag on for years, CBM review is
`required by law to reach conclusion one year after initiation, extendable by up to
`only six months if the U.S. Patent Office has good cause. 37 C.F.R. §§ 42.301,
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
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`42.200(c). As such, the CBM review will be resolved quickly.
`Congress’ actions should also ease any concerns over the costs associated
`with review proceedings. In enacting the AIA, Congress created a procedure that is
`more financially efficient than litigation. See 157 CONG. REC. S1053 (daily ed.
`Mar. 1, 2011) (statement of Sen. Schumer) (describing CBM Review as an
`“efficient” way to avoid “costly litigation”) (Ex. D). Unlike the pre-AIA review
`proceedings, CBM review is designed specifically to be a cheaper and potentially
`faster alternative to district court litigation over the validity of business method
`patents. 157 CONG. REC. S1363 (daily ed. Mar. 8, 2011) (statement of Sen.
`Schumer) (Ex. C). Congress intended CBM review to be used “instead of, rather
`than in addition to, civil litigation.” Id. These cost savings result, in part, from the
`limits to discovery during the invalidity-only CBM review proceedings. 37 C.F.R.
`§ 42.51.
`For all of the above reasons, the first factor strongly favors a stay.
`B.
`This Case Is Still at an Early Stage.
`Section 18(b)(1) of the AIA specifically states that the Court should consider
`“whether discovery is complete and whether a trial date has been set.” AIA §
`18(b)(1). Here, the litigation is in its early stages. Discovery is not complete. Fact
`discovery will continue through July 1, 2014, and expert discovery will continue
`until September 17, 2014. eBay CMC Order. Costly email discovery and
`deposition practice have yet to begin. Geyer Decl. ¶ 3. The Markman hearing is
`over two months away and the parties have yet to submit claim construction briefs.
`Id. The Court will not set a trial date until the final Pretrial Conference, and that
`conference is not scheduled until December 1, 2014. Id. These factors all favor
`granting the stay. See In re: Ameranth Patent Litigation Cases, No. 3:11-cv-01810-
`DMS-WVG, at 3 (ongoing discovery and unset trial date supported stay) (Ex. H);
`see also Zillow, 2013 U.S. Dist. LEXIS 144919 at *17-18 (W.D. Wash. Oct. 4,
`2013) (factor weighed in favor of stay when close of discovery was slightly over
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`CASE NO. 3:13-cv-1612-BEN-WMC
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`five months away, no depositions had been taken, claim construction was just over
`two months away, and parties had not yet submitted claim construction briefs).
`Moreover, courts have stayed cases pending CBM review in later stages than
`this case. For example, one court stayed a case pending CBM review after claim
`construction had occurred. Sightsound, 2013 U.S. Dist. LEXIS 79319, at *7-8
`(staying the case even though the litigation had “reached a relatively late stage”).
`Thus, the second factor weighs heavily in favor of a stay.
`C. A Stay Will Not Unduly Prejudice Advanced Auctions or Afford
`eBay a Clear Tactical Advantage.
`A stay will not unduly prejudice Advanced Auctions or provide eBay with a
`clear tactical advantage. Courts have considered several factors in determining
`whether prejudice is undue, including the timing of the motion, the timing of the
`administrative review request, the status of the review proceedings, and the
`relationship between the parties. See Market-Alerts, 2013 U.S. Dist. LEXIS 15300,
`at **23-24; Sightsound, 2013 U.S. Dist. LEXIS 79319, at *8-9.
`Regarding the timing-related factors, this motion is being filed within one
`week of eBay filing its CBM petition with the PTAB. Moreover, as previously
`discussed, CBM review proceedings are governed by a strict timeline. Office
`Patent Trial Practice Guide, 77 Fed. Reg. at 48,756, 48,757, 48,765. The PTAB
`will promptly determine whether to grant review of the ’000 Patent, and if the
`PTAB grants review, the review will necessarily conclude within one year of the
`decision granting the review. Id. at 48,765; Progressive, 2013 U.S. Dist. LEXIS
`54899, at *26 (“The PTAB is likely to decide the issues . . . well in advance of the
`Court . . . .”). Any alleged prejudice arising from the timing of the CBM review is
`substantially outweighed by the probable simplification of issues for this Court.
`Regarding the relationship of the parties, Advanced Auctions is not a direct
`competitor of eBay. See SenoRx, Inc., v. Hologic, Inc., No. 1:12-cv-00173-LPS-
`CJB, 2013 U.S. Dist. LEXIS 8044 (D. Del. Jan. 11, 2013), at *28 (recognizing that
`EBAY’S MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT OF MOTION TO
`STAY UNDER SECTION 18(B) OF THE LEAHY-
`SMITH AMERICA INVENTS ACT
`
`CASE NO. 3:13-cv-1612-BEN-WMC
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`delay in a case for direct competitors may cause prejudice). Advanced Auctions
`does not practice the alleged i