Case 2:12-cv-02781-JPM-tmp Document 55-1 Filed 11/26/13 Page 1 of 12 PageID 347
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TENNESSEE
`WESTERN DIVISION
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`B.E. TECHNOLOGY, L.L.C.,
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`Plaintiff,
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`v.
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`GROUPON, INC.,
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`Defendant.
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`Civil Action No. 2:12-cv-02781-JPM-tmp
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`Hon. Jon Phipps McCalla
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`DEFENDANT GROUPON, INC.’S MEMORANDUM IN SUPPORT OF ITS
`MOTION TO STAY PROCEEDINGS PENDING INTER PARTES REVIEW
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`Defendant Groupon, Inc. (“Groupon”), respectfully submits this Memorandum in support
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`of its Motion to Stay Proceedings Pending Inter Partes Review, and states as follows:
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`I.
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`INTRODUCTION
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`Last month, several defendants in related cases filed petitions for inter partes review
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`(“IPR”) of U.S. Patent Nos. 6,628,314 (“the ’314 patent”) and 6,771,290 (“the ’290 patent”) with
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`the U.S. Patent and Trademark Office (“USPTO”). The ’314 patent is the only patent asserted
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`against Groupon in this case, and in each of the four separate IPR filings on this patent, every
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`claim that has also been asserted against Groupon was challenged as invalid. Groupon did not
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`file or participate in any of the subject IPR petitions, and Groupon is not in privity with any of
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`the IPR-filers. Nonetheless, the law is clear that where each of the factors considered in
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`determining whether a stay should be entered weigh in favor of a stay, this case should be stayed
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`pending IPR review of the ’314 patent. Here, Plaintiff B.E. Technology, L.L.C. (“B.E.”) would
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`not be unduly prejudiced by a stay; a stay will simplify the case; and this case is in its early
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`Case 2:12-cv-02781-JPM-tmp Document 55-1 Filed 11/26/13 Page 2 of 12 PageID 348
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`stages. Moreover, Groupon and B.E. agree that this case should be stayed pending resolution of
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`the multiple IPRs, provided this Court likewise stays all litigations involving the ’314 and ’290
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`patents.
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`Shortly after the petitions were filed with the USPTO, Groupon and the other defendants
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`in the related actions discussed a stay with each other and with B.E. Based on those discussions,
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`Groupon understands that B.E. supports a stay of each of the cases involving the ’290 and ’314
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`patents, as long as all of those cases are stayed.1 Groupon also understands that most—if not
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`all—of the other defendants will either move to stay their respective cases, or will not actively
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`oppose2 entry of a stay in their cases, as long as all the other cases involving the ’290 and ’314
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`patents are also stayed.3
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`Despite this virtual consensus among the parties that all litigation related to the ’290 and
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`’314 patents should be stayed, the parties’ discussions regarding a stay reached an impasse due to
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`a disagreement not involving Groupon. Thus, to avoid delay and to give effect to the virtual
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`consensus amongst the parties, Groupon files this motion to request a stay of this case pending
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`resolution of the IPR proceedings.
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`Given the strong support for a stay from both B.E. and the defendants, Groupon
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`respectfully asks the Court to exercise its inherent power to stay all litigation involving the ’290
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`1 See Declaration of Aaron J. Weinzierl (“Weinzierl Decl.”), ¶ 7.
`2 For example, Apple has indicated that, at this time, it does not plan to request a stay of its case
`but also does not plan to actively oppose such a stay should the Court order a stay with respect to
`all the cases. Groupon understands that Apple and the other defendants may file notices or other
`papers in their respective cases further explaining their positions on a potential stay. See
`Weinzierl Decl., ¶ 8.
`3 To facilitate the prompt resolution of this and any other motions to stay that are filed, see, e.g.,
`D.E. 63-1 in B.E. Technology, LLC v. Samsung Telecommunications America, LLC, No. 2:12-cv-
`02824, Groupon suggests the Court set a schedule for the parties to file any notices or motions by
`a date certain to resolve this matter before significant additional work is done.
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`Case 2:12-cv-02781-JPM-tmp Document 55-1 Filed 11/26/13 Page 3 of 12 PageID 349
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`and/or ’314 patents. The Court’s inherent power to manage its docket includes the ability to stay
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`actions sua sponte because the Court is tasked with “control[ling] the disposition of the causes
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`on its docket with economy of time and effort for itself, for counsel, and for litigants.” Gray v.
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`Bush, 628 F.3d 779, 785 (6th Cir. 2010) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254
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`(1936)). Staying the case during the IPR process will prevent the parties from engaging in costly
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`parallel proceedings and prevent the Court from having to spending time on issues that may be
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`rendered moot (e.g., if the USPTO invalidates the patent claims at issue). Accordingly, a stay is
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`warranted in this case.
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`II.
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`BACKGROUND
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`This is one of nineteen cases B.E. filed in September and October 2012, asserting the
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`’290 patent, the ’314 patent, and/or U.S. Patent No. 6,141,010 (“the ’010 patent”).4 In its
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`Complaint filed in this case on September 10, 2012, B.E. accused Groupon of infringing the ’314
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`patent. (D.E. 1.) Groupon filed its Answer, Affirmative Defenses, and Counterclaims on
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`December 31, 2012. (D.E. 19.) A Markman hearing is scheduled for April 28, 2014, but no trial
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`date has been set.
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`4 B.E. Technology, LLC v. Amazon Digital Servs., Inc., No. 2:12-cv-02767; B.E. Technology,
`LLC v. Facebook, Inc., No. 2:12-cv-02769; B.E. Technology, LLC v. LinkedIn Corp., No. 2:12-
`cv-02772; B.E. Technology, LLC v. Pandora Media, Inc., No. 2:12-cv-02782; B.E. Technology,
`LLC v. Twitter, Inc., No. 2:12-cv-02783; B.E. Technology, LLC v. Barnes & Noble, Inc., No.
`2:12-cv-02823; B.E. Technology, LLC v. Samsung Telecommunications America, LLC, No. 2:12-
`cv-02824; B.E. Technology, LLC v. Samsung Electronics America Inc., No. 2:12-cv-02825; B.E.
`Technology, LLC v. Sony Computer Entm’t Am., Inc., No. 2:12-cv-02826; B.E. Technology, LLC
`v. Sony Mobile Commcn’s (USA) Inc., No. 2:12-cv-02827; B.E. Technology, LLC v. Sony Elecs.
`Inc., No. 2:12-cv-02828; B.E. Technology, LLC v. Microsoft Corp., No. 2:12-cv-02829; B.E.
`Technology, LLC v. Google Inc., No. 2:12-cv-02830; B.E. Technology, LLC v. Apple, Inc., No.
`2:12-cv-02831; B.E. Technology, LLC v. Spark Networks, Inc., No 2:12-cv-02832 (dismissed);
`B.E. Technology, LLC v. People Media, Inc., No. 2:12-cv-02833; B.E. Technology, LLC v.
`Match.com LLC, No. 2:12-cv-02834; B.E. Technology, LLC v. Motorola Mobility Holdings,
`LLC, No. 2:12-cv-02866.
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`Case 2:12-cv-02781-JPM-tmp Document 55-1 Filed 11/26/13 Page 4 of 12 PageID 350
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`To date, the parties have engaged in limited discovery, primarily exchanging disclosures
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`as required by the Local Patent Rules. Preliminary infringement, non-infringement, invalidity,
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`and validity contentions have been exchanged. In its preliminary infringement contentions, B.E.
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`alleged that Groupon infringed claims 11, 12, 13, 15, 18, and 20 of the ’314 patent. No party
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`depositions have taken place. The parties also exchanged their preliminary and final
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`identification of terms for construction on September 23, 2013 and November 5, 2013,
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`respectively.
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`Last month, several defendants in the related cases filed IPR petitions with the USPTO
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`seeking to invalidate the ’290 and ’314 patent claims. With respect to the ’314 patent, four
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`petitions were filed challenging, inter alia, the same claims asserted against Groupon: Google
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`filed a petition (IPR2014-0038) on October 8, 2013 with respect to claims 11, 12, 13, 15, 18, and
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`20 of the ’314 patent; Microsoft filed a petition (IPR2014-0039) on October 9, 2013 with respect
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`to claims 11-22 of the ’314 patent; and Facebook filed two petitions (IPR2014-0052 and
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`IPR2014-0053) on October 9, 2013 with respect to claims 11, 12, 13, 15, 18, and 20 of the ’314
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`patent. (Weinzierl Decl., Exs. A-D.) These petitions were accorded filing dates of October 8,
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`2013 (per Order dated October 11, 2013); October 9, 2013 (per Order dated October 24, 2013);
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`and October 9, 2013 (per Order dated October 15, 2013), respectively.5 (Weinzierl Decl., Ex. E.)
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`B.E. may file an optional preliminary response to these petitions within three months of
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`the date that the petitions were accorded their respective filing dates—i.e., between January 11,
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`2014 and January 24, 2014, depending on the petition. 37 C.F.R. § 42.107(b). As soon as B.E.
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`5 Several other defendants also filed a combined five IPR petitions with respect to the ’290
`patent. Those filings are discussed in Samsung’s Motion to Stay (and supporting papers) filed
`November 22, 2013. See, e.g., D.E. No. 63-1 in B.E. Technology, LLC v. Samsung
`Telecommunications America, LLC, No. 2:12-cv-02824 and B.E. Technology, LLC v. Samsung
`Electronics America Inc., No. 2:12-cv-02825.
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`files its preliminary responses (or the dates pass), the USPTO is statutorily required to grant or
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`deny the petitions within three months of these dates—i.e., between April 11, 2014 and April 24,
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`2014. 35 U.S.C. § 314(b). B.E. may optionally notify the USPTO if it does not intend to file an
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`optional preliminary response, which would advance the date of required action by the USPTO.
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`37 U.S.C. § 42.107(b). Once the petitions are instituted, the USPTO will have one year to issue
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`final decisions. 35 U.S.C. § 316(a)(11). Hence, these statutorily prescribed timeframes ensure
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`the efficient resolution of these petitions.
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`Recent statistics show that nearly 90% of all IPR petitions are granted. See Weinzierl
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`Decl., Ex. F (showing only 33 of 239 decisions with denials of IPR petitions through November
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`14, 2013). An IPR will only be instituted if the USPTO agrees that there is a reasonable
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`likelihood that the petitioner will prevail on at least one of the challenged claims. 35 U.S.C.
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`§ 314(a). Given the very high rate of institution and that four separate petitions have been filed
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`against the ’314 patent, there is a high probability that an IPR will be instituted on at least one
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`claim based on one or more of those petitions.
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`III. ARGUMENT
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`The decision whether to grant a stay of a particular action is within the inherent power of
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`the Court and is discretionary. Ellis v. Merck & Co., Inc., 06-1005-T/An, 2006 U.S. Dist. LEXIS
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`9639, at *3 (W.D. Tenn. Feb. 19, 2006); Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed.
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`Cir. 1988). In particular, a district court has the discretion to stay judicial proceedings pending
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`reexamination of a patent. Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., No. SACV
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`12-21-JST (JPRx), 2012 U.S. Dist. LEXIS 186322, at *3 (C.D. Cal. Dec. 19, 2012). There is a
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`“liberal policy in favor of granting motions to stay proceedings pending the outcome of
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`reexamination, especially in cases that are still in the initial stages of litigation and where there
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`has been little or no discovery.” Like.com v. Superfish, Inc., No. 09-cv-05805, 2010 U.S. Dist.
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`LEXIS 70458, at *4 (N.D. Cal. June 29, 2010) (internal citations omitted).
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`Although the IPR proceeding is relatively new, several courts in this Circuit, including
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`this Court, have stayed patent cases pending an IPR by the USPTO. One Stockduq Holdings,
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`LLC v. Becton, Dickinson & Co., No. 2:12-cv-3037-JPM-tmp, D.E. 85 (W.D. Tenn. Nov. 12,
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`2013) (Weinzierl Decl., Ex. G); see also Regents of Univ. of Mich. v. St. Jude Med., Inc., No. 12-
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`12908, 2013 U.S. Dist. LEXIS 76845 (E.D. Mich. May 31, 2013); NUtech Ventures v. Norman
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`Noble, Inc., No. 1:12CV2326, 2013 U.S. Dist. LEXIS 133092 (N.D. Ohio May 30, 2013). Stays
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`have likewise been granted even where the USPTO has not yet instituted the proceeding, no
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`doubt due in part to the high rate of institution of such proceedings to date. See, e.g., SSW
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`Holding Co. v. Schott Gemtron Corp., 2013 U.S. Dist. LEXIS 118326 (W.D. Ky. Aug. 19,
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`2013); Black & Decker, Inc. v. Positec USA, Inc., No. 13 C 3075, 2013 U.S. Dist. LEXIS 153795
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`(N.D. Ill. Oct. 1, 2013).
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`In determining whether a stay pending an IPR is appropriate, the court evaluates the
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`following factors: “(1) whether a stay would unduly prejudice or present a clear tactical
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`disadvantage to the non-moving party; (2) whether a stay will simplify the issues in question and
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`trial of the case; and (3) whether discovery is complete and whether a trial date has been set.”
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`One Stockduq, slip op. at 6-7 (internal citations omitted). All three factors favor a stay in this
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`case, particularly whereas here, B.E. supports a stay of all litigations involving the ’290 and ’314
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`patents.
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`A. B.E. Will Not Suffer Undue Prejudice From A Stay
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`The first factor favors a stay because B.E. will not suffer any undue prejudice or a tactical
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`disadvantage. Indeed, B.E. does not oppose a stay in this case and the other ’314 (and ’290)
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`patent related litigation, if all of the cases are stayed. (Weinzierl Decl., ¶ 7.) Additionally, any
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`delay incurred due to the stay will be of very limited duration because the IPR process will be
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`complete within one year after it is instituted (and it will be instituted within six months of
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`filing). 35 U.S.C. § 316(a)(11). Moreover, B.E. will not suffer any competitive harm if Groupon
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`continues to use the accused product during the stay because B.E. is a patent holding company
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`that does not make or sell any product or service covered by the ’314 patent. See Software
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`Rights Archive, LLC v. Facebook, Inc., No. C-12-3970 RMW; Case No. C-12-3971 RMW; Case
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`No. C-12-3972 RMW, 2013 U.S. Dist. LEXIS 133707, at *20-21 (N.D. Cal. Sept. 17, 2013)
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`(internal citations omitted); see also Implicit Networks, Inc. v. Advanced Micro Devices, Inc.,
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`No. C08-184JLR, 2009 U.S. Dist. LEXIS 14467, at *10 (W.D. Wash. Feb. 9, 2009) (noting that
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`a technology licensing company “cannot be prejudiced by a stay because monetary damages
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`provide adequate redress for infringement” and that courts have “consistently found”
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`accordingly) (internal citations omitted); Roblar Marketing Group, Inc. v. GPS Industries, Inc.,
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`633 F. Supp. 2d 1341, 1347 (S.D. Fl. 2008) (finding “no material prejudice” due to the stay
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`pending reexamination where patentee does not produce a product, has no substantial operations,
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`and “appears to exist only as a holding company whose only asset is the [patent in suit]”).
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`B.E. is also not prejudiced due to the fact that the ’314 patent issued in 2004, yet B.E. did
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`not assert its patent rights until more than eight years later. Finally, even if B.E. ultimately
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`prevails without having to amend the claims, it will still be entitled to collect damages accrued
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`during the stay should it succeed, arguendo, on its infringement claim. See Patlex Corp. v.
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`Mossinghoff, 758 F.2d 594, 603 (Fed. Cir. 1985). Thus, a stay would not unduly prejudice B.E.
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`B. The IPR Proceedings And A Stay Will Simplify The Issues
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`The second factor (simplification of the issues) also favors a stay. A stay will simplify
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`the case regardless of the outcome of the IPRs. The IPR process may eliminate the need for trial
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`on the ’314 patent by finding the asserted claims invalid. At a minimum, the process will
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`streamline the remaining issues for trial by, inter alia, narrowing the number of claims and/or
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`interpreting claim terms. As noted above, given the high rate of institution of IPRs and the sheer
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`number of petitions filed and arguments presented therein, there is virtual certainty that at least
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`some (if not all) of the asserted claims will be reviewed in an IPR proceeding. See One
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`Stockduq, slip op. at 14-15 (“Amendment of any claim could impact the litigation presently
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`before the Court, and a majority of patents which have been reexamined have either had all
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`claims canceled or changes made to the claims.”) (internal citations omitted).
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`If some or all of the asserted claims are invalidated, a stay will save the Court from
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`wasting time addressing invalid claims. See e-Watch v. Lorex, No. H-12-3314, 2013 U.S. Dist.
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`LEXIS 138198, at *5 (S.D. Tex. Sept. 26, 2013) (“…the continuation of this litigation will likely
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`result in the unnecessary expenditure of the parties’ and court’s time and resources on claims that
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`may be fundamentally altered by the USPTO’s determination regarding the patent[]-in-suit.”);
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`see also Cameras Onsite, LLC v. Digital Mgmt. Solutions, Inc., No. H-09-2518, 2010 U.S. Dist.
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`LEXIS 28648, at *11 (S.D. Tex. Mar. 24, 2010) (“If the patent is partially invalidated while this
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`case is pending, then by not granting a stay the Court possibly will have wasted its time and the
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`time and resources of the parties by addressing invalid claims.”). If any of the asserted claims
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`survive the IPR, the record of the proceedings will provide valuable analysis to the Court. See
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`One Stockduq, slip op. at 15; see also e-Watch, 2013 U.S. Dist. LEXIS 138198, at *6-7 (“The
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`USPTO’s insight and expertise regarding the validity of the patents would be of invaluable
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`assistance to this court.”) (internal citation omitted); Emtel, Inc. v. Lipidlabs, Inc., No. 07-cv-
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`01798, 2013 U.S. Dist. LEXIS 56312, at *17 (S.D. Tex. Apr. 19, 2013) (“[The patentee’s]
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`statements during reexamination and the USPTO’s insights will be valuable to the issues this
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`court will have to decide.”). Furthermore, past damages may also be eliminated or reduced on
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`any amended claim pursuant to 35 U.S.C § 252. Thus, a stay would simplify the issues to be
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`litigated, regardless of the outcome of the IPR.
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`C. The Timing Favors A Stay
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`The final factor (timing) also favors a stay because this case is in its early stages. The
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`case is still in its relative infancy: no trial date has been set and the Markman hearing is not set
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`for more than five months from the filing of this motion. The parties also have not yet begun to
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`brief claim construction. Moreover, no party depositions have taken place, and fact discovery is
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`not set to close until almost 120 days after the Court issues its claim construction ruling. See
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`D.E. 49.
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`However, during the next six months, the parties will be required to exchange proposed
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`claim constructions, serve expert reports on claim construction, conduct discovery on claim
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`construction issues, and brief claim construction. Indeed, “considering the general time line of
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`patent litigation, there is more work ahead of the parties and the Court than behind the parties
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`and the Court.” See Tierravision, Inc. v. Google, Inc., No. 11-cv-2170, 2012 U.S. Dist. LEXIS
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`21463, at *6 (S.D. Cal. Feb. 21, 2012). Courts have stayed cases that have progressed much
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`further into discovery and claim construction. See, e.g., Tierravision, 2012 U.S. Dist. LEXIS
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`21463 (granting stay where Markman briefs were soon due and parties had exchanged proposed
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`claim constructions and extrinsic evidence); Emtel, 2013 U.S. Dist. LEXIS 56312 (granting stay
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`despite having already conducted the Markman hearing).
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`Therefore, continued litigation in the face of a pending IPR proceeding risks wasting
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`judicial resources over claims that may be invalidated, amended, or narrowed by post-grant
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`review under the expertise of the USPTO examiners. Due to the high likelihood that the USPTO
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`will institute an IPR of the ’314 patent in which the claims are likely to be cancelled or altered
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`given the USPTO’s higher standard for instituting such proceedings, the granting of a stay is
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`warranted and will save the Court and the parties from wasting a great deal of resources.
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`IV. CONCLUSION
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`All of the relevant factors weigh in favor of staying the litigation. For the foregoing
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`reasons, Groupon respectfully requests that the Court stay this action pending inter partes review
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`of the ’314 patent.
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`Dated: November 26, 2013
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`Respectfully submitted,
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`/s/ Stephanie A. Quick
`John S. Golwen (TN BPR #014324)
`Annie T. Christoff (TN BPR #026241)
`BASS, BERRY & SIMS, PLC
`100 Peabody Place, Suite 900
`Memphis, Tennessee 38103
`Telephone: (901) 543-5900
`Facsimile: (901) 543-5999
`Email: jgolwen@bassberry.com
`achristoff@bassberry.com
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`
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`Jeanne M. Gills
`Aaron J. Weinzierl (pro hac vice)
`FOLEY & LARDNER LLP
`321 North Clark Street, Suite 2800
`Chicago, Illinois 60654
`Telephone: (312) 832-4500
`Facsimile: (312) 832-4700
`Email: jmgills@foley.com
` aweinzierl@foley.com
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`Stephanie A. Quick
`FOLEY & LARDNER LLP
`777 East Wisconsin Avenue
`Milwaukee, Wisconsin 53202
`Telephone: (414) 297-2400
`Facsimile: (414) 297-4900
`Email: squick@foley.com
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`Attorneys for Defendant
`Groupon, Inc.
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`CERTIFICATE OF SERVICE
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`I hereby certify that, on November 26, 2013, all counsel of record who are deemed to
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`have consented to electronic service are being served with a copy of this document via the
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`/s/ Stephanie A. Quick
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`Court’s CM/ECF system.
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`4827-6380-4183.