Case 2:12-cv-02823-JPM-tmp Document 40-1 Filed 02/14/13 Page 1 of 8 PageID 235
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TENNESSEE
`MEMPHIS DIVISION
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`B.E. TECHNOLOGY, L.L.C.,
`Plaintiff,
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`v.
`BARNES & NOBLE, INC.,
`Defendant.
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`Case No. 2:12-cv-02823-JPM-tmp
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`JURY TRIAL REQUESTED
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`MEMORANDUM OF FACTS AND LAW IN SUPPORT OF DEFENDANT BARNES &
`NOBLE, INC.’S MOTION TO STAY PENDING RESOLUTION OF ITS MOTION TO
`TRANSFER VENUE PURSUANT TO 28 U.S.C. § 1404(a)
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`I.
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`Introduction
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`Defendant Barnes & Noble, Inc. (“Barnes & Noble”) respectfully submits this
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`memorandum in support of its motion to stay proceedings pending the Court’s ruling on Barnes
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`& Noble’s motion to transfer venue pursuant to 28 U.S.C. § 1404(a) (“Transfer Motion”) (Dkt.
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`No. 28). At this stage of the proceedings, the parties are poised to expend significant time and
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`resources in disclosures and discovery pursuant to the Local Patent Rules -- time and resources
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`that may not be necessary in the event that this Court grants Barnes & Noble’s Transfer Motion.
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`This is precisely the situation contemplated by the Federal Circuit in its recent In re Fusion-IO
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`decision, in which it recommended that transfer motions be addressed by a district court prior to
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`any other proceedings in the case, and that a brief stay be instituted to avoid unnecessary
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`expenditures of time and resources while a transfer motion was pending. In re Fusion-IO, No.
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`12-139, 2012 WL 6634939, *1 (Fed. Cir. Dec. 21, 2012) (non-precedential). Furthermore,
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`plaintiff B.E. Technology (“B.E.”) will not be prejudiced by a stay. Accordingly, Barnes &
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`Noble respectfully asks the Court to stay all proceedings, including proceedings in this case
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`called for in the Local Patent Rules, until the Court rules on its pending motion to transfer venue.
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`Case 2:12-cv-02823-JPM-tmp Document 40-1 Filed 02/14/13 Page 2 of 8 PageID 236
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`II.
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`Factual Background
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`B.E. brought nineteen separate suits in this District against a large number of defendants,
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`the overwhelming majority of which are based in California -- specifically, the Northern District
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`of California -- alleging separate and independent acts of patent infringement. On January 7,
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`2013, Barnes & Noble filed a motion to transfer this case to the Northern District of California
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`pursuant to 28 U.S.C. § 1404(a). The motion explains that the Northern District of California is
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`clearly a more convenient forum in which to litigate this case than the Western District of
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`Tennessee. In addition, most of the other defendants filed motions to transfer to a more
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`convenient forum, and most of those motions request transfer to the Northern District of
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`California. On January 25, 2013, B.E. filed a memorandum in opposition to the Transfer Motion
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`(Dkt. No. 32) and Barnes & Noble filed a reply, by leave of Court, on February 13, 2013 (Dkt.
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`No. 39). Accordingly, Barnes & Noble’s Transfer Motion is fully briefed and ready for
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`consideration by this Court.
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`Defendants in most of the other B.E. cases have also filed motions to stay proceedings
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`pending determination of proper venue.1 This Court has, to date, granted the motions filed by
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`1 B.E. Technology L.L.C. v. Amazon Digital Services, Inc., 2:12-cv-02767-JPM-tmp, Dkt. No.
`44; B.E. Technology, L.L.C. v. Facebook, Inc., 2:12-cv-02769-JPM-tmp, Dkt. No. 37; B.E.
`Technology, L.L.C. v. LinkedIn Corp., 2:12-cv-02772-JPM-tmp, Dkt. No. 37; B.E. Technology,
`L.L.C. v. Groupon, Inc., 2:12-cv-02781-JPM-cgc, Dkt. No. 28; B.E. Technology, L.L.C. v.
`Pandora Media, Inc., 2:12-cv-02782-JPM-cgc, Dkt. No. 35; B.E. Technology, L.L.C. v. Twitter,
`Inc., 2:12-cv-02783-JPM-cgc, Dkt. No. 32; B.E. Technology, L.L.C. v. Samsung Telecomms.
`America, LLC, 2:12-cv-02824-JPM-cgc Dkt. No. 30; B.E. Technology, L.L.C. v. Samsung
`Electronics America, LLC, 2:12-cv-02825-JPM-cgc Dkt. No. 34; B.E. Technology, L.L.C. v.
`Sony Computer Entm’t America LLC, 2:12-cv-02826-JPM-tmp, Dkt. No. 28; B.E. Technology,
`L.L.C. v. Sony Mobile Commc’ns (USA) Inc., 2:12-cv-02827-JPM-tmp, Dkt. No. 32; B.E.
`Technology, L.L.C. v. Sony Electronics, Inc., 2:12-cv-02828-JPM-tmp, Dkt. No. 27; B.E.
`Technology, L.L.C. v. Microsoft Corp., 2:12-cv-02829-JPM-tmp, Dkt. No. 40; B.E. Technology,
`L.L.C. v. Google Inc., 2:12-cv-2830-JPM-tmp, Dkt. No. 39; B.E. Technology, L.L.C. v. Apple
`Inc., 2:12-cv-02831-JPM-tmp, Dkt. No. 41; B.E. Technology, L.L.C. v. People Media, Inc., 2:12-
`cv-02833-JPM-tmp, Dkt. No. 37; B.E. Technology, L.L.C. v. Match.com L.L.C., 2:12-cv-02834-
`JPM-tmp, Dkt. No. 34; B.E. Technology, L.L.C. v. Motorola Mobility Holdings LLC, 2:12-cv-
`02866-JPM-tmp, Dkt. No. 38.
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`2
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`Case 2:12-cv-02823-JPM-tmp Document 40-1 Filed 02/14/13 Page 3 of 8 PageID 237
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`Facebook, Inc. (“Facebook”), Samsung Telecommunications America, LLC, Samsung
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`Electronics America, Inc. (collectively, “Samsung”), Pandora Media, Inc. (“Pandora”), Twitter,
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`Inc., Apple, Inc., Google, Inc., Motorola Mobility Holdings, LLC, Sony Computer Entertainment
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`America, LLC, Sony Mobile Communications (USA), Inc., and Sony Electronics, Inc.2
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`Absent a stay in the action, this Court as well as the parties will likely expend significant
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`resources that may be rendered unnecessary if the Court grants Barnes & Noble’s motion to
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`transfer. Substantive discovery will soon commence in this litigation. The Local Patent Rules
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`require Barnes & Noble to serve Initial Non-Infringement Contentions on February 21, 2013 and
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`produce “[d]ocuments sufficient to describe the structure, composition, and/or operation of the
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`Accused Instrumentality.” Additionally, Barnes & Noble must serve Invalidity and
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`Unenforceability Contentions, as well as accompanying documents, by March 29, 2013. Finally,
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`Barnes & Noble is set to identify claim terms for construction no later than April 3, 2013.
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`III. Legal Authority
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`This court has the inherent authority to manage its docket by, for example, staying
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`discovery and other proceedings in a case. Landis v. North American Co., 299 U.S. 248, 254
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`(1936); Gray v. Bush, 628 F.3d 779, 786 (6th Cir. 2010); Ellis v. Merck & Co., Inc., 06-1005-
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`T/AN, 2006 WL 448694 (W.D. Tenn. Feb. 19, 2006); Fed. R. Civ. P. 26(c) (stay permitted for
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`2 B.E. Technology, L.L.C. v. Facebook, Inc., 2:12-cv-02769-JPM-tmp, Dkt. No. 43; B.E.
`Technology, L.L.C. v. Groupon, Inc., 2:12-cv-02781-JPM-cgc, Dkt. No. 32; B.E. Technology,
`L.L.C. v. Pandora Media, Inc., 2:12-cv-02782-JPM-cgc, Dkt. No. 36; B.E. Technology, L.L.C. v.
`Twitter, Inc., 2:12-cv-02783-JPM-cgc, Dkt. No. 32; B.E. Technology, L.L.C. v. Samsung
`Telecommunications America, L.L.C., 2:12-cv-02824-JPM-cgc, Dkt. No. 33; B.E. Technology,
`L.L.C. v. Samsung Electronics America, L.L.C., 2:12-cv-02825-JPM-cgc, Dkt. No. 37; B.E.
`Technology, L.L.C. v. Sony Computer Entm’t America LLC, 2:12-cv-02826-JPM-tmp, Dkt. No.
`31; B.E. Technology, L.L.C. v. Sony Mobile Commc’ns (USA) Inc., 2:12-cv-02827-JPM-tmp,
`Dkt. No. 35; B.E. Technology, L.L.C. v. Sony Electronics, Inc., 2:12-cv-02828-JPM-tmp, Dkt.
`No. 30; B.E. Technology, L.L.C. v. Google Inc., 2:12-cv-2830-JPM-tmp, Dkt. No. 42; B.E.
`Technology, L.L.C. v. Apple Inc., 2:12-cv-02831-JPM-tmp, Dkt. No. 42; B.E. Technology, L.L.C.
`v. Microsoft Corp., 2:12-cv-02829-JPM-tmp, Dkt. No. 41; B.E. Technology, L.L.C. v. Motorola
`Mobility Holdings LLC, 2:12-cv-02866-JPM-tmp, Dkt. No. 41.
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`3
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`Case 2:12-cv-02823-JPM-tmp Document 40-1 Filed 02/14/13 Page 4 of 8 PageID 238
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`good cause). In fact, just last week this Court granted motions to stay in several of the other
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`cases filed by B.E. at the same time as this one.3 See orders cited supra note 2.
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`Recent authority confirms that in order to balance competing docket pressures that might
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`prevent a district court from quickly resolving a transfer motion, the court should stay the
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`proceedings until it can provide such a decision, thus avoiding prejudice to the parties. The
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`Federal Circuit just a few weeks ago addressed this very issue. In Fusion-IO, the plaintiff filed a
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`lawsuit against Fusion-IO and eight other defendants. Fusion-IO promptly moved to sever and
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`transfer. In re Fusion-IO, Inc., 2012 WL 6634939 at *1-2. Some time after briefing on the
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`motions had been completed, the district court granted Fusion-IO’s motion to sever but denied its
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`motion to transfer without prejudice, offering Fusion-IO an opportunity to re-file the motion and
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`start the process over if it believed transfer was still appropriate in light of the severance. Id. at
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`*2. Fusion-IO sought a writ of mandamus from the Federal Circuit on the refusal to transfer.
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`The Federal Circuit denied the petition for mandamus but only because the district court had not
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`decided the transfer motion on the facts; the appellate court held that it would not weigh the
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`transfer factors on its own without allowing the district court another opportunity to do so in the
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`first instance. Fusion-IO, 2012 WL 6634939 at *2.
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`3 Because the issues presented by Barnes & Noble’s motion to stay are substantially identical to
`the arguments presented by the other defendants, Barnes & Noble joins and adopts by reference
`the arguments set forth in the memoranda filed by Amazon (Case No. 12-cv-02767, Dkt. No.
`44), Facebook (Case No. 12-cv-02769, Dkt. No. 37-1), LinkedIn (Case No. 2:12-cv-02772, Dkt.
`No. 37), Groupon (2:12-cv-02781-JPM-cgc, Dkt. No. 28), Pandora (Case No. 12-cv-02782, Dkt.
`No. 35), Twitter (Case No. 2:12-cv-02783-JPM-cgc, Dkt. No. 32), Samsung (Case No. 12-cv-
`02824, Dkt. No. 30; Case No. 12-cv-02825, Dkt. No. 34), Sony (Case No.2:12-cv-02826-JPM-
`tmp, Dkt. No. 28; Case No. 2:12-cv-02827-JPM-tmp, Dkt. No. 32; Case No. 2:12-cv-02828-
`JPM-tmp, Dkt. No. 27), Microsoft (Case No. 2:12-cv-02829-JPM-tmp, Dkt. No. 40), Google
`(Case No. 2:12-cv-2830-JPM-tmp, Dkt. No. 39), Apple (Case No. 2:12-cv-02831-JPM-tmp, Dkt.
`No. 41), People Media (Case No. 2:12-cv-02833-JPM-tmp, Dkt. No. 37), Match.com (Case No.
`2:12-cv-02834-JPM-tmp, Dkt. No. 34) and Motorola (Case No. 2:12-cv-02866-JPM-tmp, Dkt.
`No. 38).
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`Case 2:12-cv-02823-JPM-tmp Document 40-1 Filed 02/14/13 Page 5 of 8 PageID 239
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`The Federal Circuit, however, acknowledged Fusion-IO’s concern with litigating on the
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`merits in the district in which the case was initially filed while the district court decided the
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`transfer issue. The Court recommended that Fusion-IO file a stay motion to limit that prejudice
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`and also noted its expectation that the district court would take up the stay motion and the
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`transfer motion before proceeding to the merits of the case:
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`We fully expect, however, for Fusion-IO to promptly request transfer in the lead
`case along with a motion to stay proceedings pending disposition of the transfer
`motion, and for the district court to act on those motions before proceeding to
`any motion on the merits of the action. See In re Horseshoe Entm’t, 337 F.2d
`429, 433 (5th Cir. 2003) (“As indicated earlier, Horseshoe filed its motion to
`transfer timely and before it filed its answer and in our view disposition of that
`motion should have taken a top priority in the handling of this case[.]”);
`McDonnell Douglas Corp. v. Polin, 429 F.2d 30, 30-31 (3d Cir. 1970) (“[I]t is not
`proper to postpone consideration of the application for transfer under § 1404(a)
`until discovery on the merits is completed, since it is irrelevant to the
`determination of the preliminary question of transfer.”).
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`Id. (emphasis added). The Federal Circuit has therefore recommended a short stay of
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`proceedings as the proper tool to balance a district court’s need for time to address motions on its
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`busy docket and the prejudice to defendants that accrues during that time needed to render a
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`decision.
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`The importance of deciding transfer motions at an early stage of litigation was recently
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`emphasized not only in Fusion-IO, but in another Federal Circuit case, In re EMC Corp., No. 13-
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`142 (Fed. Cir. Jan. 29, 2013) (non-precedential) (attached as Ex. A). There the court explained
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`that “Congress’ intent to ‘prevent the waste of time, energy and money and to protect litigants,
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`witnesses and the public against unnecessary inconvenience and expense… may be thwarted
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`where, as here, defendants must partake in years of litigation prior to a determination on a
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`transfer motion.” No. 13-142 at *4 (quoting Van Dussen v. Barrack, 376 U.S. 612, 616 (1964).
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`Case 2:12-cv-02823-JPM-tmp Document 40-1 Filed 02/14/13 Page 6 of 8 PageID 240
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`A stay of the proceedings is the proper mechanism to avoid thwarting the intent of § 1404(a)
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`while allowing the Court time to consider the transfer motion.
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`In addition to the Federal Circuit’s recent guidance on the issue, sound authority from the
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`Third and Fifth Circuits also recognizes that district courts should rule on timely-filed transfer
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`motions before allowing parties to commence discovery. For example, in the Third Circuit, a
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`“transfer motion is to be decided before proceeding on the merits.” In re All Terrain Vehicles
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`Litig., No. 88-237, 1989 WL 30948, at *2 (E.D. Penn. Feb. 23, 1989) (citing McDonnell Douglas
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`Corp. v. Polin, 429 F.2d 30, 31 (3d Cir. 1970)). The Third Circuit established its policy in
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`McDonnell Douglas Corp. v. Polin, 429 F.2d 30, 31 (3d Cir. 1970). The district court in that
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`case postponed the disposition of a motion to transfer under § 1404(a) until after merits
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`discovery was completed. Id. at 30. The Third Circuit held that delaying a decision on the motion
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`to transfer was an abuse of discretion, and explained that principles of comity and judicial
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`economy require district courts to avoid making case management decisions which could later
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`bind a transferee court if a transfer was ordered:
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`To undertake a consideration of the merits of the action is to assume, even
`temporarily, that there will be no transfer before the transfer issue is decided.
`Judicial economy requires that another district court should not burden itself with
`the merits of the action until it is decided that a transfer should be effected and
`such consideration additionally requires that the court which ultimately decides
`the merits of the action should also decide the various questions which arise
`during the pendency of the suit instead of considering it in two courts.
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`Id. at 30. The Third Circuit directed the district court to resolve the pending transfer motion
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`“and then only if the court should deny the motion to transfer should discovery be permitted to
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`go forward.” Id. at 31.
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`The Fifth Circuit ordered a similar result in In re: Horseshoe Entertainment, 337 F.3d
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`429 (5th Cir. 2003). In Horseshoe, Horseshoe Entertainment filed a motion to transfer a Title VII
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`Case 2:12-cv-02823-JPM-tmp Document 40-1 Filed 02/14/13 Page 7 of 8 PageID 241
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`sex discrimination/ADA case to the Shreveport Division of the United States District Court for
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`the Western District of Louisiana. Id. at 430. Although Horseshoe Entertainment’s motion was
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`filed early in the case, the district court waited 13 months before denying the motion. Id. at 433.
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`The Fifth Circuit granted the petition for a writ of mandamus and instructed the district court to
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`transfer the litigation to Shreveport. The Fifth Circuit emphasized that, “Horseshoe filed its
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`motion to transfer timely and before it filed its answer and in our view disposition of that motion
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`should have taken top priority in the handling of this case.” Id.
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`IV.
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`The Court Should Stay These Proceedings
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`Barnes & Noble filed its transfer motion in a timely manner, only a week after filing its
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`Answer. Moving forward with discovery and other deadlines in this case as provided in the
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`Local Patent Rules while awaiting a decision on its transfer motion would cause a waste of party
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`resources, would prejudice Barnes & Noble’s right to participate in discovery and claim
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`construction in the ultimate forum, and would thwart the purposes of 28 U.S.C. § 1404(a). The
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`relief requested here would supply the Court time to resolve the transfer motion consistent with
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`its other priorities, and at the same time would guard against wasting party resources preparing
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`for specific discovery and claim construction in this case when a transfer may require the parties
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`to start over again in another District.
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`This Court’s Local Patent Rules include discovery and claim construction procedures that
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`are very specific to this District. For example, the Local Patent Rules 3.3 and 3.4 require a
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`defendant to prepare and serve non-infringement contentions, whereas non-infringement
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`contentions are not required in the Northern District of California. This is only one instance of
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`each forum’s unique procedures and practices for the early stages of patent litigation. Without a
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`stay, Barnes & Noble will be required to proceed using the specific procedures of this District. If
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`the Court then grants the motion to transfer, whatever work has been done by that time will
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`likely be rendered moot when the transferee Court takes up the case and sets a new schedule
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`under its own different discovery and claim construction procedures.
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`While a short stay of these proceedings will limit the potential prejudice to Barnes &
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`Noble, a stay will not unduly prejudice B.E. In fact, the goal of conserving the parties’ resources
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`and avoiding a scenario in which work is wasted due to a transfer to the Northern District of
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`California are as applicable to B.E. as they are to Barnes & Noble. A brief stay in this action
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`would further efficiency and economy for both parties as well as this Court.
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`V.
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`Conclusion
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`For the above reasons, Barnes & Noble respectfully requests the Court stay all other
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`proceedings in this litigation including Local Patent Rule disclosures and fact discovery pending
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`resolution of Barnes & Noble’s motion to transfer.
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`60325172.1
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`Respectfully submitted,
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`s/Mark Vorder-Bruegge, Jr.
`Mark Vorder-Bruegge, Jr. (#06389)
`WYATT, TARRANT & COMBS, LLP
`1715 Aaron Brenner Drive, Suite 800
`Memphis, TN 38120-4367
`Phone: 901.537.1010
`Facsimile: 901.537.1010
`mvorder-bruegge@wyattfirm.com
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