Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 1 of 21 PagelD #: 978
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`FALL LINE PATENTS, LLC,
`
`Plaintiff,
`
`V.
`
`ZOE'S KITCHEN, INC. and ZOE'S
`KITCHEN USA, LLC,
`
`Defendants.
`
`CIVIL ACTION NO. 6:18-cv-407-RWS
`
`LEAD CASE
`
`JURY TRIAL DEMANDED
`
`AMC ENTERTAINMENT HOLDINGS,
`INC. and AMERICAN MULTI-CINEMA,
`INC.
`
`CIVIL ACTION NO. 6:18-cv-408-RWS
`
`JURY TRIAL DEMANDED
`
`BOSTON MARKET CORPORATION
`
`STARBUCKS CORPORATION
`
`MCDONALD'S CORPORATION and
`MCDONALD'S USA, LLC,
`
`PANDA RESTAURANT GROUP, INC.
`and PANDA EXPRESS, INC.
`
`PAPA JOHN'S INTERNATIONAL, INC.
`and STAR PAPA, LP
`
`CIVIL ACTION NO. 6:18-cv-409-RWS
`
`JURY TRIAL DEMANDED
`
`CIVIL ACTION NO. 6:18-cv-411-RWS
`
`JURY TRIAL DEMANDED
`
`CIVIL ACTION NO. 6:18-cv-412-RWS
`
`JURY TRIAL DEMANDED
`
`CIVIL ACTION NO. 6:18-cv-413-RWS
`
`JURY TRIAL DEMANDED
`
`CIVIL ACTION NO. 6:18-cv-415-RWS
`
`JURY TRIAL DEMANDED
`
`DEFENDANTS' MOTION TO STAY LITIGATION
`PENDING INTER PARTES REVIEW OF THE PATENT-IN-SUIT
`
`Fall Line Patents, LLC Ex. 2003
`U.S. Patent No. 9,454,748
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 2 of 21 PagelD #: 979
`
`TABLE OF CONTENTS
`
`2
`
`4
`6
`
`I. FACTUAL AND PROCEDURAL HISTORY
`II. LEGAL STANDARD
`III. ARGUMENT
`A. A stay will not unduly prejudice or tactically disadvantage Fall Line because, as a
`non-practicing entity, Fall Line cannot lose market share or revenue, and seeks only
`money damages
`B. A stay will simplify the issues because both Defendants' IPR and the April 5
`written decision of Unified's IPR will narrow the issues, prevent duplicative discovery,
`and provide guidance for claim construction
`7
`C. A stay will not negatively impact close of discovery or trial because both are
`distant. ii
`D. A stay would limit the burden of litigation on the Court and the parties because it
`12
`would avoid litigating the validity of the '748 Patent in parallel with the PTAB
`W. CONCLUSION
`
`6
`
`13
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE i
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 3 of 21 PagelD #: 980
`
`TABLE OF AUTHORITIES
`
`Cases
`
`The Armor All/STP Products Co. v. Aerospace Commc'ns Holdings Co., Ltd.,
`Case No. 6:15-CV-00781-JRG-KNM, 2016 WL 6397269 (E.D. Tex. Oct. 28,
`2016)
`
`e-Watch, Inc. v. Lorex Canada, Inc.,
`No. H-12-3314, 2013 WL 5425298 (S.D. Tex. Sept. 26, 2013)
`
`EchoStar Techs. Corp. v. TiVo, Inc.,
`No. 5:05-cv-81, 2006 WL 2501494 (E.D. Tex. July 14, 2006)
`
`Emp't Law Compliance, Inc. v. Compli, Inc.,
`No. 3:13-cv-3574-N, 2014 WL 3739770 (N.D. Tex. May 27, 2014)
`
`Ericsson Inc., et al. v. TCL Commc'n Tech. Holdings, Ltd.,
`No. 2:15-cv-00011-RSP, 2016 WL 1162162 (E.D. Tex. Mar. 23, 2016)
`
`Evolutionary Intelligence, LLC v. Apple, Inc.,
`No. C 13-04201, 2014 WL 93954 (N.D. Cal. Jan. 9, 2014)
`
`Fall Line Patents, LLC v. American Airlines Group Inc., et al.,
`No. 6:17-cy-202-RWS
`
`Intellectual Ventures II LLC v. Commerce Bancshares, Inc.,
`No. 2:13-cv-4160-NKL, 2014 WL 2511308 (W.D. Mo. June 4, 2014)
`
`LakeSouth Holdings, LLC v. Ace Evert, Inc.,
`No. 3:14-cv-1348-N, 2015 WL 10818619 (N.D. Tex. June 17, 2015)
`
`Landis v. N. Am. Co.,
`299 U.S. 248 (1936)
`
`Lennon Image Techs., LLC v. Macy's Retail Holdings, Inc.,
`No. 2:13-cv-00235-JRG, 2014 WL 4652117 (E.D. Tex. Sep. 18, 2014)
`
`Micrografx, LLC v. Google, Inc.,
`No. 3:13-CV-3595-N, 2014 WL 12580455 (N.D. Tex. July 9, 2014)
`
`Murata Mach. USA v. Daifuki Co.,
`83o F.3d 1357 (Fed. Cir. 2016)
`
`Neste Oil OYJ v. Dynamic Fuels, LLC,
`No. 1:12-1744-GMS, 2013 WL 3353984 (D. Del. July 2, 2013)
`
`Network-1 Sec. Sols., Inc. v. Alcatel-Lucent USA Inc.,
`No. 6:11cy492, 2015 WL 11439060 (E.D. Tex. Jan. 5, 2015)
`
`Page(s)
`
`6
`
`7, 11, 12
`
`5, IA 12
`
`6, 7, 12
`
`9
`
`10
`
`2
`
`11
`
`5
`
`4
`
`5
`
`12
`
`4, 5
`
`7
`
`11
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE ii
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 4 of 21 PagelD #: 981
`
`NFC Tech. LLC v. HTC Am., Inc.,
`No. 2:13-cv-1058-WCB, 2015 WL 1069111 (E.D. Tex. Mar. 11, 2015) (Bryson,
`J.)
`
`passim
`
`Norman IP Holdings, LLC v. TP-Link Techs., Co.,
`No. 6:13-cv-384-JDL, 2014 WL 5035718 (E.D. Tex. Oct. 8, 2014)
`
`Princeton Dig. Image Corp. v. Konami Dig. Entm't Inc.,
`No. 12-1461-LPS-CJB, 2014 WL 3819458 (D. Del. Jan. 15, 2014)
`
`SAS Inst., Inc. v. Iancu,
`138 S. Ct. 1348 (2018)
`
`Soverain Software LLC v. Amazon.com, Inc.
`356 F.Supp.2d 66o (E.D. Tex. 2005)
`
`TAS Energy, Inc. v. San Diego Gas 8z- Elec. Co.,
`No. 12-cv-2777-GPC(BGS), 2014 WL 794215 (S.D. Cal. Feb. 26, 2014)
`
`Tinnus Enters., LLC v. Telebrands Corp.,
`No. 6:15-cv-551-RC-JDL, 2017 WL 379471 (E.D. Tex. Jan. 24, 2017)
`
`Troyer Group, Inc. v. Dedicated Micros USA,
`No. 2:13-cv-1047-WCB, 2015 WL 1069179 (E.D. Tex. Mar. 11, 2015) (Bryson,
`J.)
`
`Virtual Agility Inc. v. Salesforce.com, Inc.,
`759 F.3d 1307 (Fed. Cir. 2014)
`
`ZitoVault, LLC v. IBM,
`No. 3:16-cv-00962-M, 2016 WL 9244739 (N.D. Tex. July 11, 2016)
`
`Statutes
`
`35 U.S.C. § 314(a)
`
`Other Authorities
`
`Fed. R. Civ. P. 12(0
`
`7
`
`11
`
`9
`
`1, 5
`
`12
`
`6
`
`4
`
`6,11
`
`8
`
`9
`
`3
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE iii
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 5 of 21 PagelD #: 982
`
`This case is in its early stages, and a motion for judgment on the pleadings is
`
`currently pending. It involves a patent that is currently under inter partes review ("IPR")
`
`and that is being asserted by a non-practicing entity that would not suffer any prejudice
`
`from a stay. Moreover, the patent-in-suit is subject to an additional IPR petition and is a
`
`continuation of a patent that had all of its claims cancelled as a result of a re-examination
`
`following a years-long litigation campaign by the same plaintiff actors. There are only
`
`slight differences between the patent-in-suit and the cancelled parent claims. The Court
`
`should thus grant Defendants a stay pending resolution of the most recent petition for
`
`IPR, which requires an institution decision from the Patent Trial and Appeal Board
`
`("PTAB") by August 12, 2019. Defendants' request meets the requisite test adopted by this
`
`Court for determining whether the benefits of a stay outweigh the costs: (a) a stay will
`
`not unduly prejudice or tactically disadvantage Fall Line, (b) a stay will simplify the issues,
`
`(c) discovery is not complete and trial is distant, and (d) a stay would limit the burden of
`
`litigation on the Court and the parties. Soverain Software LLC v. Amazon.com, Inc. 356
`
`F.Supp.2d 66o, 662 (E.D. Tex. 2005).
`
`Further, the PTAB will issue a final written decision regarding validity of claims
`
`16-19, 21, and 22 of Fall Line's asserted U.S. Patent No. 9,454,748 ("the '748 Patent") on
`
`or before April 5, 2019. That petition was filed on October 6, 2017, by Unified Patents,
`
`Inc. ("Unified IPR"), and the PTAB's impending decision will shed light on nearly half of
`
`the claims Defendants challenge in their own IPR petition, not to mention provide
`
`guidance to the parties and this Court as to the construction of terms found in claims
`
`asserted in this litigation.
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE 1
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 6 of 21 PagelD #: 983
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`Accordingly, Defendants respectfully request the Court stay this case at least until
`
`the PTAB's institution decision on or before August 12, 2019, and to extend the stay
`
`pending the resolution of the IPR if instituted.
`
`I. FACTUAL AND PROCEDURAL HISTORY
`
`Prior to the current litigation, Fall Line asserted the '748 Patent in several district
`
`court cases that are no longer pending. See, e.g., Fall Line Patents, LLC v. American
`
`Airlines Group Inc., et al., No. 6:17-cv-202-RWS. The '748 Patent is also the subject of a
`
`pending IPR petition (IPR2o18-00043) filed October 6, 2017, by Unified Patents, Inc.
`
`Petition for Inter Partes Review of U.S. Patent No. 9,454,748 (Exhibit A, at 3). The
`
`Unified IPR was instituted on April 5, 2018, and oral arguments were held on December
`
`14, 2018. Id. A written decision regarding challenged claims 16-19 and 21-22 is anticipated
`
`on or before April 5, 2019. Id.
`
`The current litigation is in its early stages. On August 15, 2018, Plaintiff Fall Line
`
`Patents, LLC ("Plaintiff' or "Fall Line") serially filed seven complaints alleging
`
`infringement of the '748 Patent against Zoe's Kitchen, Inc., and Zoe's Kitchen USA, LLC;
`
`AMC Entertainment Holdings, Inc., and American Multi-Cinema, Inc.; Boston Market
`
`Corporation; Starbucks Corporation; McDonald's Corporation and McDonald's USA,
`
`LLC; Panda Restaurant Group, Inc., and Panda Express, Inc.; and Papa John's
`
`International, Inc., and Star Papa, LP (collectively, "Defendants"). All seven complaints
`
`allege infringement of "at least Claim 1" of the '748 Patent. The asserted patent is a
`
`continuation of U.S. Patent No. 7,822,816 ("the '816 Patent"). The '816 Patent was
`
`asserted in numerous lawsuits in previous years by substantially the same plaintiff
`
`actors—i.e., the same managing member, law firm, and inventor are involved. Their
`
`litigation campaign, filed against dozens of defendants, came to a halt when the United
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE 2
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 7 of 21 PagelD #: 984
`
`States Patent and Trademark Office ("USPTO" or "PTO") cancelled all claims of the '816
`
`Patent as a result of an ex parte re-examination. The differences between the '816 Patent
`
`and the patent-in-suit are exceedingly narrow, and the current patent essentially adds
`
`nothing more than using a GPS signal, which was well-known at the relevant time.
`
`Defendant Starbucks filed a motion for judgment on the pleadings pursuant to
`
`Federal Rule of Civil Procedure 12(c) on March 14, 2019, arguing Fall Line lacks standing
`
`to sue Defendants due to the terminal disclaimer attached to the '748 Patent. Dkt. Nos.
`
`63-65. Pursuant to those terms, Fall Line must also own the '816 Patent to enforce the
`
`'748 Patent. Id. But Fall Line did not own the '816 Patent when it filed these complaints.
`
`Id.
`
`Defendants timely filed initial pleadings,1 including counterclaims seeking
`
`declaratory judgments of non-infringement and invalidity,2 and a joint motion to dismiss
`
`for lack of patent eligible subject matter.3 This Court consolidated these cases on October
`
`23, 2018.4
`
`In January 2019, Fall Line served its infringement contentions and asserted Claims
`
`1, 2, 5, and 7 against "the [Defendants'] mobile Android app, the [Defendants'] mobile iOS
`
`app, the use of the mobile apps by the end user, the mobile apps running on a mobile
`
`device, and the associated back-end servers." Disclosure of Asserted Claims and
`
`1 Zoe's (Dkt. No. 14-15); AMC (Dkt. 15-16); Boston Market (Dkt. No. 12); Starbucks (Dkt.
`No. 14); McDonald's (Dkt. Nos. 14-15); Panda (Dkt. Nos. 14-15); and Papa John's (Dkt.
`Nos. 16-17).
`2 Only Zoe's, McDonald's, Panda, Papa John's, and Starbucks filed answers.
`3 Defendants filed identical motions to dismiss and were joined in two sub-groups: (1)
`Starbucks (Dkt. No. 13) and McDonald's (Dkt. No. 13); and (2) Zoe's (Dkt. No. 13), AMC
`Panda (Dkt. No. 13), and Papa John's (Dkt.
`(Dkt. No. 17), Boston Market (Dkt. No.
`No. 15).
`4 Zoe's (Dkt. No. 19); AMC (Dkt. No. 19); Boston Market (Dkt. No. 15); Starbucks (Dkt.
`No. 16); McDonald's (Dkt. No. 19); Panda (Dkt. No. 19); and Papa John's (Dkt. No. 21).
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE 3
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 8 of 21 PagelD #: 985
`
`Infringement Contentions (Exhibit B, at 2). Confirming its status as a non-practicing
`
`entity, Fall Line stated it "does not intend to rely on the assertion that any of its own
`
`applications practice the Asserted Patent." Id. at 3. The following day, January 16, 2019,
`
`it served its first set of Common Interrogatories.
`
`Within a week of receiving Fall Line's infringement contentions and identification
`
`of asserted claims, on January 22, 2019, Defendants filed a Petition for IPR of claims 1, 2,
`
`5, 7, and 19-22 of the '748 Patent with the PTAB. (Exhibit A). Thereafter, on January 31,
`
`2019, this Court issued various discovery related orders, Dkt. Nos. 48-51, as well as the
`
`Docket Control Order. Dkt. No. 47.
`
`This latter order provides two dates especially germane to this motion: August 7,
`
`2019 (Markman hearing), and May 18, 2020 (jury selection and trial). Id. The Markman
`
`hearing date is especially salient because it is, at most, just five days before the PTO is
`
`required to issue its institution decision regarding the '748 Patent. Notice of Filing Date
`
`Accorded to Petition (Exhibit C) (setting the institution decision deadline as August 12,
`
`2019). Further, the trial date is set for May 18, 2020, well over a year from now. Dkt. No.
`
`47.
`
`II. LEGAL STANDARD
`
`It is well-established that "the power to stay proceedings is incidental to the power
`
`inherent in every court to control the disposition of the causes on its docket with economy
`
`of time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S.
`
`248, 254 (1936); Troyer Group, Inc. v. Dedicated Micros USA, No. 2:13-cv-1047-WCB,
`
`2015 WL 1069179, at *1 (E.D. Tex. Mar. 11, 2015) ("A district court has the inherent power
`
`to control its own docket, including the power to stay proceedings before it.") (Bryson,
`
`J.); see also Murata Mach. USA v. Daifuki Co., 830 F.3d 1357, 1361 (Fed. Cir. 2016)
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE 4
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 9 of 21 PagelD #: 986
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`(affirming a district court's refusal to lift a stay pending IPR). A stay is apt if "the outcome
`
`of a PTO proceeding is likely to assist the court in determining patent validity or eliminate
`
`the need to try infringement issues." NFC Tech. LLC v. HTC Am., Inc., No. 2:13-cv-1058-
`
`WCB, 2015 WL 1069111, at *1 (E.D. Tex. Mar. 11, 2015) (Bryson, J.) (internal quotation
`
`marks omitted).
`
`District courts typically consider three factors in deciding whether to stay litigation
`
`pending the outcome of PTO proceedings:
`
`(i) whether a stay would unduly prejudice or present a clear tactical
`disadvantage to the non-moving party; (ii) whether a stay will simplify the
`issues in question and trial of the case; and (iii) whether discovery is
`complete and whether a trial date has been set.
`
`Soverain, 356 F.Supp.2d at 662; Lennon Image Techs., LLC v. Macy's Retail Holdings,
`
`Inc., No. 2:13-cv-00235-JRG, 2014 WL 4652117, at *2 (E.D. Tex. Sep. 18, 2014).
`
`"Essentially, courts determine whether the benefits of a stay outweigh the inherent costs
`
`based on these factors." EchoStar Techs. Corp. v. TiVo, Inc., No. 5:05-cv-81, 2006 WL
`
`2501494, at *1 (E.D. Tex. July 14, 2006).
`
`In addition, courts may also consider a fourth, more practical factor that weighs
`
`"whether a stay will reduce the burden of litigation on the parties and the court." NFC
`
`Tech., 2015 WL 1069111, at *5; see also Murata, 830 F.3d at 1352 (noting "Congress's
`
`desire to enhance the role of the PTO and limit the burden of litigation on courts and
`
`parties") (internal quotation marks omitted). The party moving for the stay bears the
`
`burden of demonstrating that a stay is appropriate. LakeSouth Holdings, LLC v. Ace
`
`Evert, Inc., No. 3:14-cv-1348-N, 2015 WL 10818619, at *I (N.D. Tex. June 17, 2015).
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE 5
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 10 of 21 PagelD #: 987
`
`HI. ARGUMENT
`
`A. A stay will not unduly prejudice or tactically disadvantage Fall
`Line because, as a non-practicing entity, Fall Line cannot lose
`market share or revenue, and seeks only money damages.
`
`The first factor weighs in favor of granting a stay, as it will not prejudice Fall Line.
`
`Defendants and Fall Line are not competitors. In fact, because it is a non-practicing entity,
`
`Fall Line faces no loss of market share or competitive disadvantage from the requested
`
`stay. Fall Line seeks monetary damages, the delay of which is not unduly prejudicial. See
`
`Virtual Agility Inc. v. Salesforce.com, Inc., 759 F.3d 13o7, 1318 (Fed. Cir. 2014) ("A stay
`
`will not diminish the monetary damages to which VA will be entitled if it succeeds in its
`
`infringement suit—it only delays realization of those damages...."); The Armor All/STP
`
`Products Co. v. Aerospace Commc'ns Holdings Co., Ltd., Case No. 6:15-CV-oo781-JRG-
`
`KNM, 2016 WL 6397269, at *2 (E.D. Tex. Oct. 28, 2016) ("When a patentee seeks
`
`exclusively monetary damages, as opposed to a preliminary injunction or other relief,
`
``mere delay in collecting those damages does not constitute undue
`
`prejudice.") (emphasis added) (internal citations omitted); Tinnus Enters., LLC v.
`
`Telebrands Corp., No. 6:15-cv-551-RC-JDL, 2017 WL 379471, at *3 (E.D. Tex. Jan. 24,
`
`2017) ("Mere delay in the litigation does not establish undue prejudice"). With respect to
`
`non-practicing plaintiffs like Fall Line, courts have found that a stay will not cause undue
`
`prejudice and have accordingly granted motions to stay pending an IPR institution
`
`decision.
`
`The fact that a stay will cause some delay is not sufficient to establish prejudice or
`
`preclude the requested relief. See, e.g., NFC Tech., 2015 WL 1069111, at *2 (delay "is
`
`present in every case in which a patentee resists a stay, and it is therefore not sufficient,
`
`standing alone, to defeat a stay motion"); Emp't Law Compliance, Inc. v. Compli, Inc.,
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE 6
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 11 of 21 PagelD #: 988
`
`No. 3:13-cv-3574-N, 2014 WL 3739770, at *2 (N.D. Tex. May 27, 2014) (Plaintiff "fail[ed]
`
`to show that the parties are direct competitors or how it would be adversely affected by a
`
`stay."); see also Neste Oil OYJ v. Dynamic Fuels, LLC, No. 1:12-1744-GMS, 2013 WL
`
`3353984, at *4-5 (D. Del. July 2, 2013) (granting pre-institution stay even when parties
`
`were indirect competitors). As such, Defendants' Motion should be granted.
`
`B. A stay will simplify the issues because both Defendants' IPR and
`the April 5 written decision of Unified's IPR will narrow the
`issues, prevent duplicative discovery, and provide guidance for
`claim construction.
`
`The second factor weighs in favor of granting a stay because IPR will simplify the
`
`issues and increase the efficiency of any residual litigation.
`
`Simplification. Whether the IPR proceeding will result in simplification of the
`
`issues before the Court is "the most important factor" when evaluating a motion to stay,
`
`NFC Tech., 2015 WL 1069111, at *4, because "the PTAB's determination of the validity of
`
`all the [challenged] claims [] could narrow the issues before the court, prevent duplicative
`
`or unnecessary discovery, and encourage settlement or dismissal." Norman IP Holdings,
`
`LLC v. TP-Link Techs., Co., No. 6:13-cv-384-JDL, 2014 WL 5035718, at *3 (E.D. Tex. Oct.
`
`8, 2014); see Emp't Law Compliance, 2014 WL 3739770, at *2 ("waiting for the PTO's
`
`[institution] decision will clarify the scope of issues in this case and could eliminate the
`
`need for a trial altogether."); see also e-Watch, Inc. v. Lorex Canada, Inc., No. H-12-
`
`3314, 2013 WL 5425298, at *2 (S.D. Tex. Sept. 26, 2013) (In issuing a pre-institution IPR
`
`stay, the court considers the potential for "simplification of the issues," not "total
`
`resolution of the case.").
`
`Here, the case for simplification is strong because crucially the PTO has already
`
`been down this road with the '748 Patent before, having instituted the Unified IPR on
`
`DEFENDANTS' MOTION TO STAY PENDING IPR
`
`-PAGE 7
`
`

`

`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 12 of 21 PagelD #: 989
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`April 5, 2018.5 (Exhibit D) (comparing asserted claim 1 with challenged claim 19 in the
`
`Unified IPR). Three of the challenged claims overlap with Defendants' petition. (Exhibit
`
`A, at 3). Oral arguments were heard December 14, 2018, and a final written decision is
`
`expected in a short matter of weeks, on or before April 5, 2019. Id.
`
`Notably, the parent patent to the '748 patent contained claims that are nearly
`
`identical to the asserted claims. Following a complete ex parte re-examination, the
`
`USPTO cancelled all claims of the parent patent because they were invalid in light of
`
`numerous prior art references. This important fact makes this case stand out from most
`
`other cases where defendants seek an IPR and a stay: claims which are nearly identical
`
`to the asserted patent, and indeed every claim from the asserted patent's parent
`
`application, have already been found unpatentable by the USPTO, and as such, the
`
`potential for simplification of the issues is very real and tangible.
`
`Given this, and "[biased on statistics from the PTAB [that] there is a significant
`
`probability the PTAB will invalidate [] some [] of the claims at issue in this litigation and
`
`simplify the case for trial," this factor weighs in favor of a stay. See ZitoVault, LLC v. IBM,
`
`No. 3:16-cv-00962-M, 2016 WL 9244739, at *2 (N.D. Tex. July 11, 2016) (noting IPR had
`
`already been instituted by different petitioners with overlapping challenged claims).
`
`IPR Timeline. It was only a week after receiving Fall Line's Infringement
`
`Contentions (Exhibit B, served January 15, 2019) that Defendants filed their petition for
`
`IPR. (Exhibit A, accorded the filing date of January 22, 2019). Defendants did not delay
`
`in their filing, as it occurred immediately after Fall Line disclosed the claims it was
`
`5 As Ex. D illustrates, the asserted claims and the claims subject to the Unified IPR both
`relate to methods for tokenized questionnaires that rely on GPS location data, and
`related storage and transmission activity.
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`DEFENDANTS' MOTION TO STAY PENDING IPR
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`-PAGE 8
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`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 13 of 21 PagelD #: 990
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`asserting against defendants and before any significant discovery had taken place or case
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`management orders were entered. NFC Tech., 2015 WL 1069111, at *3-4 (finding IPR
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`petition filed four months after service of infringement contentions to be timely).
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`Defendants' petition seeks IPR of claims 1, 2, 5, 7, and 19-22 of the '748 Patent.
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`(Exhibit A, at 1). The petition thus targets all of the claims asserted by Fall Line in this
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`case, and will likely guide the validity determination in this case or potentially eliminate
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`the need to litigate the district court case all together. See, e.g., NFC Tech., 2015 WL
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`1069111, at *1 ("A stay is particularly justified when the outcome of a PTO proceeding is
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`likely to assist the court in determining patent validity or eliminate the need to try
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`infringement issues." (quotation omitted)). Further, any statements made by Fall Line as
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`part of the IPR proceedings will be a part of the intrinsic record, and staying the case will
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`allow the parties and the Court to consider those statements during claim construction.
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`Ericsson Inc., et al. v. TCL Commc'n Tech. Holdings, Ltd., No. 2:15-cv-00011-RSP, 2016
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`WL 1162162, at *3 (E.D. Tex. Mar. 23, 2016) (granting stay pending IPR, noting "the claim
`
`construction positions taken by the parties before the PTAB may inform subsequent claim
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`construction proceedings in this Court.").
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`Fall Line must submit its preliminary response to the IPR Petition, if any, by May
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`12, 2019 (Exhibit C)—well before the Markman hearing of August 7, 2019. Dkt. No. 47.
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`The PTO will initiate IPR if Defendants show "a reasonable likelihood" of prevailing with
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`respect to at least one of the challenged claims. 35 U.S.C. § 314(a). This is a fairly low bar
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`as "[o]nce that single claim threshold is satisfied, it doesn't matter whether the petitioner
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`is likely to prevail on any additional claims; the Director need not even consider any other
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`claim before instituting review." (emphasis in the original) SAS Inst., Inc. v. Iancu, 138 S.
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`Ct. 1348, 1356 (2018). As noted above, according to the PTO, more petitions are instituted
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`DEFENDANTS' MOTION TO STAY PENDING IPR
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`-PAGE 9
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`

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`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 14 of 21 PagelD #: 991
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`than denied. U.S. Patent and Trademark Office Trial Statistics (Exhibit E, at 7). Once
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`instituted, the PTAB usually finds all of the challenged claims unpatentable. Id. at 11.
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`Given the '748 Patent is already undergoing reexamination, as described above, the
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`likelihood the PTO will again grant institution is high.
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`The institution decision is due August 12, 2019 (Exhibit C), concurrent with the
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`Markman hearing of August 7, 2019. If a stay is granted and the PTAB does not institute
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`Defendants' IPR, the stay will therefore be short. If instituted, the PTAB must issue its
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`final validity decision by August 12, 2020. As such, any delay would be minimal and would
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`not constitute a tactical disadvantage to Plaintiff.
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`Increased efficiencies. IPR "was designed in large measure to simplify
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`proceedings before the courts and to give the courts the benefit of the expert agency's full
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`and focused consideration of the effect of prior art on patents being asserted in litigation."
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`NFC Tech., 2015 WL 1069111, at *4. Considering the dates for the institution decision and
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`the Markman hearing are within days of each other, lilt would be an egregious waste of
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`both the parties' and the Court's resources if [it] and summary judgment proceedings
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`went forward and the claims were subsequently declared invalid or were amended as a
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`result of the reexamination proceeding." EchoStar Techs. Corp., 2006 WL 2501494, at
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`*4. There is little, if any, benefit to litigating validity in district court while the parties are
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`simultaneously litigating the same issues before the PTAB. Evolutionary Intelligence,
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`LLG u. Apple, Inc., No. C 13-04201, 2014 WL 93954, at *3 (N.D. Cal. Jan. 9, 2014) ("There
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`is also little benefit to be gained from having two forums review the validity of the same
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`claims at the same time.").
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`Given IPR is likely to simplify this case, thus increasing this Court's ability to
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`proceed more efficiently, the second factor weighs in favor of granting a stay.
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`DEFENDANTS' MOTION TO STAY PENDING IPR
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`-PAGE 10
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`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 15 of 21 PagelD #: 992
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`C. A stay will not negatively impact close of discovery or trial
`because both are distant.
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`The third factor weighs in favor of granting a stay because discovery is in the early
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`stages. Generally, the filing of the motion to stay is the relevant time to measure the stage
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`of the litigation. VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1317 (Fed. Cir.
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`2014) (holding that a district court abused its discretion when it denied a motion to stay
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`that was filed only four months into the life of the case); see also Network-1 Sec. Sols.,
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`Inc. v. Alcatel-Lucent USA Inc., No. 6:11cv492, 2015 WL 11439060, at *1 (E.D. Tex. Jan.
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`5, 2015) ("The infant stage of a case normally weighs against lifting a stay."); Intellectual
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`Ventures II LLC v. Commerce Bancshares, Inc., No. 2:13-cv-4160-NKL, 2014 WL
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`2511308, at *4 (W.D. Mo. June 4, 2014) (concluding the case was "still at a relatively early
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`stage of patent litigation" where discovery was open for another six months, Markman
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`hearing had not occurred, and trial date was nearly a year away).
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`Here, although discovery has begun, the parties have only recently exchanged
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`initial and additional disclosures. And while some expenses have been incurred, the bulk
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`of anticipated expenses have not. For example, the Markman hearing, expert discovery,
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`and summary judgment motions have not yet occurred. See Intellectual Ventures II, 2014
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`WL 2511308, at *4; accord Princeton Dig. Image Corp. v. Konami Dig. Entm't Inc., No.
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`12-1461-LPS-CJB, 2014 WL 3819458, at *4 (D. Del. Jan. 15, 2014) (granting pre-
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`institution stay after preliminary Markman rulings, noting "further Markman hearings,
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`the completion of expert discovery and the filing of case dispositive motions are all still
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`many months to well over a year away").
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`For this reason, Texas district courts have stayed cases in a procedural posture
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`similar to the instant case based on the filing of IPR petitions. For example, in e-Watch,
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`DEFENDANTS' MOTION TO STAY PENDING IPR
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`-PAGE 11
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`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 16 of 21 PagelD #: 993
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`where the parties had exchanged contentions and were six weeks away from the
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`Markman hearing, the Court rejected plaintiffs argument that the "litigation is too far
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`along for a stay to be appropriate." 2013 WL 5425298, at *3 ("No dispositive motions have
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`been filed, and discovery is in its very early stages," and therefore "there is more work
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`ahead of the parties and the Court than behind the parties and the Court.") (internal
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`quotation marks omitted). Other courts have likewise granted pre-institution stays based
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`on IPR petitions, even where opening claim construction briefs were already filed, given
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`that a "significant amount of work still remains such as expert discovery, summary
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`judgment motions and trial." TAS Energy, Inc. v. San Diego Gas & Elec. Co., No. 12-CV-
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`2777-GPC(BGS), 2014 WL 794215, at *3 (S.D. Cal. Feb. 26, 2014).
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`"If the stay is unlikely to prejudice the plaintiff and the motion for stay comes early
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`in the case, courts generally look favorably on granting stays pending reexamination."
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`Micrografx, LLC v. Google, Inc., No. 3:13-CV-3595-N, 2014 WL 12580455, at *2 (N.D.
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`Tex. July 9, 2014) (quoting BarTex Research, LLC v. FedEx Corp., 611 F.Supp.2d 647,
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`65o (E.D. Tex April 20, 2009)); Emp't Law Compliance, 2014 WL 3739770, at *2.
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`Because this case has not progressed past the early stages of litigation, this third factor
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`also weighs in favor of a stay pending IPR.
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`D. A stay would limit the burden of litigation on the Court and the
`parties because it would avoid litigating the validity of the '748
`Patent in parallel with the PTAB.
`
`The fourth factor weighs in favor of granting a stay as well, as Defendants have
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`demonstrated how IPR will simplify the issues in question in this case. See e.g., EchoStar,
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`2006 WL 2501494, at *2 (Benefits of a completed reexamination include: prior art
`
`considered by the PTO; discovery problems potentially alleviated; dismissal of the suit or
`
`encouragement to settle; reduction in complexity and length of litigation; issues,
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`DEFENDANTS' MOTION TO STAY PENDING IPR
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`-PAGE 12
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`

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`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 17 of 21 PagelD #: 994
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`defenses, and evidence narrowed; and reduction of costs). By definition, a stay pending
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`resolution of IPR will substantially reduce the burdens on this Court and on the parties
`
`regarding any litigation that may be necessary after the stay. The Court will conserve
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`resources that may be wasted in this case, and the parties will avoid litigating the validity
`
`of the '748 Patent in the district court parallel with the PTAB. Doing so will greatly reduce
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`the cost of attorneys' fees and expenses.
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`Importantly, staying the litigation will prevent duplicative and potentially
`
`inconsistent claim construction efforts. The PTAB now uses the same standard as the
`
`district court to construe the terms of the patent. The institution decision (regardless of
`
`whether the IPR is instituted or not) will likely include constructions for certain terms. If
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`the institution decision issues shortly after the Markman hearing, this Court will not have
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`the benefit of hearing the parties' positions in view of the PTAB's constructions. As such,
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`the Court may require subsequent supplemental briefing. On the other hand, if the Court
`
`grants a stay, even in the event the IPR is not granted, the institution decision could
`
`eliminate the need for briefing certain claim terms for construction.
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`Accordingly, a stay would serve to reduce the burden of litigation on the Court and
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`the parties. This factor, like the other three, weighs in favor of granting a stay. In
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`summary, all factors indicate the benefits of the requested stay outweigh its costs.
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`IV. CONCLUSION
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`As explained herein, all of the pertinent factors weigh in favor of staying all
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`proceedings in this case pending the PTAB's decision to institute Defendants' IPR. A stay
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`will not subject Fall Line to undue prejudice or tactical disadvantage, will simplify the
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`issues in this case, will not significantly impede discovery as it has just commenced, and
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`would relieve the Court and parties of the burden of parallel litigation. In addition, the
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`DEFENDANTS' MOTION TO STAY PENDING IPR
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`-PAGE 13
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`Case 6:18-cv-00407-RWS Document 66 Filed 03/19/19 Page 18 of 21 PagelD #: 995
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`PTAB's imminent Unified IPR written decision will undoubtedly influence these
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`proceedings, beginning with the exchange of proposed terms and claim elements for
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`construction. Defendants therefore respectfully ask the Court to stay this case at least
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`until the PTAB's institution decision