Case 6:20-cv-00872-ADA Document 23 Filed 12/11/20 Page 1 of 11
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`WORLDS INC.,
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`Plaintiff,
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`v.
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`MICROSOFT CORPORATION;
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`Defendant.
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`CIVIL ACTION NO. 6:20-cv-872-ADA
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`PLAINTIFF WORLDS INC.’S OPPOSITION TO DEFENDANT MICROSOFT
`CORPORATION’S MOTION TO STAY PENDING
`INTER PARTES REVIEW OF THE PATENT-IN-SUIT
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`Patent Owner's Exhibit 2007
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`I.
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`Introduction
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`Microsoft moves this Court to stay the litigation pending completion of an inter partes
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`review (“IPR”) proceeding based on a petition filed by Microsoft just one week ago. But the
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`IPR has not been instituted, and contrary to Microsoft’s unabashed confidence in its petition,
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`there is no guarantee that it will be instituted. The relevant factors weigh against a stay. The
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`most important factor, potential simplification of issues in this proceeding, weighs against a
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`stay because the IPR has not been instituted. And the near-universal practice of district courts
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`is to deny pre-institution motions to stay. This case does not warrant different treatment.
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`The other enumerated factors also weigh against a pre-institution stay. Worlds is
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`entitled to the timely enforcement of its patent rights, and a stay would unduly delay this case
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`without any certainty that the IPR will be instituted. Further, the parties will be focused on
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`claim construction during the early months of this proceeding, and there is only one patent at
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`issue, U.S. Patent No. 8,082,501 (the “’501 patent”), with only four asserted claims. This
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`patent—and these claims—have already been subjected to a thorough claim construction process in
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`Worlds Inc. v. Activision Blizzard, Inc., et al., 1:12-cv-10576 (D. Mass. filed March 30, 2012)
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`(the “Activision litigation”). Therefore, the burden to the parties and the Court is not so heavy
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`as to weigh in favor of a pre-institution stay.
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`For these reasons, Microsoft’s motion to stay pending IPR should be denied.
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`II. Microsoft’s Motion to Stay Based on a Non-Instituted IPR Petition Should Be Denied
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`In deciding whether to grant a stay pending resolution of an IPR petition, courts consider
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`(1) whether a stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving
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`party, (2) whether a stay will simplify the issues in question and trial of the case, and (3) whether
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`discovery is complete and a trial date has been set. Allure Energy Inc. v. Honeywell Int’l, Inc.,
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`No. 1:15-CV-079-RP, 2015 WL 4207243, at *1 (W.D. Tex. July 2, 2015). Microsoft also
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`addresses a fourth factor: “whether a stay will reduce the burden of litigation on the parties and
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`the court.” NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at
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`*5 (E.D. Tex. Mar. 11, 2015) (Bryson, J.).
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`Here, the factors weigh in favor of denying Microsoft’s stay motion.
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`A.
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`A Stay Will Unfairly Prejudice Worlds’s Right to a Timely Trial
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`Microsoft bases its analysis of this first factor on the ’501 patent’s expired status, and the
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`prejudice that would result from Worlds’ delayed recovery of damages. But Microsoft fails to
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`address any of this District’s case law on this factor, and fails to recognize that the ’501 patent’s
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`expired status is irrelevant to this factor’s analysis.
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`As this Court has previously found, a patent holder has “an interest in the timely
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`enforcement of its patent right.” Multimedia Content Management LLC v. DISH Network L.L.C.,
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`No. 6:18-CV-00207-ADA, Dkt. 73 at 4 (W.D. Tex. May 30, 2019) (Albright, J.) (Ex. A). As
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`Worlds is the original assignee of all patents in the ’501 patent’s family, this statement certainly
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`applies.
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`Additionally, the delay due to an IPR is extensive. The PTAB is not required to reach a
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`decision on whether to institute the IPR until more than six months from now.1 While final
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`written decisions normally issue within a year after institution, this one-year period can be
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`extended for another six months. 35 U.S.C. § 316(a)(11); 37 C.F.R. § 42.100. Thus, staying this
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`case pending resolution of the IPR could result in a delay of up to two years, and that does not
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`account for additional delay due to any Federal Circuit appeals of a final written decision. “Such
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`1 Microsoft alleges that the “institution decision is due by June 3, 2021.” Dkt. 22 at 1. This is
`inaccurate. The PTAB’s institution decision is due three (3) months from the filing date of or
`deadline for the patent owner’s preliminary response (see 35 U.S.C. § 314(b)), which is set three
`(3) months from the date that the PTAB accords a filing date to the petition (see 37 C.F.R. §
`42.107(b)). In counsel’s experience, the accordance of a filing date can occur anywhere from
`one to four weeks after the petition is filed.
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`2
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`a lengthy delay will result in significant prejudice to [Worlds] and, therefore, this factor weighs
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`against a stay.” Realtime Data LLC v. Actian Corp., No. 6:15-CV-463-RWS-JDL, 2016 WL
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`3277259, at *2 (E.D. Tex. June 14, 2016); see also Multimedia Content, Dkt. 73 (Ex. A) at 4.
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`Moreover, a stay risks the loss of evidence, and this risk is unnecessary where there is no
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`certainty that Microsoft’s IPR will be instituted or that the issues in this proceeding will be
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`simplified due to the pre-institution stay. For example, employees at Microsoft with knowledge
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`of the accused Minecraft game, or Microsoft’s 2014 acquisition of Mojang and the Minecraft
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`game, could depart the company during a length stay. “[C]rucial witnesses are more likely to be
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`located if discovery is allowed to proceed now, rather than later.” Anascape, Ltd. v. Microsoft
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`Corp., 475 F. Supp. 2d 612, 617 (E.D. Tex. 2007). A stay would also tactically disadvantage
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`Worlds, “as the longer this matter persists, the more likely it is that evidence and witnesses’
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`memories will disappear or deteriorate.” Allure Energy, Inc. v. Nest Labs, Inc., No. 9:13-CV-
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`102, 2015 WL 11110606, at *1 (E.D. Tex. Apr. 2, 2015).
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`Additionally, a stay would require Worlds to “expend considerable financial resources on
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`the IPR proceedings, prior to its day in court.” Id. This would be in addition to the considerable
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`financial resources already expended by Worlds on six IPR proceedings, a Federal Circuit appeal
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`in which the appealed PTAB final written decisions were vacated, and a consolidated remand to
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`the PTAB, where the remanded IPRs were ultimately terminated.
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`As introduced above, Microsoft argues that Worlds would not be prejudiced by a stay
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`because the patent is “expired.” Dkt. 22 at 1. But the expired status of the ’501 patent does not
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`diminish the reasoning applied by this Court in evaluating this first factor, and Microsoft points
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`to no authority for a contrary position. Microsoft has the burden of demonstrating that a pre-
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`institution stay is appropriate, and has failed to do so.
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`Finally, this Court has recognized that the Seventh Amendment Right to a trial by jury
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`weighs against a stay. Kerr Machine Co. d/b/a Kerr Pumps v. Vulcan Industrial Holdings, LLC,
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`No. 6:20-cv-00200 (W.D. Tex. Aug. 2, 2020) (Ex. C); Continental Intermodal Group - Trucking
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`LLC v. Sand Revolution LLC et al., No. 7:18-cv-00147 (W.D. Tex. July 22, 2020) (Ex. D).
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`This factor weighs against a stay.
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`B.
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`A Stay Will Not Simplify the Issues for Trial
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`“[T]he most important factor bearing on whether to grant a stay in this case is the
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`prospect that the inter partes review proceeding will result in simplification of the issues before
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`the Court.” NFC Tech., 2015 WL 1069111, at *4. Here, Microsoft’s IPR has not been instituted,
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`and so any purported simplification that might result from a stay is purely speculative.
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`Courts in this Circuit routinely deny stays where the IPRs have not yet been instituted, with
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`the Eastern District of Texas declaring that “[i]n this district . . . it is the universal practice” to
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`deny pre-institution motions to stay. Trover Grp., Inc. v. Dedicated Micros USA, No. 2:13-CV-
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`1047-WCB, 2015 WL 1069179, at *6 (E.D. Tex. Mar. 11, 2015) (emphasis added). This is
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`because Microsoft’s arguments for substantial simplification at this juncture is “purely
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`speculative, because it is also possible that the PTAB may decline to institute IPR proceedings.”
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`MiMedx Grp., Inc. v. Tissue Transplant Tech. Ltd., No. SA-14-CA-719, 2015 WL 11573771, at *2
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`(W.D. Tex. Jan. 5, 2015); see also Nat’l Oilwell Varco, L.P. v. Omron Oilfield & Marine, Inc.,
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`No. A-12-CA-773-SS, 2013 WL 6097571, at *2 (W.D. Tex. June 10, 2013) (denying pre-
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`institution stay, noting “there is a real risk at this point the PTAB will decline to grant inter
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`partes review, which would make a stay at this point a complete waste of time”) (emphasis
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`added); Affinity Labs of Texas, LLC v. Netflix, Inc., No. 1:15-CV-00849-RP, Dkt. 95 at 2 (W.D.
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`Tex. Jan. 17, 2017) (Ex. B) (denying pre-institution motion to stay; “It remains speculative
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`whether the PTO will institute IPR and, even if it does, whether any of Plaintiff’s claims will be
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`invalidated.”). Indeed, this Court has found that this factor “strongly favors denying a stay” prior
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`to IPR institution. Multimedia Content, Dkt. 73 (Ex. A) at 6 (emphasis added).
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`Microsoft argues that this case deserves different treatment because the “PTAB has
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`already found the asserted claims of the ’501 patent unpatentable.” Dkt. 22 at 7. This is
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`incorrect. The PTAB’s final written decision in IPR2015-01315, addressing the ’501 patent, was
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`vacated by the Federal Circuit because the Board erroneously evaluated whether Bungie’s
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`petition was time-barred. Worlds Inc. v. Bungie, Inc., 903 F.3d 1237, 1248 (Fed. Cir. 2018). On
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`remand, the PTAB agreed with Worlds that Bungie’s petition was time-barred, and dismissed the
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`IPR. See Dkt. 22-1 at 5. In other words, the prior IPR never should have been instituted.
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`Moreover, by vacating the Board’s final written decision for failure to properly evaluate the real
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`parties in interest to Bungie’s petition, the Federal Circuit did not need to address Worlds’
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`substantive arguments on the ’501 patent’s claims. Id. (“Because of our conclusions with respect
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`to the real-party-in-interest issue, we need not address the merits of the parties’ invalidity
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`arguments ….”). It is improper for Microsoft to rely upon a vacated and defective decision to
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`sell this Court on the merits of its petition.
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`Further, the PTAB looks to more than substantive issues when determining whether to
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`institute an IPR. One factor affecting an institution decision is the PTAB’s own limited
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`resources. By the time a final written decision on the ’501 patent may issue from the PTAB, the
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`’501 patent will have been expired for nearly six years and will be near the end of the statutory
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`damages period under 35 U.S.C. § 286. The PTAB may determine that issuing a final written
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`decision so near the end of the statutory damages period does not warrant the PTAB’s use of its
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`own limited resources.
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`Microsoft also overlooks that the PTAB might conclude that Activision is a real party in
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`interest to Microsoft’s petition. This would result in Microsoft’s petition being time-barred
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`under 35 U.S.C. § 315(e)(2), just like Bungie’s was. Under Federal Circuit law, the “focus of the
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`[RPI] inquiry is on the patentability of the claims challenged in the IPR petition, bearing in mind
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`who will benefit from having those claims canceled or invalidated.” Applications in Internet
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`Time, LLC v. RPX Corp., 897 F.3d 1336, 1348 (Fed. Cir. 2018) (emphasis added). Bungie could
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`not prove that Activision was not an RPI to Bungie’ petition, and on remand the PTAB found
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`that Activision had, at minimum, an opportunity to control or influence Bungie’s petition
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`contents. Dtk. 22-1 at 28-48. This opportunity included Activision’s right to review and
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`approve Bungie’s asserted prior art, the particular combinations of that prior art, and the
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`declaration testimony of Bungie’s technical expert.
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`Here Microsoft has taken the extraordinary step of replicating Bungie’s petition,
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`including the identification of prior art and grounds, and has even selected the same expert, Dr.
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`Michael Zyda, that Bungie used in support of its petition. See Dkt. 22 at 3-4 (explaining that its
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`petition reasserts “the successful grounds of IPR2015-01315.”). And while Microsoft claims that
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`it “has put ample evidence into record that … Bungie and Activision are not real parties in
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`interest to Microsoft’s IPR,” (id. at 7), Microsoft does not and cannot prove that Activision had
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`no role in the selection of Bungie’s (and now Microsoft’s) prior art, the asserted combinations of
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`prior art, and the declaration testimony of Dr. Michael Zyda. Microsoft has no way to prove that
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`the very grounds asserted by first Bungie, and now adopted by Microsoft, were not controlled or
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`influenced by Activision.
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`Moreover, Worlds’ case against Activision for infringement of the ’501 patent is
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`ongoing, and there is no dispute that Activision would benefit from Microsoft’s reassertion of the
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`very challenges that Bungie could not assert on Activision’s behalf or behest. And while
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`Microsoft appears quite confident that its IPR will be instituted, Microsoft has no way to know
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`which Administrative Patent Judges will be on its IPR panel or how that panel will react to
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`Microsoft’s decision to reassert challenges already dismissed once due to the statutory time-bar.
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`As another argument on this simplification factor, Microsoft encourages a pre-institution
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`stay because “the pre-institution phase of the IPR will develop the intrinsic record.” Dkt. 22 at 7.
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`This argument recalls the logic of ANZA Tech., Inc. v. Avant Tech., Inc., Case No. 1:17-cv-
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`01193-LY (W.D. Tex. Nov. 15, 2018) (Dkt. 22-4). There, the Court stayed the litigation pending
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`IPR in order to gain further enlightment into the patent’s claim construction. Id. at 4 (granting
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`the stay because “whatever occurs at the PTAB will potentially be helpful to the court in
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`construing the parties’ disputed claim terms.”). But the ’501 patent already endured a complete
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`IPR, and whever additional development of the intrinsic record might occur during the pre-
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`institution phase of Microsoft’s IPR is likely to be minimal, particularly where Microsoft is just
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`reasserting Bungie’s challenges. Further, the ’501 patent has already been subject to a thorough
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`claim construction in the Activision litigation. Thus, this argument holds no water.
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`Microsoft also incorrectly relies upon the Fall Line Patents case to argue for a pre-
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`institution stay. Dkt. 22 at 5-6, 7. In Fall Line Patents, LLC v. Zoe’s Kitchen, Inc., Case No.
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`6:18-cv-00407-RWS, Slip Op. at *1 (E.D. Texas Aug. 9, 2019) (Dkt. 22-7), a first IPR against
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`the patent-at-issue had concluded, and the motion to stay was filed after a second IPR was
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`instituted. Id. (“the PTAB recently instutited Defendants’ IPR petition challenging all the
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`asserted claims in this case.”). This case does not support Microsoft’s argument for a pre-
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`institution stay.
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`Finally, Worlds notes that even where the IPR is instituted, there is no “per se rule” that
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`patent cases should be stayed simply because some of the relevant claims may be affected.
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`Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005). This is
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`because while “[s]ome of the claims may change . . . the interests of justice will be better served
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`by dealing with that contingency when and if it occurs, rather than putting this case indefinitely
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`on hold.” Id. at 663. In any event, the mere possibility of issue simplification is “not sufficiently
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`persuasive” to warrant a stay. Id.
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`C.
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`The Status of the Case Weighs Against a Stay
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`Again, at issue is Microsoft’s request for the Court to deviate from its usual practice of
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`denying motions to stay pending IPR where the institution decision has not yet issued. This case
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`is in its early stages, with the parties filing their Case Readiness Status Report on December 11,
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`2020.2
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`However, even this factor weighs against a pre-institution stay because there is minimal
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`burden on the parties while the PTAB decides whether to institute Microsoft’s petition. Under
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`this Court’s procedures, the early stage of this case will be focused on claim construction, not
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`discovery, and the ’501 has already been through an extensive claim construction process in the
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`Activivsion litigation. Further, there is only one patent, and four claims, asserted against
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`Microsoft, the parties are limited in the number of terms that they can identify for construction,
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`and claim construction of these four claims should not be burdensome to Microsoft. See, e.g.,
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`Dkt. 1 at 2 (¶5). Therefore, consistent with this Court’s normal practice, this case does not
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`warrant an early pre-institution stay.
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`2 Microsoft was able to file an IPR petition very early in this proceeding exactly because it
`picked up the baton dropped by Bungie and replicated Bungie’s time-barred petition and expert
`declaration.
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`D.
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`A Stay Will Not Limit the Burden on the Court and the Parties
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`Finally, Microsoft argues that a stay will reduce the burdens on the parties and this Court.
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`Dkt. 22 at 9-10. But Microsoft’s entire argument on this point assumes that the PTAB will
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`institute Microsoft’s petition and ultimately cancel all challenged claims. Id. That assumption is
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`unwarranted for the reasons already explained above. Microsoft also engages in hyperbole,
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`arguing that “a denial of a stay [here] would be tantamount to declaring that no pre-institution
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`stay is ever warranted in favor of an IPR proceeding.” Dkt. 22 at 10. The latter question is not
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`before the Court, and there is no need for Worlds to fabricate circumstances where a pre-
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`institution stay motion might be more meritorious that Microsoft’s. It is enough here to show
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`that Microsoft’s pre-institution stay motion lacks merit.
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`III. Conclusion
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`For the foregoing reasons, Microsoft’s motion for a pre-institution stay of this case
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`pending IPR should be denied.
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`Of Counsel:
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`DAVIDSON BERQUIST JACKSON & GOWDEY,
`LLP
`
`Wayne M. Helge
`Alan A.Wright
`Donald L. Jackson
`James T. Wilson
`8300 Greensboro Drive, Suite 500
`McLean, VA 22102
`Tel: (571) 765-7700
`whelge@dbjg.com
`awright@dbjg.com
`djackson@dbjg.com
`jwilson@dbjg.com
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`DATED: December 11, 2020
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`
`
`ETHERIDGE LAW GROUP, PLLC
`
` .
`/s/ Ryan S. Loveless
`James L. Etheridge, TX Bar No. 24059147
`Ryan S. Loveless, TX Bar No. 24036997
`2600 E. Southlake Blvd., Suite 120 / 324
`Southlake, TX 76092
`Tel.: (817) 470-7249
`Jim@EtheridgeLaw.com
`
`
`
`Attorneys for Plaintiff Worlds, Inc.
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`CERTIFICATE OF SERVICE
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`I certify that the foregoing document was served upon all counsel of record via the Court's
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`CM/ECF electronic filing system in accordance with the Federal Rules of Civil Procedure on
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`December 11, 2020.
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`/s/ Ryan S. Loveless
`Ryan S. Loveless
`
`
`
`
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`10
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