Case: 17-14849 Doc: 47 Filed: 04/03/18 Page: 1 of 7
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`IN THE UNITED STATES BANKRUPTCY COURT
`FOR THE WESTERN DISTRICT OF OKLAHOMA
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`In re
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`Youtoo Technologies, LLC
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`Debtor.
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`Case No. 17-14849-JDL
`Chapter 7
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`TWITTER, INC.’S LIMITED OBJECTION TO MOTION TO SELL PROPERTY
`FREE AND CLEAR OF LIENS, CLAIMS, AND ENCUMBRANCES COMBINED
`WITH BRIEF AND WITH NOTICE OF OPPORTUNITY FOR HEARING AND
`NOTICE OF HEARING AND BRIEF IN SUPPORT
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`Twitter, Inc. (“Twitter”), a party-in-interest in the above referenced bankruptcy
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`case, by and through its undersigned counsel, respectfully files this limited objection and
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`brief in support (this “Limited Objection”) to the Motion to Sell Property Free and
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`Clear of Liens, Claims, and Encumbrances Combined With Brief and With Notice of
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`Opportunity for Hearing and Notice of Hearing [Dkt. No. 41] (the “Sale Motion”) filed
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`by Douglas N. Gould, Trustee (“Trustee”) for YouToo Technologies, LLC, the Chapter
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`7 debtor (“Debtor”). In support of this Limited Objection, Twitter respectfully states as
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`follows:
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`BACKGROUND
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`1.
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`The Debtor filed the above-referenced case under Chapter 7 of Title 11 of
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`the United States Code (the “Bankruptcy Code”) on November 30, 2017 (the “Petition
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`Date”). Thereafter, the Trustee was appointed Chapter 7 trustee for the Debtor’s
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`bankruptcy estate.
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`2.
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`On February 2, 2018, Twitter filed Twitter, Inc.’s Motion for Order (i)
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`Holding that the Automatic Stay Does not Apply Pursuant to 11 U.S.C. § 362(b)(4), or
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`Alternatively, (ii) Lifting the Automatic Stay for Cause Under § 362(d)(1) and Waiving
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`the 14-Day Stay Under Bankruptcy Rule 4001(a)(3), Brief in Support Thereof, And
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`Notice for Opportunity for Hearing [Dkt. No. 21] (the “Stay Motion”).
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`3.
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`As set forth in more detail in the Stay Motion, prior to the Petition Date,
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`Twitter filed several petitions requesting inter partes review of (i) U.S. Patent No.
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`9,083,997,
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`(ii) U.S. Patent No. 8,601,506, and (iii) U.S. Patent No. 8,464,304
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`(collectively, the “Challenged Patents”) with the Patent and Trial Appeal Board (the
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`“PTAB”) of the United States Patent and Trade Mark Office (the “USPTO”). The
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`PTAB has “instituted” inter partes review proceedings (“IPR Proceedings”)
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`for
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`Twitter’s challenges to the Challenged Patents based on the PTAB’s findings that there is
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`a reasonable likelihood that Twitter will prevail on one or more of those challenges in
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`front of the PTAB.1
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`4.
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`A hearing on Twitter’s request
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`that
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`the Court determine that
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`IPR
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`Proceedings were excluded from the automatic stay under Bankruptcy Code § 362(b)(4)
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`was held on March 21, 2018. The Court denied the motion, holding that the automatic
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`1 While the Trustee states that the “Patents” are the subject of a proceeding pending in
`front of the PTAB and references proceeding number IPR2017-00829, that is only one of
`the four pending IPR Proceedings. Certain of the Challenged Patents are also subject to
`proceeding numbers IPR2017-00830, IPR2017-00113 and IPR2017-001131.
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`stay does apply to IPR Proceedings. The parties have agreed to continue the hearing as to
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`Twitter’s alternative request that the Court lift the automatic stay with respect to the IPR
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`Proceedings.
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`5.
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`Prior to the Petition Date, the Debtor sued Twitter for patent infringement
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`on the Challenged Patents in the case styled and numbered Youtoo Technologies LLC v.
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`Twitter, Inc., Case No. 3:16-cv-00764-N, in the United States District Court for the
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`Northern District of Texas, Dallas Division (the “Patent Litigation”). Twitter moved to
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`dismiss the Debtor’s infringement claims on U.S. Patent Nos. 8,464,304 and 8,601,506
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`on the grounds that the claimed inventions were unpatentable under 35 U.S.C. § 101.2
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`The District Court granted the motion to dismiss, holding that U.S. Patent Nos. 8,464,304
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`and 8,601,506 were invalid, and dismissing the Debtor’s claims for infringement of those
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`two patents.3 Twitter has asserted several defenses concerning U.S. Patent No. 9,083,997
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`(the “’997 Patent”), including failure to mark, invalidity, non-infringement, and the
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`Debtor’s lack of standing to assert any claim on the ’997 Patent. Twitter has also brought
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`a counterclaim for declaratory judgment that the ’997 Patent is invalid.4
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`2 See Twitter’s Partial Motion to Dismiss First and Second Claims of Infringement for
`Failure to State a Claim Pursuant to 35 U.S.C. §101 (Patent Litigation Docket. No. 28).
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`3 See Order (Patent Litigation Docket No. 39). The District Court sua sponta certified its
`order invalidating U.S. Patent Nos. 8,464,304 and 8,601,506 for “immediate interlocutory
`appeal pursuant to 28 U.S.C. § 1292(b).” Id. The Debtor petitioned the Federal Circuit
`for leave to appeal the court’s order, but the appellate court declined to take the appeal.
`Youtoo Technologies LLC v. Twitter, Inc., No. 17-106, Dkt. No. 12 (Fed. Cir. Dec. 22,
`2016).
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`4 See Twitter’s Answer, Affirmative Defenses, and Counterclaim to Plaintiff’s Amended
`Complaint, Case No. 3:16-cv-00764-N (Patent Litigation Docket. No. 87).
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`6.
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`Further, prior to the Petition Date, Twitter informed the Debtor that Twitter
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`will seek a finding by the District Court that the Patent Litigation is an exceptional case
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`that warrants an award of fees and sanctions to Twitter under 35 U.S.C § 285 based on
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`the failure to dismiss the remaining claims in the Patent Litigation despite overwhelming
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`evidence that the invention claimed by the ’997 Patent was unquestionably “in public use
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`or on sale in this country, more than one year prior to the date of the application for
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`patent in the United States.” See pre-AIA 35 U.S.C. § 102(b). Twitter asserts that each
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`element of the Debtor’s asserted claims was practiced, publically used, and commercially
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`sold at least four years prior to filing the application that resulted in the ’997 Patent. In
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`the event that the Patent Litigation continues with the Buyer (as hereafter defined) or
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`some other party stepping into the shoes of the Debtor in that litigation, Twitter will (a)
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`vigorously defend itself,
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`(b) continue to pursue its affirmative defenses and its
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`counterclaim for declaratory judgment, and (c) seek to recover its attorneys’ fees and any
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`other sanctions available under 35 U.S.C. § 285.
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`7.
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`On March 13, 2018, the Trustee filed the Sale Motion, seeking an order
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`authorizing the sale of the Debtor’s interests in certain patents and other assets of the
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`estate to Arundel Ventures, LLC (the “Buyer”) free and clear of liens, claims and other
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`interests in the patents, other than the perfected security interests of the alleged Secured
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`Creditors’ claims. The Challenged Patents are included in the “Patents and Purchased
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`Assets” to be sold to the Buyer.
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`LIMITED OBJECTION
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`8.
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`Twitter files this Limited Objection seeking clarification in any “Sale
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`Order” that (a) the challenges raised to the Challenged Patents in the IPR Proceedings,
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`(b) all defenses available to Twitter in the Patent Litigation, including but not limited to
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`defenses related to failure to mark, invalidity, non-infringement, and the Debtor’s lack of
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`standing, (c) Twitter’s counterclaim for declaratory judgment, and (d) Twitter’s claim for
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`fees and sanctions under 35 U.S.C. § 285 for continuation of the Patent Litigation will
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`survive the sale of the Patents and Purchased Assets to the Buyer. Twitter believes the
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`requested relief is appropriate and reasonable in light of the Trustee’s request that the
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`Sale Order “specifically state that the same shall be effective upon closing to remove any
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`and all liens, claims and encumbrances from the Purchased Assets other than the Secured
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`Creditors’ prior perfected security interests.”5
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`9.
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`Specifically, Twitter requests that any Sale order provide that it is without
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`prejudice to: (a) the continuation of the pending IPR Proceedings in front of the PTAB
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`and Twitter’s continued participation in those proceedings, (b) Twitter’s right to fully
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`defend against any claims or causes of action asserted in the Patent Litigation, which
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`includes asserting Twitter’s affirmative defenses and pursuing its declaratory judgment
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`claim, (c) the effect or validity of any prior rulings issues in the Patent Litigation or the
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`5 C.f. Silica Tech, L.L.C. v. J-Fiber, GmbH, Case No. 06-10293-WGY, 2009 WL
`2579432, at *28 (D. Mass. Aug. 19, 2009) (“Prudently, neither party questions the
`authority of the Massachusetts bankruptcy court to condition the sale of [the debtor’s]
`assets subject to the ‘surviving claims’ of [a non-debtor patent litigant].”); Diego, Inc. v.
`Hsiao-Shih Chang (In re IPDN Corp.), 352 B.R. 870, 877 (Bankr. E.D. Mo. 2006) (“[A]
`sale order cannot be read to affect purported property interests that lay outside the
`estate.”).
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`IPR Proceedings, and (d) Twitter’s right to pursue fees and sanctions under 35 U.S.C.
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`§ 285 against the Buyer in the event that the Buyer continues the Patent Litigation.
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`10. While Twitter believes there is sufficient ambiguity in the Sale Motion to
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`necessitate this objection, Twitter is hopeful that it will be able to reach an agreement
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`with the Trustee and Buyer regarding language sufficient to resolve Twitter’s concerns.
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`11.
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`Further, Twitter objects to the Sale Motion for lack of information in two
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`areas. First, the Sale Motion does not provide sufficient information regarding the
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`Buyer’s financial ability to consummate the sale or the anticipated time line to close the
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`sale. A significant delay in the closing of the sale would be prejudicial to Twitter by
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`further delaying the IPR Proceedings and Twitter’s ability to pursue final resolution of
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`the Patent Litigation.
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`12.
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`Second, the Sale Motion does not indicate whether the Buyer has been
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`informed of its continuing obligations to, and has committed to, preserve records related
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`to the Patent Litigation. Those obligations are critical to Twitter’s ability to fully pursue
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`appropriate discovery and remedies in the Patent Litigation.
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`FOR ALL THE ABOVE STATED REASONS, Twitter requests that the Court
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`require modifications to the Sale Order sufficient to address the objections raised in this
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`Limited Objection and grant such other relief as the Court deems just and proper.
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`Case: 17-14849 Doc: 47 Filed: 04/03/18 Page: 7 of 7
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`DATED: April 3, 2018
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`Respectfully submitted,
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`By: s/ Tami J. Hines
`Tami J. Hines, OBA #32014
`HALL, ESTILL, HARDWICK, GABLE,
`GOLDEN & NELSON, P.C.
`100 North Broadway, Suite 2900
`Oklahoma City, OK 73102-8865
`Telephone: (405) 533-2828
`Facsimile: (405) 533-2855
`Email: thines@hallestill.com
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`Steven W. Soule, OBA #13781
`William W. O’Conner, OBA #13200
`HALL, ESTILL, HARDWICK, GABLE,
`GOLDEN & NELSON, P.C.
`320 South Boston Avenue, Suite 200
`Tulsa, OK 74103-3706
`Telephone: (918) 594-0400
`Facsimile: (918) 594-0505
`Email: ssoule@hallestill.com
`Email: boconnor@hallestill.com
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`and
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`Stephen M. Pezanosky (admitted pro hac vice)
`Autumn D. Highsmith (admitted pro hac vice)
`HAYNES AND BOONE, LLP
`2323 Victory Avenue, Suite 700
`Dallas, TX 75219
`Telephone: (214) 651-5000
`Facsimile: (214) 651-5904
`Email stephen.pezanosky@haynesboone.com
`Email autumn.highsmith@haynesboone.com
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`COUNSEL FOR TWITTER, INC.
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