Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 1 of 10 PagelD #: 1479
`
`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' REPLY IN SUPPORT OF THEIR MOTION TO STAY LITIGATION
`PENDING INTER PARTES REVIEW OF THE PATENT-IN-SUIT
`
`Fall Line Patents, LLC Ex. 2004
`U.S. Patent No. 9,454,748
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 2 of 10 PagelD #: 1480
`
`I. THIS EXCEPTIONAL CASE WARRANTS A STAY BECAUSE THE SOLE
`ASSERTED PATENT ALREADY HAS CLAIMS DECLARED UNPATENTABLE.
`
`The asserted patent just had six claims declared unpatentable last week by the Patent Trial
`
`and Appeal Board, three of which were included in Defendants' pending IPR.1 The asserted claims
`
`here are very similar to the claims found unpatentable. Mot. at 7-8. Nevertheless, Plaintiff asks
`
`this Court to ignore that every claim in the parent patent was declared unpatentable, and now over
`
`a quarter of the claims in the present patent are unpatentable, and instead pretends this is a routine
`
`patent infringement case. It is not; it is an exceptional case — exceptional in that the same plaintiff
`
`actors are continuing a long line of litigation campaigns with the weakest of patents, and now a
`
`partially-invalidated asserted patent. This is exactly the type of case that should be stayed pending
`
`an IPR decision, and Plaintiff should not in good faith oppose. Given that three claims in
`
`Defendants' pending IPR are now unpatentable, it is a near certainty that the PTAB will institute
`
`Defendants' IPR, warranting a stay. It is also a near certainty that every challenged claim will be
`
`found unpatentable — just as the last six challenged claims were, and just as every single claim in
`
`the parent patent was. Plaintiff's efforts to oppose a stay are a blatant attempt to drive up costs to
`
`inflate settlement leverage.
`
`II. THE COURT HAS DISCRETION TO STAY THIS CASE PRE-INSTITUTION.
`
`Contrary to Plaintiff's suggestions, there is no requirement for a district court to wait for
`
`the PTAB to institute an IPR before staying a case. VirtualAgility, Inc. v. Salesforce.com, Inc., 759
`
`F.3d 1307, 1315-16 (Fed. Cir. 2014) ("a motion to stay could be granted even before the PTAB
`
`rules on a post-grant review petition"); accord Neuro Cardiac Techs., LLC v. Livallova, Inc., No.
`
`I The patent has 22 claims, and thus over one-quarter of the claims in the asserted patent have now
`been declared unpatentable.
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 1
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 3 of 10 PagelD #: 1481
`
`H-18-1517, 2018 WL 4901035, at *2 (S.D. Tex. Oct. 9, 2018). Indeed, in granting a pre-institution
`
`stay in Realtime Data, LLC v. Hewlett Packard Enterprises Co., et al., this Court specifically
`
`rejected the argument that it should deny the stay because it is a "universal practice" to deny a
`
`motion to stay where IPR has not been instituted. No. 6:15-CV-86-RWS-JDL, 2017 WL 3712916
`
`(E.D. Tex. Feb. 3, 2017); see also Chart Trading Dev., LLC v. Tradestation Grp., Inc., No. 6:15-
`
`CV-1136-JDL, 2016 WL 1246579 (E.D. Tex. March 29, 2016); Landmark Tech., LLC v. iRobot
`
`Corp., No. 6:13-cv-411-JDL, 2014 WL 486836 (E.D. Tex. Jan. 24, 2014). In particular, the
`
`Realtime Court acknowledged that while IPR had not been instituted with respect to two of the
`
`asserted patents, both shared common specifications with patents where IPR had been recently
`
`instituted. 2017 WL 3712916, at *4. As such, here, where IPR has not only been instituted on
`
`certain claims of the sole asserted patent, but has invalidated those claims, a stay is more than
`
`appropriate.
`
`III. ALL FOUR FACTORS FAVOR GRANTING DEFENDANTS' MOTION TO
`STAY.
`
`A. Plaintiff will not suffer undue prejudice.
`
`Plaintiff seeks only money damages, a remedy that "will not [be] diminish[ed]" by a stay.
`
`VirtualAgility, 759 F.3d at 1318. The undue prejudice factor "focuses on the patentee's need for an
`
`expeditious resolution of its claim," id., not the length of the IPR process, or whether "a motion to
`
`stay [was filed] after the related post-grant proceeding had been instituted," as Plaintiff contends.
`
`Opp. at 7 (emphasis in original).
`
`Plaintiff waited more than 15 months after acquiring ownership of the '748 Patent before
`
`filing suit against Defendants. Although Plaintiff contends a stay "would substantially prejudice
`
`Plaintiff's ability to timely enforce its patent rights," Opp. at 8, its failure to explain its own
`
`significant delay in bringing suit raises doubt as to its need for expeditious resolution.
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 2
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 4 of 10 PagelD #: 1482
`
`VirtualAgility, 759 F.3d at 1319 (finding delay of nearly a year in filing suit "weigh[ed] against
`
`[plaintiff's] claims that it will be unduly prejudiced by a stay").
`
`Although Plaintiff asserts that even non-practicing entities like itself can suffer prejudice
`
`by "a substantial delay of an imminent trial date," Opp. at 6, that has nothing to do with the case
`
`at hand. Here, trial is distant, Mot. at 11-12, and Defendants, unlike those in Tracbeam, LLC v. T-
`
`Mobile US, Inc., have not "waited until the last possible day to file their IPR petitions." No. 6:14-
`
`cv-678, 2016 WL 9225574, at *1 (E.D. Tex. Mar. 29, 2016). Rather, as in Chart Trading, "the
`
`delay [in waiting for the PTAB's decision] is minimal and at the earliest stages of the case, and is
`
`therefore not unduly prejudicial." 2016 WL 1246579, at *5. In short, Plaintiff's complaints
`
`regarding timely enforcement of patent rights are "too generic, standing alone, to defeat a stay
`
`motion." Realtime, 2017 WL 3712916, at *6.
`
`B. Simplification of the issues is highly likely.
`
`Plaintiff urges the Court to deny a stay, citing Freeny v. Apple, Inc., and MPHJ Tech. Invs.,
`
`LLC v. Research Now, Inc. for support. Those cases are distinguishable. In Freeny, while the Court
`
`did find the lack of an institution decision was dispositive, it also cited an additional factor that cut
`
`against a stay: only one of the two remaining defendants was a party to the IPR, and it "waited for
`
`a year after the complaint was filed before filing its petition." No. 2:13-cv-361, 2014 WL 3611948,
`
`at *2 (E.D. Tex. July 22, 2014). This is not a factor here. And in MPHJ Tech., the Court doubted
`
`"the estoppel effect of the administrative proceeding" would "simplify the issues" because the
`
`defendant was not a party to the IPR. No. 2:13-cv-962, 2014 WL 11514323, at *2, fn. 1 (E.D. Tex.
`
`June 10, 2014). Here, 10 of the 12 Defendants are parties to the IPR petition. Mot. at 8.
`
`Also unlike MPHJ Tech, there are four reasons why the outcome of the pending IPR
`
`petition is not "wholly unpredictable, if not completely speculative." 2014 WL 11514323, at *1;
`
`see also Realtime, 2017 WL 3712916, at *4 (granting pre-institution stay motion because "it [was]
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 3
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 5 of 10 PagelD #: 1483
`
`highly likely that there will be at least some simplification of the issues in this case overall"). First,
`
`the PTAB issued a final written decision on Unified's IPR on April 4, 2019. Order regarding
`
`Public Access to the Final Written Decision. (Exhibit A). Although under seal, Defendants
`
`understand from Unified counsel this resulted in cancellation of all six challenged claims. The
`
`Unified decision simplifies the issues because it provides: (1) guidance regarding claim terms for
`
`which Defendants seek construction, Mot. at 7-8, and (2) near certainty that Defendants' IPR will
`
`be instituted, as three of the challenged claims have now been found unpatentable.2 Second, the
`
`PTO has already cancelled all claims of the parent to the '748 Patent, which are nearly identical to
`
`the asserted claims. Mot. at 8. This also raises the probability of institution because most elements
`
`of the '748 Patent's claims have already been found to be unpatentable. Id. Third, Defendants'
`
`petition challenges all of the asserted claims. Mot. at 9. This simplifies the issues because, if
`
`instituted, "the outcome of [the] proceeding is likely to assist the court in determining patent
`
`validity or eliminate the need to try infringement issues." NFC Tech., 2015 WL 1069111, at *1.
`
`Fourth, the PTO recently found 11 claims of a patent application that claims priority to the '748
`
`Patent unpatentable under § 101. Four of those eleven claims are nearly identical to the asserted
`
`'748 Patent claims (and indeed the PTO said that the pending claims are not patentably distinct
`
`from the '748 Patent).3 The PTO is the best place to address this patent.
`
`2 The PTO will initiate IPR if Defendants show "a reasonable likelihood" of prevailing with respect
`to at least one of the challenged claims. 35 U.S.C. § 314(a); SAS Inst. Inc. v. Iancu, 138 S. Ct.
`1348, 1354 (2018) (holding that PTAB statutorily required to address every contested claim once
`IPR is granted) (emphasis in the original).
`3 Exhibit B (rejection for application 15/260,929 dated March 20, 2019 from the USPTO finding
`all requested claims unpatentable under Section 101); Exhibit C (requested claims). The rejection
`was mailed the day after Defendants filed their opening motion to stay.
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 4
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 6 of 10 PagelD #: 1484
`
`C. Neither discovery nor trial will be negatively impacted.
`
`Plaintiff completely ignores the test for the third factor, namely, "whether discovery is
`
`complete and whether a trial date has been set." Soverain Software LLC v. Amazon.com, Inc., 356
`
`F.Supp.2d 660, 662 (E.D. Tex. Feb.9, 2005). This omission is telling.
`
`This Court has previously determined that a defendant that filed its IPR petition 10.5
`
`months after the complaint, and its motion to stay five weeks after its petition, was diligent. See
`
`Papst Licensing GmbH & Co., KG v. Apple Inc., No. 6:15-cv-01095, Dkt. No. 388 at 7 (E.D. Tex.
`
`June 16, 2017). Here, Defendants were likewise diligent, having filed their IPR petition just over
`
`five months after the complaint and their motion to stay eight weeks after the petition. Dkt. No.
`
`66.
`
`Further, Plaintiff does not rebut Defendants' evidence that this case is in the early stages.
`
`See generally Opp. at 9-10. The close of fact discovery is more than seven months away, the close
`
`of expert discovery is more than eight months away, and trial is set more than one year from now.
`
`Dkt. No. 47. See, e.g., Landmark, 2014 WL 486836, at *3.
`
`D. A reduction in the burdens of litigation is highly likely.
`
`Plaintiff summarily dismisses Defendants' arguments that a stay will reduce the burden of
`
`litigation as "nothing more than conjecture," "speculative," and "generic." Opp. at 10-11. Plaintiff
`
`insists Defendants' petition for IPR "cannot be used against Plaintiff as an argument in favor of
`
`staying this case," Opp. at 11. But this was the very purpose of IPR — to be "an inexpensive
`
`substitute for district court litigation [that] allows key issues to be addressed by experts in the
`
`field," thus reducing the burdens of litigation. 157 Cong. Rec. S5319 (daily ed. Sept. 6, 2011)
`
`(statement of Sen. Kyl), 2011 WL 3902927; Chart Trading, 2016 WL 1246579, at *5.
`
`IV. CONCLUSION
`
`Defendants respectfully request the Court grant their motion and stay the case.
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 5
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 7 of 10 PagelD #: 1485
`
`Date: April 10, 2019
`
`Respectfully submitted,
`
`By: /s/ Ricardo J. Bonilla
`Neil J. McNabnay
`Texas Bar No. 24002583
`mcnabnay@fr.com
`Ricardo J. Bonilla
`Texas Bar No. 24082704
`rbonilla@fr.com
`FISH & RICHARDSON P.C.
`1717 Main Street, Suite 5000
`Dallas, TX 75201
`Tel: (214) 747-5070
`Fax: (214) 747-2091
`
`Sara Lynn Townsend
`California Bar No. 320300
`townsend@fr.com
`FISH & RICHARDSON P.C.
`500 Arguello Street, Suite 5000
`Redwood City, CA 94063
`Tel: (650) 839-5070
`Fax: (650) 839-5071
`
`Counsel for Defendants
`Zoe's Kitchen, Inc.,
`Zoe's Kitchen USA, LLC,
`McDonald's Corporation,
`McDonald's USA, LLC,
`Panda Restaurant Group, Inc.,
`Panda Express, Inc.,
`Papa John's International, Inc., and Star Papa,
`LP
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 6
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 8 of 10 PagelD #: 1486
`
`Date: April 10, 2019
`
`Respectfully submitted,
`
`By: /s/ Robert H. Reckers
`Michael W. Gray
`Texas Bar No. 24094385
`mgray@shb.com
`Robert H. Reckers
`Texas Bar No. 24039520
`rreckers@shb.com
`SHOOK, HARDY & BACON L.L.P.
`JPMorgan Chase Tower
`600 Travis Street, Suite 3400
`Houston, TX 77002
`Tel: (713) 227-8008
`Fax: (713) 227-9508
`
`Counsel for Defendants
`AMC Entertainment Holdings, Inc. and
`American Multi-Cinema, Inc.
`
`Date: April 10, 2019
`
`Respectfully submitted,
`
`By: /s/ Lowell D. Mead
`Lowell D. Mead
`CA SBN 223989
`lmead@cooley.com
`COOLEY LLP
`3175 Hanover Street
`Palo Alto, CA 94304
`Tel: (650) 843-5000
`Fax: (650) 849-7400
`
`Counsel for Defendant
`Boston Market Corporation
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 7
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 9 of 10 PagelD #: 1487
`
`Date: April 10, 2019
`
`Respectfully submitted,
`
`By: /s/ Melissa R. Smith
`Melissa R. Smith
`Texas Bar No. 24001351
`melissa@gillamsmithlaw.COM
`GILLAM & SMITH LLP
`303 South Washington Avenue
`Marshall, TX 75670
`Tel: (903) 934-8450
`Fax: (903) 934-9257
`
`Tara D. Elliott (Pro Hac Vice)
`tara.elliott@lw.com
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, D.C. 20004
`Tel: (202) 637-2200
`Fax: (202) 637-2201
`
`Counsel for Defendant
`Starbucks Corporation
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 8
`
`

`

`Case 6:18-cv-00407-RWS Document 81 Filed 04/10/19 Page 10 of 10 PagelD #: 1488
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on April 10, 2019, the foregoing document was served upon
`
`all counsel of record via the Court's CM/ECF electronic filing system in accordance with the
`
`Federal Rules of Civil Procedure.
`
`/s/ Ricardo I Bonilla
`Ricardo J. Bonilla
`
`DEFENDANTS' REPLY IN SUPPORT OF ITS MOTION TO STAY PENDING IPR
`
`PAGE 9
`
`