Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 1 of 8 PageID 652
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`IN THE UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TENNESSEE
`WESTERN DIVISION
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`Civil Action No. 2:12-cv-2829 JPM
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`B.E. Technology, L.L.C.,
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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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`MEMORANDUM OF LAW IN SUPPORT OF MICROSOFT CORPORATION’S
`MOTION TO STAY PROCEEDINGS PENDING INTER PARTES REVIEW
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`I.
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`INTRODUCTION
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`Defendant Microsoft Corporation (“Microsoft”) respectfully moves to stay this case
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`pending resolution of petitions for inter partes review (“IPR”) of U.S. Patent Nos. 6,628,314
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`(“the ’314 patent”) and 6,771,290 (“the ’290 patent”) filed by Microsoft on October 9, 2013. In
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`total, nine petitions for IPR have been filed by five defendants across 18 co-pending cases.1
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`Granting a stay would serve judicial economy without prejudice to B.E. In fact, B.E. itself
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`offered to stay all 18 co-pending cases for this very reason. Indeed, the parties were on the verge
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`of a global agreement to stay all cases until the following two limited issues derailed a
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`stipulation:
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`1 Samsung filed its IPR petition (IPR2014-00044) on October 9, 2013. Sony filed its IPR
`petition (IPR2014-00029) on October 8, 2013. Google filed IPR petition (IPR2014-00031 and
`IPR2014-00033) on October 7, 2013. Google filed its IPR petition (IPR2014-00038) on October
`8, 2013. Facebook filed its IPR petitions (IPR2014-00052 and IPR2014-00053) on October 9,
`2013.
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`Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 2 of 8 PageID 653
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`1) Amazon requests that its motions to dismiss be heard in advance of an entry of a stay;
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`and
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`2) B.E. and Apple could not reach agreement on language memorializing that Apple
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`would not be estopped on invalidity as a result of the stay, despite the absence of
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`privity with petitioners in the IPRs.
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`Though both issues are unrelated to Microsoft, B.E. would not agree to stay the present
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`case against Microsoft absent agreement with all other defendants to stay all other cases.2 In
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`doing so, B.E. acknowledges the logic and reason all cases should be stayed – namely, that
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`invalidity affecting one affects all. Neither B.E.’s apparent dispute with Amazon nor Apple is
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`ground to deny staying this case against Microsoft pending resolution of IPRs on both patents
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`asserted against it in this case.
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`Additionally, unlike previous cases before this Court, the particular facts here support a
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`stay even though the U.S. Patent and Trademark Office (“PTO”) has not yet granted the petitions
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`filed by Microsoft and/or the respective defendants, particularly if the Court is inclined to
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`consider staying all 18 co-pending cases. To date, there has been limited discovery and an initial
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`2 See B.E. v. Amazon Digital Servs., Inc., No. 2:12-cv-02767-JPM-cgc; B.E. v. Facebook, Inc.,
`No. 2:12-cv-02769-JPM-tmp; B.E. v. LinkedIn Corp., No. 2:12-cv-02772-JPM-dkv; B.E. v.
`Groupon, Inc., No. 2:12-cv-02781-JPM-cgc; B.E. v. Pandora Media, Inc., No. 2:12-cv-02782-
`JPM-cgc; B.E. v. Twitter, Inc., No. 2:12-cv-02783-JPM-cgc; B.E. v. Barnes & Noble, Inc., No.
`2:12-cv 02823-JPM-tmp; B.E. v. STA, No. 2:12-cv-02824-cgc; B.E. v. SEA, No. 2:12-cv-02825-
`JPM-tmp; B.E. v. Sony Computer Entm’t Am., Inc., No. 2:12-cv-02826-JPM-tmp; B.E. v. Sony
`Mobile Commcn’s (USA) Inc., No. 2:12-cv-02827-JPM-dkv; B.E. v. Sony Elecs. Inc., No. 2:12-
`cv-02828-JPM-tmp; B.E. v. Microsoft Corp., No. 2:12-cv-02829-JPM-tmp; B.E. v. Google Inc.,
`No. 2:12-cv-02830-JPM-cgc; B.E. v. Apple Inc., No. 2:12-cv-02831-JPM-cgc; B.E. v. Spark
`Networks, Inc., No. 2:12-cv-02832-JPM-cgc (since dismissed); B.E. v. People Media, Inc., No.
`2:12-cv-02833-JPM-dkv; B.E. v. Match.com, LLC, No. 2:12-cv-02834-JPM-dkv; B.E. v.
`Motorola Mobility Holdings, LLC, No. 2:12-cv-02866-JPM-dkv.
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`2
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`Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 3 of 8 PageID 654
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`round of contentions, but the Court’s schedule sets a number of significant claim construction
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`deadlines in the coming months and a Markman hearing on April 28, 2014. The enormous
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`resources required in a typical single-party patent case is exponentially greater here because of
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`the multiplicity of actions, covering vastly disparate products and requiring herculean
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`coordination efforts to achieve consolidated claim construction briefing on a single schedule.
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`Yet, the PTO’s decision to grant or deny the petitions are due just two to three weeks before the
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`April 28 Markman hearing. Moreover, the PTO has granted over 85% of inter partes review
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`petitions since the process began in September of 2012. (Ex. A - showing only 33 of 239
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`decisions resulting in denials of IPR petitions through November 14, 2013.) Here, nine IPR
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`petitions have been filed by five defendants, further increasing the already strong likelihood that
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`IPR will be granted.
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`Accordingly, in the interests of judicial economy, Microsoft respectfully requests an
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`immediate stay of proceedings in this case, particularly if all or substantially all co-pending cases
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`are stayed. Alternatively, Microsoft requests a stay if and when inter partes review is granted.
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`II.
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`ARGUMENT
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`This Court has the “inherent power to manage [its] dockets and stay proceedings,
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`including the authority to order a stay pending conclusion of a PTO reexamination.” Ethicon,
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`Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citations omitted); see also Esperson v.
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`Trugreen LP, 2010 WL 2640520, at *2 (W.D. Tenn. June 29, 2010) (“A district court has the
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`inherent power to stay proceedings.”); Ellis v. Merck & Co., Inc., No. 06–1005–T/AN, 2006 WL
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`448694 (W.D. Tenn. Feb. 19, 2006). There is a “liberal policy in favor of granting motions to
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`stay proceedings pending the outcome of reexamination, especially in cases that are still in the
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`Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 4 of 8 PageID 655
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`initial stages of litigation and where there has been little or no discovery.” Like.com v. Superfish,
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`Inc., 2010 WL 2635763, at *2 (N.D. Cal. June 30, 2010) (internal citations omitted).
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`In applying that liberal policy, this Court, along with others in the Circuit, has granted
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`motions to stay pending USPTO review of a patent. One Stockduq Holdings, LLC v. Becton,
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`Dickinson & Co., No. 2:12-cv-3037-JPM-tmp, D.E. 85 (W.D. Tenn. Nov. 12, 2013) (attached
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`hereto as Ex. B); SSW Holding Co. v. Schott Gemtron Corp., 2013 WL 4500091 (W.D. Ky. Aug.
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`21, 2013); Regents of the Univ. of Mich. v. St. Jude Med., Inc., 2013 WL 2393340 (E.D. Mich.
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`May 31, 2013); Visual Interactive Phone Concepts, Inc. v. Samsung Tele. Am., LLC., 2012 WL
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`1049197, at *1 (E.D. Mich. Mar. 28, 2012); Dura Global Tech., LLC v. Magna Int’l Inc., 2011
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`WL 5039883, at *1 (E.D. Mich. Oct. 24, 2011); EMSAT Advanced v. T-Mobile USA, Inc., 2011
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`WL 843205, at *1 (N.D. Ohio Mar. 8, 2011).
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`In determining whether to grant a stay pending reexamination, this Court applies a three-
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`part test: “(1) whether a stay would unduly prejudice or present a clear tactical disadvantage to
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`the non-moving party; (2) whether a stay will simplify the issues in question and trial of the case;
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`and (3) whether discovery is complete and whether a trial date has been set.” One Stockduq, Slip
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`Op. at 6-7 (internal citations omitted). Being that all three factors here favor a stay and that B.E.
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`acknowledges the benefits of a stay pending inter partes review, Microsoft respectfully requests
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`that this Court grant this Motion.
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`a. B.E. Will Not Be Unduly Prejudiced or Receive a Tactical Disadvantage
`from a Stay.
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`B.E. will not suffer any undue prejudice or a tactical disadvantage from the requested
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`stay. The lack of prejudice is evidenced by the fact that B.E. was at one point “willing to agree
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`to a stay of all litigation related to the ‘290 and ‘314 patents pending the IRPs.” (Ex. C-
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`11/18/2013 email from D. Weinberg to P. Sauer.) Both the ’314 and ’290 patents issued in 2004;
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`Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 5 of 8 PageID 656
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`B.E. waited for years to assert its patents against Microsoft and the other defendants. B.E. will
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`not suffer any competitive harm from this stay, as it is a non-practicing entity that exists solely to
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`enforce these patents. As such, delay based on the inter partes review process alone is not
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`sufficient to demonstrate undue prejudice to the non-moving party. One Stockduq, Slip Op. at 10
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`(internal citations omitted).
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`Moreover, B.E. will not be prejudiced if a stay is limited to a subset of the co-pending
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`B.E. cases – such as the present case against Microsoft. The only basis articulated by B.E. for
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`objecting to a limited stay is “to preserve the joint schedule.” Id. The convenience offered to
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`B.E. by a coordinated schedule does not outweigh the significant efficiencies of an inter partes
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`review prior to undertaking significant expenses associated with claim construction and
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`discovery in these District Court proceedings. Moreover, if all cases are stayed, there can still
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`be coordination in the event the stays are lifted.
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`b. The Stay and Inter Partes Review Proceedings Will Simplify the Issues
`and Trial.
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`Granting Microsoft’s request for a stay would simplify the issues in question and trial.
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`Pursuant to the Scheduling Order in this case, the parties’ respective Claim Construction briefs
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`are due in the coming months, with a Claim Construction Hearing set for April 28, 2014. If any
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`or all of the claims are invalidated by the Patent Trial and Appeal Board, a stay at this time
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`would significantly promote judicial economy. Cameras Onsite, LLC v. Digital Mgmt.
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`Solutions, Inc., 2010 WL 1268054, at *4 (S.D. Tex. Mar. 24, 2010) (“If the patent is partially
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`invalidated while this case is pending, then by not granting a stay the Court possibly will have
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`wasted its time and the time and resources of the parties by addressing invalid claims.”).
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`Further, “[a]mendment of any claim could impact the litigation presently before the Court, and a
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`majority of patents which have been reexamined have either had all claims canceled or changes
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`Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 6 of 8 PageID 657
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`made to the claims.” One Stockduq, slip op. at 14-15. Accordingly, a stay at this time “will assist
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`the Court in “reducing the complexity and length of the litigation.” One Stockduq, Slip Op. at 11
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`(internal citations omitted).
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`c. Discovery Is Just Beginning and No Trial Date Has Been Set.
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`The relatively early stage of these proceedings similarly favors a stay. Discovery is not
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`set to close until 120 days after this Court issues its claim construction ruling. No trial date has
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`been set. One Stockduq, slip op. at 7. As noted above, the Markman hearing is set for April 28,
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`2014. Claim construction briefs have not yet been filed, and no claim construction expert reports
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`or claim construction discovery has taken place. A stay at this time would prevent the
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`unnecessary expenditure of resources by the parties and the Court.
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`III. GRANTING A STAY IS PROPER AT THIS TIME.
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`According to recent statistics, over 85% of IPR petitions are granted. (Ex. A - showing
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`only 33 of 239 decisions resulting in denials of IPR petitions through November 14, 2013.) As
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`noted above, four separate petitions have been filed against the ’314 patent, and five separate
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`petitions have been filed against the ’290 patent. While the outcome of the petitions cannot be
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`known in advance, the present case is distinguishable from instances where a single petition was
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`filed by a single defendant seeking a stay. Compare One Stockduq Holding, LLC v. Becton,
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`Dickinson & Co., No. 2:12-cv-03037-JPM-TMP, D.E. 53, slip op. at 3-4 (W.D. Tenn. May 6,
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`2013). Indeed, absent a stay in the present case, there is a substantial risk of overlap and
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`unnecessary proceedings, including briefing and preparation for the Markman hearing. “[I]f the
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`PTO declines inter partes review, little time is lost, but if PTO grants inter partes review, the
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`promise is greater for an important contribution by the PTO to resolution of the governing issues
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`Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 7 of 8 PageID 658
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`in the litigation.” See Capriola Corp. v. LaRose Indus. LLC, 2013 WL 1868344, at *2 (M.D.
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`Fla. Mar 11, 2013).
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`IV. CONCLUSION
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`As elaborated above, each factor weighs in favor of granting a stay at this time.
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`Microsoft respectfully requests that the Court in its discretion and inherent power grant the
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`present motion for stay pending petitions for inter partes review.
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`Dated: December 6, 2013
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` Respectfully submitted,
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`s/ Adam S. Baldridge
`Bradley E. Trammell (TN #13980)
`Adam Baldridge (TN #023488)
`Baker, Donelson, Bearman, Caldwell &
`Berkowitz, P.C.
`165 Madison Avenue, Suite 2000
`Memphis, TN 38103
`Telephone: 901.577.2121
`Email: btrammell@bakerdonelson.com
`abaldrige@bakerdonelson.com
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`Of Counsel:
`Ruffin B. Cordell (TX #4820550)
`FISH & RICHARDSON P.C.
`1425 K Street, N.W., 11th Floor
`Washington, D.C. 20005
`Telephone: (202) 783-5070
`Cordell@fr.com
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`Kelly C. Hunsaker (CA Bar No. 168307)
`Leeron G. Kalay (CA Bar No. 23359)
`FISH & RICHARDSON P.C.
`500 Arguello Street, Suite 500
`Redwood City, CA 94063
`Telephone: (650) 839-5070
`hunsaker@fr.com
`kalay@fr.com
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`Attorneys for Defendant
`MICROSOFT CORPORATION
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`Case 2:12-cv-02829-JPM-tmp Document 68-1 Filed 12/06/13 Page 8 of 8 PageID 659
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`CERTIFICATE OF SERVICE
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`I hereby certify that on December 6, 2013, a true and correct copy of the foregoing
`document was electronically filed with the United States District Court for the Western District
`of Tennessee, and was served on all counsel by the court’s electronic filing notification or via
`email.
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`s/ Adam S. Baldridge
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