Case 6:15-cv-00907-RWS-KNM Document 42 Filed 02/05/16 Page 1 of 9 PageID #: 889
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`Civil Action No. 6:15-cv-907
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`Plaintiffs,
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`SIPCO, LLC, and IP CO, LLC
`(d/b/a INTUS IQ),
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` v.
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`EMERSON ELECTRIC CO., EMERSON
`PROCESS MANAGEMENT LLLP, FISHER-
`ROSEMOUNT SYSTEMS, INC.,
`ROSEMOUNT INC., BP, p.l.c., BP
`AMERICA, INC., and BP AMERICA
`PRODUCTION COMPANY,
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`Defendants.
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`PLAINTIFFS’ SUR-REPLY IN SUPPORT OF ITS OPPOSITION TO THE EMERSON
`DEFENDANTS’ MOTION TO DISMISS OR TRANSFER THIS ACTION
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`Emerson bears the ultimate burden to show that this case should be dismissed or
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`transferred under the first-to-file rule. Sanofi-Aventis Deutschland GmbH v. Novo Nordisk, Inc.,
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`614 F. Supp. 2d 772, 777 n.5 (E.D. Tex. 2009). Because Emerson fails to meet this burden, its
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`Motion to Dismiss or Transfer should be denied. Indeed, nothing in Emerson’s eleven-page
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`Reply alters the fact that (1) Emerson’s actions in the Northern District of Georgia (“Georgia”)
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`preclude it from benefiting from the first-to-file rule; (2) the asserted patents in this case are
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`sufficiently different such that first-to-file does not apply; and (3) the Eastern District of Texas is
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`the proper and more convenient forum for resolving this dispute, thereby warranting denial of the
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`Motion to Dismiss or Transfer under first-to-file.
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`I.
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`ARGUMENT1
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`A.
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`Emerson’s “federal comity” and “judicial efficiency” arguments are
`misplaced.
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` 1
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` For the Court’s convenience, SIPCO’s sur-reply tracks the argument sections in Emerson’s Reply.
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`In its Reply, Emerson does not dispute that this Court has “ample” discretion in applying
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`the first-to-file rule and that exceptions to the rule “are not rare and are made when justice or
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`expediency requires.” See Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1299 (Fed. Cir. 2012);
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`Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993). Nor does Emerson
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`dispute that it voluntarily decided not to pursue its Georgia declaratory judgment action against
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`six of the originally asserted SIPCO patents, choosing instead to litigate only two of SIPCO’s
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`patents in Georgia—neither of which are at issue in this case. Instead, Emerson attempts to rob
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`SIPCO of its choice of forum for litigating Emerson’s infringement of the six patents Emerson
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`abandoned in the Georgia action, as well as additional SIPCO patents that were never asserted in
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`Georgia. Emerson argues that to allow SIPCO its choice of forum for the patents Emerson
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`voluntarily dropped from the Georgia action would offend “federal comity” and “judicial
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`efficiency.” (Dkt. 36 at 2.)
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`Emerson admits in the Reply that the parties attempted to settle their dispute prior to
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`Emerson’s filing of the first declaratory judgment action in Georgia. (Dkt. 36 at 2-3.) In the
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`midst of settlement efforts, however, Emerson raced to the courthouse and preemptively filed a
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`declaratory judgment action on eight SIPCO patents. By later abandoning its claims on all but
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`two of those patents, Emerson relinquished control over the timing and location of any
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`subsequent litigation involving SIPCO’s other patents. Indeed, at a later time and after
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`subsequent settlement efforts failed, SIPCO filed suit in the Eastern District of Texas, which is
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`the appropriate forum for the resolution of this dispute. Thus, it is Emerson’s conduct—not
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`SIPCO’s—that created the possibility of subsequent litigation on other SIPCO patents at some
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`point in the future. Having accepted the risk that subsequent litigation could occur, Emerson’s
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`reliance on federal comity or judicial efficiency as a means to rescue the pending motion is
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`2
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`misplaced.2
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`B.
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`Emerson’s conscious and deliberate actions in Georgia preclude it from
`claiming the benefit of the first-to-file rule.3
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`Emerson abandoned suit in Georgia on many of the patents-in-suit with full knowledge of
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`SIPCO’s patent portfolio. Such an act made a clear and unambiguous statement that it did not
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`intend to litigate any additional SIPCO patents in Georgia.4 Having consciously made this
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`tactical and case-altering decision, and having accepted the possibility that subsequent litigation
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`could follow on SIPCO’s other patents, Emerson cannot now dictate the time and location of
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`separate litigation on different patents with different claim limitations and different infringement
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`analyses. To hold otherwise would reward Emerson’s tactics and forever chain SIPCO to
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`Georgia—a forum that is not appropriate for the resolution of this dispute. Accordingly, the
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`Court should reject Emerson’s reliance on the first-to-file rule. Cf. Amerada Petroleum Corp. v.
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`Marshall, 381 F.2d 661, 663 (5th Cir. 1967) (upholding trial court’s decision not to apply first-
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`to-file rule for equitable reasons); Williamson v. Am. Mastiff Breeders Council, No. 3:08-cv-336-
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`ECR-VPC, 2009 WL 634231, at *3-*5 (D. Nev. Mar. 6, 2009) (refusing application of first-to-
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`file on a motion to dismiss or transfer the second-filed suit for equitable reasons, despite the
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`cases’ substantially similar parties and issues).
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`C.
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`The first-to-file rule does not apply because the patents in Georgia and this
`action are different and the issues do not substantially overlap.5
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`Notwithstanding the inequitable nature of invoking the first-to-file rule here, Emerson’s
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` 2
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` In Section A of the Reply, Emerson asserts that a party “cannot waive the protections the first-filed rule provides
`the judicial process itself.” It is significant to note this assertion is not supported by citation to legal authority.
`3 In Section B of the Reply, Emerson fails to cite any legal authority in support of its arguments.
`4 When Emerson filed a declaratory judgment action on eight SIPCO patents, it had to expect that the case would
`proceed on those patents. This fact is inconsistent with Emerson’s argument that a lawsuit with a large number of
`patents is “unwieldy.”
`5 In Section C of the Reply (which traverses nearly five pages), Emerson once again fails to cite legal authority in
`support of its arguments. Indeed, the only time legal authority is mentioned is during Emerson’s futile attempt to
`distinguish cases cited by SIPCO.
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`3
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`failure to demonstrate that this case substantially overlaps with the Georgia action continues in
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`its Reply. Indeed, the Reply dodges analysis of the asserted claims in both cases and glosses
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`over the differences amongst the patents.6 And by claiming that SIPCO ignores so-called
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`similarities in the asserted claims, Emerson attempts to improperly shift the burden of
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`demonstrating substantial overlap onto SIPCO. See Sanofi-Aventis, 614 F. Supp. 2d at 777 n.5.
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`Emerson’s opening brief failed to set forth a detailed analysis of potential substantial
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`overlap of the claims, and Emerson’s Reply perpetuates this failure. More particularly, the Reply
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`focuses on SIPCO and misrepresents SIPCO’s comparisons of the patents in both cases.
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`Specifically, in criticizing one of SIPCO’s comparisons of the claims of the patents, Emerson
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`states:
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`Exhibit B compares the language of claim 1 of the ‘842 patent with the language
`of claim 2 of the ‘062 patent, but the ‘062 patent (at issue in Georgia) is from the
`IPCO patent family while the ‘842 patent (asserted here) is from the SIPCO
`patent family. (Doc. 24-2). Of course the two claims differ – they are taken from
`different patent families. (Doc. 24-2).
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`(Dkt. No. 36 at 4-5) (original emphasis). But SIPCO did compare the ‘842 patent (at issue in this
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`case) to both patents in the Georgia action to show that the patents claim different subject matter.
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`(Dkt. 24 at 8.) Emerson ignored the fact that in addition to comparing the ‘842 patent to the ‘062
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`patent, SIPCO also compared the ‘842 patent to the ‘511 patent (part of the SIPCO patent
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`family), and improperly accused SIPCO of “muddl[ing]” the issues before this Court. (Dkt. 36 at
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`4-5.) Emerson then urged this Court, without legal support, to focus only on the patent family
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`relationships and the so-called similarities between the claims, arguing that the “existence of
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`different limitations” (Dkt. 36 at 5) need not be considered. See Document Generation Corp. v.
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` 6
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` The fact that SIPCO licenses a portfolio of patents (Dkt. 36 at 7-8) does not absolve Emerson of its duty to explore
`whether the patents and asserted claims in both cases are so similar that the issues to be decided in both cases will
`substantially overlap.
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`4
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`Case 6:15-cv-00907-RWS-KNM Document 42 Filed 02/05/16 Page 5 of 9 PageID #: 893
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`Allscripts, LLC, No. 6:08-cv-479, 2009 WL 2824741, at *2-*3 (E.D. Tex. Aug. 27, 2009)
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`(finding that one way to consider potential overlap in a first-to-file context “is by considering the
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`claims at issue. Were the Court to rule that it is improper for a Court to consider the specific
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`claims or products at issue, it would chain Plaintiff to [the district of the earlier filed action]
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`whenever it asserted a patent in the same family as the [asserted patent]. The Court is unwilling
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`to create such a rule . . .”). 7 The Reply provides no additional detail about how the asserted
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`claims of the patents-at-issue are similar other than to restate Emerson’s superficial comparison
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`of shared language between claim 1 of the ‘471 patent and claim 2 of the ‘062 patent. (Dkt. 36 at
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`5.)
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`Next, Emerson points to the so-called “similarity” of accused products. However, this
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`argument is misleading because it is based on a superficial analysis of the allegations in the
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`separate cases. Particularly, Emerson has not addressed the details of the features of the accused
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`products in the separate cases.8 For example, the accused product features in the Texas case
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`relate to software on remote computers that controls actuators on devices on separate wireless
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`internal networks. Such product features are not accused in the Georgia case. In the Georgia
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`case, a network of the accused wireless devices can either be standalone or connected externally
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`to a wide area network (“WAN). In the Texas case, a network of the accused wireless devices
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`has features that go beyond that and can be connected to any type of network. These differences
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`render Emerson’s first-to-file challenge futile. Emerson failed to point them out for the Court.
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` 7
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` Contrary to Emerson’s arguments, the principles regarding how a court should determine substantial overlap as set
`forth in Document Generation and Datamize, Inc. v. Fidelity Brokerage Servs., LLC, No. 2:03-cv-321-DF, 2004 WL
`1683171 (E.D. Tex. Apr. 22, 2004) are applicable. Different claims in different patents require independent
`construction, see Datamize, 2004 WL 1683171, at *6, and arguing that two patents are part of the same family is not
`enough to establish substantial overlap, see Document Generation, 2009 WL 2824741, at *3.
`8 The affidavit of a paralegal for Emerson’s trial counsel who asserts that no differences between the accused
`products in this action and the Georgia action were found (Dkt. 36 at 5-6) is hardly a substitute for an affirmative
`and detailed explanation why—despite SIPCO’s explanation that the patents-at-issue in both cases have different
`limitations and claim different subject matter—the issues to be decided in these cases substantially overlap.
`5
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`In addition, by virtue of the First Amended Complaint, this action now includes the BP
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`entities and unique claims of joint infringement by BP and Emerson, which clearly are not a part
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`of the Georgia action.9 (Dkt. 19 at 18-20, 25-27, 32-34.) Far from being a mere customer suit, the
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`fact that BP and Emerson are joint infringers requires analysis of BP’s interactions with Emerson
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`with respect to the accused products and further differentiates the issues in this action from those
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`in the Georgia action. Consequently, additional, complex issues on different patents with
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`different claim limitations requiring unique joint infringement analyses will need to be explored
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`in this action and will not be explored in the Georgia action. As such, the first-to-file rule does
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`not apply.
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`D.
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`Section 1404(a) factors are to be considered and weigh against transfer to
`Georgia.
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`To avoid having to pay any mind to the Section 1404(a) factors, Emerson argues that
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`Sanofi-Aventis was wrongly decided. (Dkt. 36 at 8-10.) But Sanofi-Aventis, decided by Chief
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`District Judge Clark, is the law in this district. See 614 F. Supp. 2d. at 772. And that case
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`establishes that this Court should consider the Section 1404(a) factors and is entitled to make a
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`decision about whether to apply the first-to-file rule—even if Emerson establishes substantial
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`overlap, which it has not. Id. at 777-778, 781. Notably, Emerson has not rebutted the Section
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`1404(a) factors discussed in SIPCO’s Opposition––factors which clearly establish that this
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`district is the appropriate forum.10 And its inability to do so is precisely why Emerson argues
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`(incorrectly) that Sanofi-Aventis was wrongly decided. Emerson has failed to demonstrate that
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` 9
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` As explained in SIPCO’s Opposition and below, this Court may consider the First Amended Complaint and
`addition of the BP entities to this suit, at the very least, in considering the convenience factors under Section
`1404(a). (Dkt. 24 at 11 n.8.)
`10 The Reply correctly notes that Judge Gilstrap is the author of only one of the Markman orders cited by SIPCO,
`but it improperly downplays the fact that Magistrate Judge Love decided the other two, that he is still on the bench
`in the Eastern District of Texas, and that he can still be consulted by this Court for any clarification on his Markman
`orders. (Dkt. 24 at 3 n. 2; Dkt. 36 at 7.)
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`Georgia is a more convenient forum. This fact warrants denial of Emerson’s Motion to Dismiss
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`or Transfer. See In re Nintendo Co., 589 F.3d 1194, 1997 (Fed Cir. 2009).
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`E.
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`The First Amended Complaint impacts the first-to-file analysis and justifies
`denial of Emerson’s Motion to Dismiss or Transfer.11
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`The First Amended Complaint adds new BP entities and unique claims of joint
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`infringement by BP and Emerson—none of which are part of the Georgia action. (Dkt. 19 at 18-
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`20, 25-27, 32-34.) Thus, in this case, on the issue of joint infringement, the parties will examine
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`BP’s interactions with Emerson with respect to the accused products. But the parties will not
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`undertake this analysis in the Georgia case. Because complex and unique joint infringement
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`claims exist only in this case, and because this case has different patents with different claim
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`limitations, the issues in this case and those in the Georgia case are dissimilar in material
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`respects. Accordingly, the first-to-file rule does not apply.
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`BP’s presence is this case is also relevant to the Section 1404(a) analysis. For example,
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`BP’s infringement of SIPCO’s patents includes activities at BP wellheads located throughout this
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`district. Also, two of the BP entities have their principal places of business in Houston, less than
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`200 miles away from Tyler. (Dkt. 19 at ¶¶ 7-9, 69-79.) Because the Section 1404(a) factors
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`weigh against application of the first-to-file rule, and because Emerson cannot meet its burden to
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`show substantial overlap or that Georgia is a clearly more convenient forum, the Court should
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`deny the Motion to Dismiss or Transfer.
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`11 Indeed, this Court may consider the addition of the BP entities and allegations of joint infringement in its Section
`1404(a) analysis. See RPost v. Holdings, Inc. v. StrongMail Sys., Inc., No. 2:12-cv-515-JRG, 2013 WL 4495119, at
`*3 (E.D. Tex. Aug. 19, 2013) (addition of co-defendants after motion filed changes convenience factors analysis);
`see also In re Volkswagen AG, 371 F.3d 201, 204 (5th Cir. 2004) (nothing in §1404(a) limits determination of
`convenience to those parties in original complaint).
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`II.
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`CONCLUSION
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`For the foregoing reasons, SIPCO respectfully requests this Court to deny Emerson’s
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`Motion to Dismiss or Transfer.
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`Dated: February 5, 2016
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`Respectfully Submitted,
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`/s/ Paul J. Cronin (by permission Claire A. Henry)
`Paul J. Cronin, Admitted July 16, 2012
`LEAD ATTORNEY
`(MA Bar No. 641230)
`James C. Hall, Admitted April 9, 2012
`(MA Bar No. 656019)
`NUTTER MCCLENNEN & FISH LLP
`155 Seaport Boulevard
`Boston, Massachusetts 02210
`Telephone: (617) 439-2000
`Facsimile: (617) 310-9000
`Email: pcronin@nutter.com
`Email: jhall@nutter.com
`
`T. John Ward, Jr.
`Texas State Bar No. 00794818
`Email: jw@wsfirm.com
`Claire Abernathy Henry
`Texas State Bar No. 24053063
`Email: claire@wsfirm.com
`WARD, SMITH & HILL, PLLC
`P.O. Box 1231
`1127 Judson Road, Ste. 220
`Longview, Texas 75606-1231
`Telephone: (903) 757-6400
`Facsimile: (903) 757-2323
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`ATTORNEYS FOR PLAINTIFFS
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`CERTIFICATE OF SERVICE
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`I hereby certify that a copy of the foregoing document was filed electronically in
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`compliance with Local Rule CV-5(a). Therefore, this document was served on all counsel who
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`are deemed to have consented to electronic service. Local Rule CV-5(a)(3)(A). Pursuant to Fed.
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`R. Civ. P. 5(d) and Local Rule CV-5(d) and (e), all other counsel of record not deemed to have
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`consented to electronic service were served with a true and correct copy of the foregoing by
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`email on this the 5th day of February, 2016.
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`/s/ Claire Abernathy Henry
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