Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 1 of 19
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`Civil Action No. 4:13 cv 02725
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`JURY TRIAL DEMANDED
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`WESTERNGECO L.L.C.,
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`Plaintiff,
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`v.
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`IN THE UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`PETROLEUM GEO-SERVICES, INC., et al.,
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`Defendants.
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`GEO’S MOTION TO STAY WESTERN’S CLAIMS PENDING
`FINAL JUDGMENT IN RELATED LITIGATION, AND
`PENDING PATENT OFFICE REVIEW PROCEEDINGS
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`
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`David Beck
`Attorney-in-Charge
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`State Bar No. 00000070
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`Federal Bar No. 919
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`dbeck@beckredden.com
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`Michael E. Richardson
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`State Bar No. 24002838
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`Federal Bar No. 23630
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`mrichardson@beckredden.com
`BECK REDDEN LLP
`1221 McKinney
`Suite 4500
`Houston, TX 77010
`Tel.: 713-951-3700
`Fax: 713-951-3720
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`Attorneys for Defendant
`Petroleum Geo-Services, Inc.
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`Of Counsel:
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`Morgan Chu
`Benjamin Hattenbach
`Ellisen Turner
`Arka Chatterjee
`Dominik Slusarczyk
`IRELL & MANELLA LLP
`1800 Avenue of the Stars
`Suite 900
`Los Angeles, CA 90067
`Tel.: 310-277-1010
`Fax: 310-203-7199
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`Dated: April 23, 2014
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`WESTERNGECO Exhibit 2032, pg. 1
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 2 of 19
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`TABLE OF CONTENTS
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`Page
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`I. 
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`FACTUAL BACKGROUND ........................................................................................... 1 
`The ION Litigation ................................................................................................ 1 
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`A. 
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`B. 
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`C. 
`
`The Present Litigation ........................................................................................... 2 
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`The Patent Review Proceedings............................................................................ 3 
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`II. 
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`III. 
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`LEGAL STANDARD ....................................................................................................... 5 
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`ARGUMENT .................................................................................................................... 5 
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`A. 
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`B. 
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`C. 
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`A Stay Will Not Prejudice Western. ..................................................................... 5 
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`The Present Litigation Remains In Its Early Stages With Relevant
`Parties Only Recently Added. ............................................................................... 6 
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`During A Stay, The Pending Proceedings Will Independently And
`Cumulatively Simplify Or End The Present Disputes. ......................................... 7 
`Judgment In The ION Litigation Will Exhaust Western’s
`Ability To Seek A Double Recovery. ....................................................... 7 
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`1. 
`
`2. 
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`The Patent Reviews Will Terminate Or Simplify This
`Matter For Trial And Will Reduce The Burden Of
`Litigation On The Parties And The Court. .............................................. 10 
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`IV. 
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`CONCLUSION ............................................................................................................... 14 
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`WESTERNGECO Exhibit 2032, pg. 2
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 3 of 19
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases 
`Amstar Corp. v. Envirotech Corp.,
`823 F.2d 1538 (Fed. Cir. 1987)........................................................................................... 8
`
`Bonutti Skeletal Innovations, LLC v. Zimmer Holdings, Inc.,
`No. 12-cv-1107, 2014 U.S. Dist. LEXIS 47430 (D. Del. Apr. 7, 2014) ........................... 12
`
`Emtel, Inc. v. Lipidlabs, Inc.,
`No. H-07-1798, 2013 WL 1707678 (S.D. Tex. Apr. 19, 2013) .......................................... 5
`
`E-Watch, Inc. v. Lorex Canada, Inc.,
`No. H-12-3314, 2013 WL 5425298 (S.D. Tex. Sept. 26, 2013) ................................... 5, 13
`
`Excentus Corp. v. Kroger Co.,
`3:10-CV-0483-B, 2010 WL 3606016 (N.D. Tex. Sept. 16, 2010) ..................................... 7
`
`Fresenius USA, Inc., v. Baxter Int’l Inc.,
`721 F.3d 1330 (Fed. Cir. 2013)......................................................................................... 12
`
`Glenayre Electronics, Inc. v. Jackson,
`443 F.3d 851 (Fed. Cir. 2006)......................................................................................... 8, 9
`
`One StockDuq Holdings, LLC v. Becton, Dickson & Co.,
`No. 2:12-cv-03037-JPM-tmp (W.D. Tenn. Nov. 12, 2013) ............................................... 5
`
`Pi-Net Int’l, Inc. v. Focus Business Bank,
`Nos. C-12-4958-PSG, 4959 PSG, 4962-PSG, 2013 WL 4475940 (N.D.
`Cal. Aug. 16, 2013) ........................................................................................................... 13
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`QPSX Developments 5 Pty Ltd. v. Ciena Corp.,
`2:07-CV-118-CE, 2009 WL 8590964 (E.D. Tex. Aug. 27, 2009) ..................................... 6
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`Riverbed Tech., Inc. v. Silver Peak Sys., Inc.,
`No. 13-02980 (N.D. Cal. Mar. 14, 2014) .......................................................................... 12
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`SoftView LLC v. Apple Inc.,
`No. 12-989-LPS, 2013 WL 4757831 (D. Del. Sept. 4, 2013) ...................................... 7, 12
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`Software Rights Archive, LLC v. Facebook, Inc.,
`Nos. C-12-3970, 3971, 3972 RMW, 2013 WL 5225522 (N.D. Cal. Sept.
`17, 2013) ........................................................................................................................... 13
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`Soverain Software LLC v. Amazon, Inc.,
`356 F. Supp. 2d 660 (E.D. Tex. 2005) ................................................................................ 5
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`Spa Syspatronic, AG v. Verifone, Inc.,
`C.A. No. 2:07-cv-416, 2008 WL 1886020 (E.D. Tex. Apr. 25, 2008) ............................. 11
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`Tesco Corp. v. Weatherford Int'l, Inc.,
`599 F. Supp. 2d 848 (S.D. Tex. 2009) ................................................................................ 6
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`WESTERNGECO Exhibit 2032, pg. 3
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 4 of 19
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`Page(s)
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`Union Tool Co. v. Wilson,
`259 U.S. 107 (1922) .......................................................................................................... 10
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`West Gulf Maritime Assoc. v. ILA Deep Sea Local 24,
`751 F.2d 721 (5th Cir. 1985) .......................................................................................... 7, 8
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`WesternGeco L.L.C. v. ION Geophysical Corp.,
`4:09-cv-01827 (S.D. Tex. June 12, 2009) .................................................................. passim
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`Wolf Designs, Inc. v. Donald McEvoy Ltd.,
`341 F. Supp. 2d 639 (N.D. Tex. 2004) ............................................................................... 7
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`Statutes 
`35 U.S.C. § 311(b) ........................................................................................................................ 11
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`35 U.S.C. § 314(a) ........................................................................................................................ 11
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`35 U.S.C. § 315(e) ........................................................................................................................ 13
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`35 U.S.C. § 316(A)(11)................................................................................................................. 11
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`77 Fed. Reg. 157 at 48721 ............................................................................................................ 13
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`Other Authorities 
`Bryan Wheelock & Matthew Cutler,
`A Look At 1st Year Stats on Inter Partes Review, LAW360 (Oct. 15, 2013) ..................... 11
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`Cyrus Morton & David Prange,
`Patent owners beware, your patent has a 15 percent chance (or less) of
`surviving the PTAB, INSIDE COUNSEL (Mar. 19, 2014) .............................................. 11, 12
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`David O’Dell & Thomas King,
`Inter Partes Review – How Is It Going So Far? INTELLECTUAL PROPERTY
`TODAY (September 2013) ................................................................................................ 11
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`Michelle Carniaux & Michael E. Sander,
`Claims Can Survive Inter Partes and Covered Business Method Review
`(But Few Do), IPR BLOG (Apr. 7, 2014) .......................................................................... 12
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`Ryan Davis,
`In Rare Feat, 2 Patents Emerge Unscathed From AIA Reviews, LAW360
`(Apr. 15, 2014) .................................................................................................................... 3
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`WESTERNGECO Exhibit 2032, pg. 4
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 5 of 19
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`The Court should stay Western’s lawsuit for two independent but cumulative reasons.
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`First, a pending judgment in Western’s prior lawsuit concerning the same patents and the same
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`accused technology (“DigiFIN”) will fully compensate Western such that the present suit could
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`only give Western a double recovery.1 Second, the United States Patent Office’s Patent Trial and
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`Appeals Board will rapidly resolve whether Western’s patents are invalid through inter-partes
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`review (“Patent Review”) proceedings. A decision from either tribunal will decisively impact
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`Western’s ability to assert its patents, thereby simplifying or even terminating the present suit.
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`Thus, it would be most efficient and economical to stay Western’s claims until one—or both—of
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`these tribunals issues a final ruling.
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`I.
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`FACTUAL BACKGROUND
`A.
`The ION Litigation
`Western has asserted its patents before and is already set to be paid for any infringement
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`based on DigiFIN or its use. Nearly five years ago, Western accused DigiFIN’s manufacturer,
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`ION Geophysical, of infringing the very same patents that Western is presently asserting against
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`Geo. Ex. A, WesternGeco L.L.C. v. ION Geophysical Corp., 4:09-cv-01827, Dkt. No. 1
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`(Complaint) (S.D. Tex. June 12, 2009) [hereinafter ION Litigation]. In the ION Litigation,
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`Western asserted that ION’s customers, which are Western’s competitors, use DigiFIN to
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`conduct marine seismic surveys in which they tow and laterally steer long streamer cables behind
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`their ships. Companies with a corporate relationship to Geo or Geo Norway have performed
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`surveys outside the United States using DigiFIN.
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`Western’s ongoing patent litigation against ION culminated in a 3-week trial in mid-
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`2012. The jury found that ION infringed the patents, and awarded Western $105.9 million in
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`1 Even if the ION judgment is appealed, the result would simplify this case. Affirmance
`of Western’s recovery against ION would render the recovery sought against Geo in this case to
`be duplicative. Alternatively, reversal or remand on substantive patent grounds would curtail or
`extinguish Western’s patent claims against ION, and by extension, Geo.
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`WESTERNGECO Exhibit 2032, pg. 5
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 6 of 19
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`damages. That award included $93.4 million to compensate Western for its lost profits due to
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`the surveys that Western argued it lost because ION made DigiFIN available to Western’s
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`competitors. See Ex. B, ION Litigation, Dkt. No. 536 (Verdict Form) (Aug. 16, 2012); Ex. C.,
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`id., Trial Demonstratives of Raymond Sims,2 at 64 (showing that, in the ION Litigation, Western
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`was seeking $159.1 million, of which $93.4 million represented profits allegedly lost due to
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`surveys conducted by Western’s competitors other than Fugro). These competitors include
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`corporate siblings of Geo, which conducted six of the ten surveys upon which Western received
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`lost profits damages. See id. at 34, 46. The remaining $12.5 million represents a royalty to
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`Western for patent infringement based on all of ION’s DigiFIN sales not already accounted for
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`in the lost profits award. Ex. B, ION Litigation, Dkt. No. 536 (Verdict Form) (Aug. 16, 2012), at
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`8.3 The comprehensive award is consistent with the jury’s charge to “put WesternGeco in
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`approximately the same financial position that it would have been in had the infringement not
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`occurred.” Id.
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`More recently, ION was ordered to pay an additional $73 million in supplemental
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`damages for DigiFIN sales made since May of 2011. Ex. D, ION Litigation, Dkt. No. 664 at 9
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`(Memorandum & Order) (Oct. 24, 2013). These additional damages “extrapolate the jury’s
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`award of lost profit damages and reasonable royalty to ensure consistency with the jury’s verdict
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`and adequate compensation for WesternGeco.” Id.
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`B.
`The Present Litigation
`Western filed the present litigation on September 16, 2013. No trial date has been set,
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`and as recently as April 7, 2014, Western was still adding “new” parties, and new infringement
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`theories, to the case via an amended complaint. Dkt. No. 79. By agreement of the parties, the
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`2 Mr. Sims provided expert testimony on Western’s behalf at the ION trial regarding
`damages.
`3 Instruction 20 of Ex. B directs the jury to award “a reasonable royalty for all infringing
`sales for which it has not been awarded lost profits damages” (emphasis added).
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`WESTERNGECO Exhibit 2032, pg. 6
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 7 of 19
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`named Geo entities will respond by May 30, 2014. The Court directed Western to amend its
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`pleadings on March 18, 2014, and Western waited for over three weeks—over six months since
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`filing its suit—before adding PGS Geophysical AS (“Geo AS”) to its complaint. Relatively little
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`case-specific discovery has occurred. Geo has produced a number of technical, marketing, and
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`operational documents, and Western, for its part, regurgitated the voluminous record of the ION
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`litigation. Western has also produced a handful of technical and operations documents, most of
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`which are publicly available.
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`C.
`The Patent Review Proceedings
`Geo is filing Patent Review petitions with the U.S. Patent Office’s Patent Trials and
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`Appeals Board asserting that claims of every Western patent in the present lawsuit are invalid.
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`In fact, Patent Review petitions relating to all four of Western’s asserted patents have already
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`been filed. Within about 18 months, Geo expects that all of Western’s asserted patent claims
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`will have been found invalid or will have been modified or cancelled as a result of the Patent
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`Reviews.4 Even if the Patent Reviews leave any claims undisturbed, the issues in this case will
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`have been significantly altered and narrowed as will be further explained in Section III.C.2
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`below. Notably, with only two exceptions, every Patent Review decided to date has resulted in
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`patent claims being cancelled by the patent office. See Ex. E, Ryan Davis, In Rare Feat, 2
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`Patents Emerge Unscathed From AIA Reviews, LAW360 (Apr. 15, 2014) (“In an apparent first
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`for the new [Patent Review] proceedings, the U.S. Patent and Trademark Office on Friday
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`affirmed every claim of two motion control patents . . . . The decision is notable because in
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`nearly every one of the 40 or so final written decisions issued in the AIA proceedings known as
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`4 The Patent Reviews that have already been filed include every claim that Western
`asserted against DigiFIN at trial in the ION Litigation. Western has repeatedly stated that those
`claims are what the present suit is all about. If, contrary to its prior representations, Western
`intends to assert new claims at trial in the present suit, and if Western is allowed to do so, Geo
`will initiate further Patent Reviews encompassing those claims, and the Patent Office will
`resolve those reviews in the same, swift statutory timeframe.
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`WESTERNGECO Exhibit 2032, pg. 7
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 8 of 19
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`inter partes review and covered business method patent review, the board has canceled many or
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`all of the claims.”).
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`Geo would have filed these petitions earlier had Western cooperated with Geo’s requests
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`concerning documents from the ION litigation, but it took two Court orders to obtain these
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`documents and the permission needed to submit them to the Patent Office. On January 10, 2014,
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`before the first case management conference, Geo requested specific categories of documents
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`from the ION Litigation to use in support of its Patent Reviews. See Ex. F (documenting
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`repeated attempts by Geo’s counsel to obtain documents from Western, including Jan. 10, 2014).
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`Even after the Court ordered production of the entire ION record over any potential third-party
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`objections, Western delayed for almost a month, by insisting on seeking the very third-party
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`permissions obviated by the Court’s order. See Dkt. No. 36 (Management Order) (Jan. 14, 2014)
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`(ordering disclosure of ION documents); Ex. H (Western’s counsel soliciting objections from
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`third parties on Jan. 28, 2014); see also Ex. G, Tr. 1/13/2014 at 20: 23-25 (“Because you’ve
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`burned bridges with everybody in the Western Hemisphere, I'll just order it disclosed . . . .”).
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`Even after Western finally complied with that order and produced the ION documents, it
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`refused to grant Geo permission to use them in its Patent Reviews. See, e.g., Ex. I, E-mail from
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`Timothy K. Gilman to Ellisen Turner (Jan. 29, 2014, 2:48 PM PST) (refusing permission).
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`Instead, Western claimed to be confused about what was being asked, expressing befuddlement
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`as to what “specific documents” could belong to categories such as inventor deposition
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`transcripts, invalidity expert reports, and invalidity trial testimony. Id. In an effort to resolve
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`these concerns, Geo provided greater specificity in late February after reviewing Western’s
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`belated productions, but received no response. Ex. J (identifying with Bates numbers the precise
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`pages sought for submission to the Patent Reviews). It was ultimately the Court that, in a second
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`intervention, granted the reasonable permissions that Western for so long withheld. See Dkt. No.
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`WESTERNGECO Exhibit 2032, pg. 8
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 9 of 19
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`60 (Order Compelling Discovery) (March 7, 2014) (“If the parties have not agreed which papers
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`may be submitted to the United States Patent and Trademark Office, the Court will resolve this
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`matter at the hearing on March 18, 2014.”); Dkt. No. 73 (Mgmt. Order) (March 18, 2014)
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`(granting Geo permission to submit the documents to the Patent Office because Western still had
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`not done so).
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`II.
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`LEGAL STANDARD
`In considering whether to grant a stay, the Court evaluates whether the stay (1) prejudices
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`or tactically disadvantages the non-movant, (2) delays a case in which considerable work has
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`already been done, and (3) simplifies the issues in the case. E.g., Emtel, Inc. v. Lipidlabs, Inc.,
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`No. H-07-1798, 2013 WL 1707678, at *5 (S.D. Tex. Apr. 19, 2013) (Rosenthal, J.) (citing
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`Soverain Software LLC v. Amazon, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005)); E-Watch,
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`Inc. v. Lorex Canada, Inc., No. H-12-3314, 2013 WL 5425298, at *1 (S.D. Tex. Sept. 26, 2013)
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`(Miller, J.).
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`III. ARGUMENT
`A.
`A Stay Will Not Prejudice Western.
`Western would not be prejudiced if this litigation were stayed. Mere delay caused by a
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`stay is not in itself prejudicial.5 Moreover, Western has not shown any urgency in pursuing these
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`infringement claims against Geo or any of its affiliated companies. Even though Western has
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`been aware since as early as 2007 that at least one of Geo’s corporate siblings purchased
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`DigiFIN equipment,6 it nonetheless waited over six years to bring this lawsuit. Moreover,
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`5 See, e.g., E-Watch, Inc., 2013 WL 5425298 at *2 (“[T]he mere fact of a delay alone
`does not constitute prejudice sufficient to deny a request for stay.”); Ex. K, One StockDuq
`Holdings, LLC v. Becton, Dickson & Co., No. 2:12-cv-03037-JPM-tmp, Dkt. No. 85 at 10 (W.D.
`Tenn. Nov. 12, 2013) (“[D]elay based on the inter partes review process alone is not sufficient to
`demonstrate undue prejudice . . . .”).
`6 For example, Western’s Complaint references a 2007 press release on the PGS.com
`Website indicating that at least one of Geo’s corporate siblings was involved in discussions with
`ION to test DigiFIN. Dkt. No. 1 at ¶ 14 (Complaint).
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`WESTERNGECO Exhibit 2032, pg. 9
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 10 of 19
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`Western sought discovery of Geo’s involvement with DigiFIN in connection with the ION
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`Litigation almost four years before bringing this lawsuit.7 In the course of that and other
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`discovery in the ION Litigation, Western learned of Geo AS’s involvement in the purchase of
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`DigiFIN.8 Yet, Western inexplicably did not name that company in its Complaint—and then
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`waited over six months to add it. Western’s own delay in bringing and prosecuting this case,
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`combined with its choice to not seek a preliminary injunction against the defendants, undermines
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`any argument that the delay caused by a stay would be unduly prejudicial or irreparably harmful.
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`Cf., QPSX Developments 5 Pty Ltd. v. Ciena Corp., No. 2:07-CV-118-CE, 2009 WL 8590964, at
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`*2 (E.D. Tex. Aug. 27, 2009) (“QPSX will not suffer undue prejudice—QPSX has not sought a
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`preliminary injunction in this case, and the evidence suggests that QPSX would not suffer
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`irreparable harm.”).
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`B.
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`The Present Litigation Remains In Its Early Stages With Relevant Parties
`Only Recently Added.
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`The infancy of this matter weighs in favor of a stay. This litigation has only just
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`commenced, no trial date has been set, and very little discovery or case scheduling activity has
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`occurred.9 The parties exchanged initial disclosures in October, and Geo supplemented its
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`disclosures in early December. No substantive depositions have yet been scheduled, and even
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`7 For example, Western subpoenaed Geo as a third party on January 22, 2010, and Geo
`produced numerous documents in response. Ex. L, ION Litigation, Subpoena to Produce
`Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action, issued
`to Petroleum Geo-Services, Inc. (S.D. Tex. Jan. 22, 2010). Western later sought to compel
`production of documents from overseas entities related to Geo, but the motion was denied. Ex.
`M, ION Litigation, Dkt. No. 105 at 4-5 (Memorandum & Order) (Jun. 2, 2010).
`8 For example, Western has long possessed Master Purchase Agreements between Geo
`AS and ION concerning the sale of DigiFIN. Many were produced in connection with Western’s
`revelation of the ION Litigation trial record. See, e.g., Ex. N.
`9 See Tesco Corp. v. Weatherford Int'l, Inc., 599 F. Supp. 2d 848, 853 (S.D. Tex. 2009)
`(Ellison, J.) (“Here, the case has just begun, no trial date has been set, and the Court delayed
`entry of a scheduling order until this motion to stay was decided. This factor weighs in favor of
`a stay.”) (stay denied on other grounds).
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`WESTERNGECO Exhibit 2032, pg. 10
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 11 of 19
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`the pleadings are not yet settled, let alone the parties. The Court is still considering Geo
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`Norway’s motion to dismiss on jurisdictional grounds, and none of the parties has yet answered
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`Western’s amended complaint. Further, case-specific discovery has been modest, with the
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`overwhelming majority of documents being recycled from the ION Litigation. In light of the
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`substantial, extremely expensive work that lies ahead, and the fact that decisions from the Patent
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`Office or in the ION Litigation are likely to fully resolve, or at least tremendously simplify, all
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`aspects of this matter well before it is ready for trial, it makes no sense to wastefully litigate
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`those aspects here. See, e.g., SoftView LLC v. Apple Inc., No. 12-989-LPS, 2013 WL 4757831,
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`at *2 (D. Del. Sept. 4, 2013) (“[I]t is appropriate to allow the inter partes review a reasonable
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`period to conclude before launching the parties into the expense of expert discovery.”).
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`C.
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`During A Stay, The Pending Proceedings Will Independently And
`Cumulatively Simplify Or End The Present Disputes.
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`1.
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`Judgment In The ION Litigation Will Exhaust Western’s Ability To
`Seek A Double Recovery.
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`The ION Litigation before Judge Ellison concerns the same patents and technologies at
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`issue here, and judgment in the ION Litigation will fully satisfy Western for all alleged
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`infringements involving DigiFIN. A court may stay proceedings that substantially overlap with
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`those being adjudicated in another court. E.g., Wolf Designs, Inc. v. Donald McEvoy Ltd., 341 F.
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`Supp. 2d 639, 642 (N.D. Tex. 2004) (“The Fifth Circuit has specifically recognized that district
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`courts have inherent power to stay or dismiss an action where the issues presented can be
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`resolved in an earlier filed action pending in another federal district court.” (citing West Gulf
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`Maritime Assoc. v. ILA Deep Sea Local 24, 751 F.2d 721, 728-29 (5th Cir. 1985))). Parties and
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`issues in substantially overlapping proceedings need not be identical, so long as both actions
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`involve closely related questions or common subject matter. Excentus Corp. v. Kroger Co., No.
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`3:10-CV-0483-B, 2010 WL 3606016, at *2 (N.D. Tex. Sept. 16, 2010). “The concern manifestly
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`WESTERNGECO Exhibit 2032, pg. 11
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 12 of 19
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`is to avoid the waste of duplication, to avoid rulings which may trench upon the authority of
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`sister courts, and to avoid piecemeal resolution of issues that call for a uniform result.” West
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`Gulf, 751 F.2d at 729.
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`The fundamental question in the present suit is whether Western is entitled to patent
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`infringement damages against Geo or its sister companies based on their purchase of DigiFIN.
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`Thus, even if infringement were found, the damages for any such infringement by that time
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`would already have been addressed and provided for in the ION Litigation, where the pending
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`final judgment will cover each and every DigiFIN sold to Geo by ION.
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`Western may want another bite at the DigiFIN apple by filing suits against ION’s
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`customers, but the law does not permit this kind of double-dipping. Western’s erroneous
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`reasoning was rejected in Glenayre Electronics, Inc. v. Jackson, wherein the plaintiff pursued
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`infringement damages against an infringer’s customers. See 443 F.3d 851, 860 (Fed. Cir. 2006)
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`(turning away a patentee who sought “additional damages . . . based on [defendant’s] customers'
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`use of infringing products . . . even though [the plaintiff had] already collected compensation for
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`direct infringement by [defendant] because of the same sales”). The Court barred this second
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`recovery from customers, noting that, “[plaintiff] presented evidence and arguments regarding
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`customer use to the jury and judge,” and that the plaintiff had conceded that the ultimate award
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`included benefits accruing to those customers. Id.
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`Glenayre squarely applies here, and teaches that entry of a final judgment against ION,
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`accompanied by ION’s payment or surety that it will satisfy that judgment, will fully address any
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`harm caused by the defendants’ use of DigiFIN.10 In determining whether a plaintiff has been
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`fully compensated by a prior award, courts consider whether (1) a second suit re-litigates the
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`10 Compensation occurs when the defendant promises to pay the awarded damages, even
`if the case is appealed. See, e.g., Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1549 (Fed.
`Cir. 1987) (“Under the circumstances of this case, the filing of a corporate guarantee is
`sufficiently equivalent to compensation.”)
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`WESTERNGECO Exhibit 2032, pg. 12
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 13 of 19
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`same facts at issue in the first suit; (2) a patentee introduced and relied on evidence of the
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`benefits received by an infringer’s customers in the first suit; and (3) a patentee accepted an
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`actual damages award. See Glenayre, 443 F.3d at 853-54, 856, 860-61, 872-73.
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`The Glenayre factors show that Western is seeking an improper double recovery through
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`this litigation against an ION customer. As in Glenayre, the patents and products at issue in the
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`present suit have been addressed at length in the ION Litigation. Further, in building its damages
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`case against ION, Western presented evidence of benefits accruing to Geo and other ION
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`customers. For example, in its trial demonstratives, Western identified $93.4 million in lost
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`profits based upon ten surveys. 11 A Geo corporate sibling performed six of those surveys. Ex.
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`C, ION Litigation, Trial Demonstratives of Raymond Sims, at 33, 34, 36. Notably, ION did not
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`perform any surveys at all, but the jury nonetheless found that it owed Western all of the profits
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`allegedly lost on those surveys. Ex. B, id., Dkt. No. 536 at 8 (Verdict Form) (Aug. 16, 2012).
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`Hence, the verdict against ION accounts for harm allegedly caused by ION’s customers.
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`Western has fully embraced this result, insisting throughout its post-trial briefing that
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`such a full recovery from ION was appropriate. 12 Indeed, it accused ION of causing the very
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`same harm that ION’s customers (e.g., Geo) might allegedly cause, such as “los[ing] surveys,
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`11 See, e.g., Ex. O, ION Litigation, Dkt. No. 572 at 10 (WesternGeco’s Opp’n to ION’s
`Post-Trial Damages Mot.) (Oct. 26, 2012) (“As Mr. Sims testified, each of the ten lost profit jobs
`required lateral steering as demonstrated by explicit customer requirements, the technical
`demands of the survey, and other record evidence.”); Ex. C, id., Trial Demonstratives of
`Raymond Sims, at 34, 46, and 63.
`12 See, e.g., Ex. O, ION Litigation, Dkt. No. 572 at 12 (WesternGeco’s Opp’n to ION’s
`Post-Trial Damages Mot.) (Oct. 26, 2012) (“There is substantial evidence that ION knew its
`customers would use its DigiFIN lateral steering systems to perform surveys that competed with
`WesternGeco—indeed, ION intended such a result. WesternGeco’s lost profits flowed directly
`from ION's infringement, and ION is accordingly responsible for compensating WesternGeco for
`this harm.”) (emphasis added) (citations omitted); id. at 13 (“Moreover, where, as here, the
`patentee derives revenue generated from its exclusive use of the patented product, the patentee
`may recover damages against a manufacturer for the manufacturer's customers' use of the
`invention.”)
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`WESTERNGECO Exhibit 2032, pg. 13
`PGS v WESTERNGECO
`IPR2014-01478
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`Case 4:13-cv-02725 Document 84 Filed in TXSD on 04/23/14 Page 14 of 19
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`revenue and market share, and [being] forced to accept lower prices for [Western’s] patented
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`technology.” Ex. P, ION Litigation, Dkt. No. 558 at 11 (WesternGeco’s Mot. for Perm.
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`Injunction or Ongoing Royalty) (Sept. 28, 2012). Western is not entitled to such duplicative
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`recovery against customers like Geo, because the jury verdict13 and supplemental damages award
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`in the ION Litigation already compensate Western for that harm. Ex. D, id., Dkt. No. 664 at 8
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`(Memorandum & Order) (Oct. 24, 2013).
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`Finally, Western has confirmed through its arguments to the Court in the ION Litigation
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`that the ION award fully addresses all harm caused by any DigiFIN infringement. Western
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`acknowledged the completeness of its recovery in, for example, its motion for permanent
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`injunction and ongoing royalty. Western successfully argued in that motion that the per-unit
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`damages rate, as determined by the jury, must be applied to future DigiFIN sales in order to
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`“account for the entirety of the harm caused by ION's continued infringement as determined by
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`the jury.” Ex. P, ION Litigation, Dkt. No. 558 at 18 (WesternGeco’s Mot. for Perm. Injunction or
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`Ongoing Royalty) (Sept. 28, 2012) (emphasis added). Hence, Western recognizes that the jury
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`award fully a