Case 6:22-cv-00535-ADA Document 93 Filed 07/20/23 Page 1 of 12
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`6:22-CV-00535-ADA
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`DODOTS LICENSING SOLUTIONS
`LLC,
`Plaintiff
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`-vs-
`SAMSUNG ELECTRONICS CO.,
`LTD., SAMSUNG ELECTRONICS
`AMERICA, INC., BEST BUY STORES,
`L.P., BESTBUY.COM, LLC, and BEST
`BUY TEXAS.COM, LLC,
`Defendants.
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`ORDER GRANTING DEFENDANTS’ MOTION TO SEVER AND STAY
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`Before the Court is Defendants’ Motion to Sever and Stay Claims Under the Customer-
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`Suit Exception filed on October 24, 2022. ECF No. 45. Plaintiff DoDots Licensing Solutions LLC
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`(“DoDots”) filed its response on November 14, 2022. ECF No. 51. Defendants filed a reply in
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`support of their motion on November 21, 2022. ECF No. 53. After considering the parties’ briefing,
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`the relevant facts, and the applicable law, the Court GRANTS Defendants’ Motion to Sever and
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`Stay Under the Customer-Suit Exception.
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`I.
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`BACKGROUND
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`On May 24, 2022, DoDots filed this action against Best Buy Stores, L.P., BestBuy.com,
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`LLC, Best Buy Texas.com, LLC (collectively, “Best Buy” or the “Best Buy Defendants”),
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`Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. (collectively, “Samsung”).
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`ECF No. 1. The amended complaint alleges that Samsung infringes of U.S. Patent Nos. 9,369,545
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`(“’545 patent”), 8,020,083 (“’083 patent”), and 8,510,407 (“’407 patent”) (collectively, the
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`“asserted patents”). ECF No. 29 at 1, 49. The amended complaint alleges that Best Buy infringes
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`the ’083 and ’407 patents. ECF No. 29 at 49.
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`For Defendant Samsung, the amended complaint alleges that “Samsung directly and
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`indirectly infringes [the ’083 and 407 patents] . . . by, at least, making, using, supplying,
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`distributing, importing, exporting, selling, and/or offering for sale in the United States the Accused
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`Samsung Devices and/or Accused Samsung Devices together with the Accused Samsung Software
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`in the United States.” Id. ¶¶ 126, 133. DoDots accuses Samsung of “directly infring[ing] one or
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`more claims of the ’545 patent . . . by, at least, implementing, operating, executing and using in
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`the United States, the Accused Samsung Software in each Accused Samsung Device.” Id. ¶ 117.
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`For the Best Buy Defendants, DoDots claims that Best Buy “directly infringes [the ’083 and ’407
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`patents] . . . by supplying, distributing, importing, exporting, selling and/or offering for sale in the
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`United States the Accused Samsung Devices.” Id. ¶¶ 140, 146.
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`Defendants filed this motion to sever DoDots’ claims against Best Buy and to stay those
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`claims pending the resolution of DoDots’ claims against Samsung. ECF No. 45.
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`II.
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`LEGAL STANDARD
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`A trial court has broad discretion to stay an action against a party to promote judicial
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`economy. Anderson v. Red River Waterway Comm’n, 231 F.3d 211, 214 (5th Cir. 2000); see also
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`Landis v. N. Am. Co., 299 U.S. 248, 254−55, (1936) (“[T]he power to stay proceedings is incidental
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`to the power inherent in every court to control the disposition of the causes on its docket with
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`economy of time and effort for itself, for counsel, and for litigants.”). Where suit is brought against
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`a manufacturer and its customers, the action against the customers should be stayed pending
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`resolution of the case against the manufacturer to promote judicial economy. See In re Nintendo
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`of Am., Inc., 756 F.3d 1363, 1365−66 (Fed. Cir. 2014).
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`The “customer-suit exception” to the first-filed rule provides that “litigation against or
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`brought by the manufacturer of infringing goods takes precedence over a suit by the patent owner
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`against customers of the manufacturer.” Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir.
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`1990). This exception “exists to avoid, if possible, imposing the burdens of trial on the customer,
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`for it is the manufacturer who is generally the ‘true defendant’ in the dispute.” Nintendo, 756 F.3d
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`at 1365 (citation omitted). “[C]ourts apply the customer suit exception to stay earlier-filed
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`litigation against a customer while a later-filed case involving the manufacturer proceeds in
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`another forum.” Spread Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349, 1357
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`(Fed. Cir. 2011). The Federal Circuit has applied the customer-suit exception to cases in which the
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`supplier and customer are named as defendants in the same case. Nintendo, 756 F.3d at 1365.
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`To warrant a stay of the customer suit, the case involving the manufacturer “need only have
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`the potential to resolve the ‘major issues’ concerning the claims against the customer—not every
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`issue.” Spread Spectrum, 657 F.3d at 1358 (citing Katz, 909 F.2d at 1464). Courts are instructed
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`to use a “flexible approach” to avoid wasteful expenditure of resources, and therefore “stay[]
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`proceedings if the other suit is so closely related that substantial savings of litigation resources can
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`be expected.” In re Google Inc., 588 F. App’x 988, 991 (Fed. Cir. 2014); see also Nintendo, 756
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`F.3d at 1365−66 (determining that the customer-suit exception is “designed to facilitate just,
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`convenient, efficient, and less expensive determination” (citations omitted)).
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`In determining whether the customer suit exception applies, courts analyzes three factors:
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`“(1) whether the customer-defendant in the earlier-filed case is merely a reseller; (2) whether the
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`customer-defendant agrees to be bound by any decision in the later-filed case that is in favor of
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`the patent owner; and (3) whether the manufacturer is the only source of the infringing product.”
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`CyWee Grp. Ltd. v. Huawei Device Co., No. 2:17-CV-495-WCB, 2018 U.S. Dist. LEXIS 142173,
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`at *14 (E.D. Tex. Aug. 22, 2018) (quoting Vantage Point Tech., Inc. v. Amazon.com, Inc., No.
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`2:13-CV-909, 2015 U.S. Dist. LEXIS 675, 2015 WL 123593, at *2 (E.D. Tex. Jan. 6, 2015)). The
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`“guiding principles in the customer suit exception cases are efficiency and judicial economy.”
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`Spread Spectrum, 657 F.3d at 1357 (citation omitted).
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`The factors courts typically consider when determining whether to grant a stay include:
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`“(1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-
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`moving party; (2) whether a stay will simplify the issues and trial of the case; (3) whether discovery
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`is completed; and (4) whether a trial date has been set.” In re Trustees of Bos. Univ. Patent Cases,
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`No. CV 13-12327-PBS, 2014 WL 12576638, at *2 (D. Mass. May 16, 2014).
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`III. ANALYSIS
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`A.
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`Customer-Suit Exception
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`The Court holds that the customer-suit exception applies because: (1) DoDots’ claims of
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`infringement against Best Buy hinge on Best Buy’s sale of Samsung’s products; (2) the Best Buy
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`Defendants have agreed to be bound by the outcomes of the claims against Samsung; and (3)
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`Samsung is the only source of the accused products.
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`1.
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`Whether the Best Buy Defendants Are Merely Resellers
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`Defendants argue that the Best Buy Defendants are merely resellers of the accused products
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`because the amended complaint only accuses Best Buy of selling and offering for sale the accused
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`Samsung devices. ECF No. 45 at 7. Defendants argue that DoDots’ infringement claims against
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`Best Buy rely on Best Buy’s activities as a reseller. Id. Defendants note that DoDots’ complaint
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`identifies only Samsung hardware and Android software of infringing the asserted patents. Id.
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`Defendants claim that because Best Buy only resells the accused Samsung devices, DoDots’ case
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`against Best Buy is duplicative of its case against Samsung. Id. at 8. Defendants argue that DoDots
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`infringement claims will be exhausted if DoDots prevails against Samsung. Id. Further, Defendants
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`argue that the amended complaint does not show that the technical infringement and validity
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`analysis will differ for Best Buy. Id.
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`DoDots argues that the customer-suit exception does not apply to a single action against a
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`customer and manufacturer where there should not be a separate action against only the customer.
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`ECF No 51 at 1. DoDots cites In re Dell Inc., 600 Fed. Appx. 728, 730 (Fed. Cir. 2015) for this
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`proposition. Id. at 2. In Dell, the Federal Circuit declined to grant a petition for mandamus on a
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`district court’s denial of a motion to stay claims against a customer-defendant. Dell, 600 Fed.
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`Appx. at 728, 730. The Federal Circuit explained that “the claims here are related, and the
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`complexity of the case could perhaps be simplified by a stay of some aspects of the proceedings
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`while others go forward.” Id. at 730. But the court noted that it was unaware of any case “that sets
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`forth the proposition that a district court must stay proceedings against a customer in the very same
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`litigation that will, regardless of the requested stay, go forward against the supplier.” Id. Therefore,
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`the Federal Circuit determined that the district court’s ruling was not outside of that court’s
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`discretion in managing its docket. Id.
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`DoDots also argues that the customer-suit exception does not apply here because this is a
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`single action in which the customer directly infringes and the manufacturer indirectly infringes.
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`ECF No. 51 at 3. DoDots cites Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-cv-
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`1202, 2016 U.S. Dist. LEXIS 55205 (E.D. Tex. Apr. 2, 2016). Id. In UroPep, a district court
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`declined to sever and stay the claims against the customer-defendants because plaintiff needed to
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`show that the customer-defendants directly infringed to prove that the manufacturer-defendant
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`indirectly infringed. UroPep, 2016 U.S. Dist. LEXIS 55205, at *8. The court noted that the issue
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`of infringement was not entirely common to the customer and manufacturer in that case because
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`even if the manufacturer were found to induce infringement, that did not necessarily mean that the
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`customers directly infringed. Id. at *9. DoDots claims that this case is similar to UroPep. ECF No.
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`51 at 3. DoDots argues that the infringement issues related to Samsung and Best Buy are not
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`common because DoDots accuses of Samsung of inducing Best Buy to sell the accused products
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`and DoDots accuses Best Buy of direct infringement by selling and offering for sale the accused
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`products. ECF No. 51 at 4. DoDots asserts that if its claims against Best Buy are stayed and DoDots
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`is successful against Samsung, it will still have to prove direct infringement against Best Buy in a
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`later trial. Id. In their reply, Defendants note that UroPep involved method claims, where the proof
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`of indirect infringement required showing that the direct infringer completed the steps of the
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`method claim. ECF No. 53 at 5.
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`Additionally, DoDots argues that there is no risk of duplicative proceedings because
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`Samsung and the Best Buy Defendants are represented by the same counsel. ECF No. 51 at 3. In
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`their reply, Defendants argue that the duplication of proceedings is not eliminated by the fact that
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`the customer and manufacturer defendants are represented by the same counsel. ECF No. 53 at 4.
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`The Court agrees with Defendants. “Since [Samsung’s] liability is predicate to recovery
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`from any of the defendants, the case against [Samsung] must proceed first, in any forum.”
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`Nintendo, 756 F.3d at 1366. While DoDots alleges that Best Buy directly infringes the asserted
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`patents, DoDots’ infringement allegations center on Best Buy’s sale or offer for sale of the accused
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`Samsung devices. And although Samsung and the Best Buy Defendants are represented by the
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`same counsel, that does not eliminate the risk of duplicative proceedings. Because DoDots’
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`infringement claims against Best Buy likely rise and fall with DoDots’ infringement claims against
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`Samsung, the Court concludes that this factor weighs in favor of severing and staying the claims
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`against the Best Buy Defendants.
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`DoDots’ infringement claims here are different than those asserted in UroPep. In UroPep,
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`the plaintiff’s allegations against the manufacturer for indirect infringement did not necessarily
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`show that the customer-defendants directly infringed. The plaintiff in UroPep would still need to
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`show that the customer-defendants actually performed the claimed method steps. Here, however,
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`because Best Buy is a mere reseller, DoDots’ allegations against Best Buy depend exclusively on
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`Best Buy’s sale of the accused products. If Samsung’s products infringe, Best Buy’s “supplying,
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`distributing, importing, exporting, selling and/or offering for sale” of Samsung’s products
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`necessarily infringes. ECF No. 29 ¶¶ 140, 146. As for Dell, the Court notes that while the Federal
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`Circuit determined that the district court had not abused its discretion in that case, the Federal
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`Circuit acknowledged in Dell that a stay may have been appropriate.
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`2.
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`Whether the Best Buy Defendants Agree to Be Bound by the Outcome of
`the Samsung Claims.
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`The Best Buy Defendants agree to be bound by the outcome of DoDots’ claims against
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`Samsung. ECF No. 45 at 8. DoDots does not address this factor in its briefing. ECF No. 51.
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`Because the Best Buy Defendants agree to be bound by the outcome of DoDots’ claims against
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`Samsung, the Court finds that this factor favors severing and staying the action against the Best
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`Buy Defendants.
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`3.
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`Whether Samsung Is the Only Source of the Infringing Product
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`Defendants argue that the amended complaint alleges that Samsung is the sole supplier of
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`the accused products. ECF No. 45 at 8. Defendants note that DoDots’ complaint does not implicate
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`any supplier of the accused products other than Samsung. Id. at 9. DoDots complains that
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`“Samsung’s statement is deliberately coy.” ECF No. 51 at 6. DoDots argues that Samsung has
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`failed to affirmatively state that it is the only entity that provides the accused products to Best Buy.
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`Id. DoDots argues that it does not have any information on which Samsung entity sells the accused
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`products to Best Buy. Id. DoDots argues that if the claims against Best Buy are stayed, DoDots
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`would be unable to obtain discovery regarding sales made to Best Buy by a Samsung entity in
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`Korea. Id. In their reply, Defendants state that “Samsung is the ‘sole supplier’ of the accused
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`Samsung products.” ECF No. 53 at 3. Defendants also note that “DoDots nowhere challenges the
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`third customer-suit factor weighs in favor of stay, i.e., that its allegations are solely directed at
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`Samsung for supplying the accused Samsung products.” Id. at 3 n.1. Based on DoDots’ complaint,
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`it seems that the accused Samsung devices allegedly “suppl[ied], distribut[ed], import[ed],
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`export[ed], s[old] and/or offer[ed] for sale” by Best Buy were supplied by Samsung. ECF No. 39
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`¶¶ 140, 146. DoDots discovery concerns are premature. Thus, the Court determines that this factor
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`weighs in favor of severing and staying the action against the Best Buy Defendants.
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`B.
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`Traditional Stay Factors
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`The Court gives great weight to the three factors considered under the customer-suit
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`exception. But, for the sake of completeness, the Court considers the traditional stay factors and
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`rejects Plaintiff’s concerns as to each.
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`1.
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`Whether DoDots Is Unduly Prejudiced by a Stay
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`Defendants argue that a stay will not unduly prejudice DoDots because the stay would not
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`delay DoDots’ ability to litigate its claims against Samsung, the manufacturer of the accused
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`products. ECF No. 45 at 9. Based on the allegations in the amended complaint, Defendants assert
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`that the relevant technical information is in Samsung’s or a third party’s possession. Id. at 9−10.
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`Defendants also claim that because DoDots’ amended complaint only alleges that Best Buy
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`infringes through its sale or offer for sale of Samsung’s accused devices, DoDots’ infringement
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`claims against Best Buy rise or fall with DoDots’ claims against Samsung. Id. at 9. In response,
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`DoDots argues that it will be prejudiced because it will “be forced to proceed against Samsung for
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`indirect infringement without charging any party with direct infringement.” ECF No. 51 at 7−8.
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`DoDots again cites UroPep for the proposition that a court should not stay and sever claims against
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`a customer-defendant accused of direct infringement when there are co-pending indirect
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`infringement claims against a manufacturer-defendant. Id. at 8.
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`The Court finds that this factor weighs in favor of a stay. A stay in this case—where the
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`accused product comes from the remaining defendant—does not significantly delay DoDots from
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`litigating the question of infringement. While DoDots claims that its indirect infringement claims
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`will be prejudiced if the Court severs and stays the case against the Best Buy Defendants, the Court
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`disagrees. DoDots’ indirect infringement theory is that Samsung “induc[es] Best Buy to sell the
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`Accused Samsung Devices.” ECF No. 51 at 4. Based on this indirect infringement theory, DoDots
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`does not need to show that the direct infringer, Best Buy, performs any particular steps to infringe
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`a method claim or adds any necessary components to infringe an apparatus claim. Best Buy’s sales
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`or offers for sale of the accused products infringe if Samsung infringes. Because of the nature of
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`DoDots’ indirect infringement claim, the Court finds that DoDots likely will not be unduly
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`prejudiced by a stay.
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`2.
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`Whether a Stay Would Simplify the Issues in this Case
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`Defendants argue that this factor weighs in favor of a stay because resolving the action
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`against Samsung first will simplify the action against the Best Buy Defendants. ECF No. 45 at 10.
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`Defendants argue that DoDots’ case against Best Buy is duplicative of its case against Samsung.
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`Id. And Defendants claim that it would simplify the issues to resolve the Samsung claims first
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`because fewer parties will be involved in day-to-day litigation. Id. Defendants argues that staying
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`the claims against the Best Buy Defendants will streamline the proceedings. Id. In response,
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`DoDots argues that a stay would not simplify the issues before the Court because it would
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`complicate the damages issues. ECF No. 51 at 5. DoDots argues that proving damages requires
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`information from customer defendants regarding their sales and profits. Id. at 6. DoDots claims
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`that a stay is not appropriate because Best Buy is the main source of information for the profits
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`and sales of indirect infringers. Id. DoDots argues that discovery on damages will necessarily
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`include Best Buy. Id. DoDots also claims that it should be able to obtain information from Best
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`Buy regarding Best Buy’s relationship with Samsung. Id. at 7. In their reply, Defendants argue
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`that DoDots fails to show why it would be able recover twice from both Samsung and the Best
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`Buy Defendants for sale of the same product. ECF No. 53 at 8. Further, Defendants argue that the
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`information DoDots seeks from Best Buy is also available to Samsung. Id. at 8−9.
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`The Court finds that this factor weighs in favor of a stay. As discussed above, the outcome
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`of DoDots’ claims against Samsung will “resolve the ‘major issues’ concerning the claims against
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`the customer.” Spread Spectrum, 657 F.3d at 1358. While DoDots may need information from
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`Best Buy regarding its sales of the accused products, Samsung likely possesses the relevant
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`information.
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`3.
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`Whether Discovery Is Completed and Whether a Trial Date Has Been Set
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`Defendants argue that this factor weighs in favor of a stay because, at the time this motion
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`was filed, discovery had not begun and a trial date had not been set. ECF No. 45 at 11. DoDots
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`does not dispute the outcome of this factor. ECF No. 51. The Court notes that after briefing was
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`complete on this motion, a scheduling order was entered in this case. ECF No. 57. Under the
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`scheduling order, discovery has begun and the trial date has been set. Id. (setting the opening of
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`fact discovery for June 25, 2023 and the trial date set for June 24, 2024). The Court finds that this
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`factor weighs against a stay.
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`IV. CONCLUSION
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`It is therefore ORDERED that Defendants’ Opposed Motion to Sever and Stay Claims
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`Under the Customer-Suit Exception is GRANTED. The Court’s Clerk is directed to sever the
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`claims against the Best Buy Defendants, including Best Buy Stores, L.P., BestBuy.com, LLC, and
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`Best Buy Texas.com, LLC. The Best Buy Defendants will remain in this action for the limited
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`purpose of allowing DoDots to conduct discovery. In the severed action against the Best Buy
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`Defendants, the Court’s Clerk is directed to include: Plaintiff’s Complaint (ECF No. 1); Notice of
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`Filing of Patent/Trademark Form (ECF No. 2); Rule 7 Disclosure Statement by DoDots (ECF No.
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`3); Notices of Attorney Appearances (ECF Nos. 5, 24, 32, 37); Summons Issued to Best Buy
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`Defendants (ECF Nos. 6, 7, 8); Pro Hac Vice Letters (ECF Nos.); Motions to Appear Pro Hac Vice
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`(ECF Nos. 14, 15, 16, 17, 18, 33, 34, 35, 36, 64, 67. 79); Orders Granting Pro Hac Vice (ECF Nos.
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`19, 20, 21, 22, 23, 41, 42, 43, 44, 65, 68, 81); Plaintiff’s Amended Complaint (ECF No 29);
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`Defendants’ Motion to Dismiss for Failure to State a Claim (ECF No. 38); Best Buy Defendants’
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`Rule 7 Disclosure Statement (ECF No. 39); Defendants’ Motion to Sever and Stay Claims Against
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`Best Buy (ECF No. 45); Plaintiff’s Motion for Leave to File Amended Complaint and Response
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`in Opposition to Joint Motion to Dismiss (ECF No. 46); Notice of Agreed Deadlines (ECF No.
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`47); Defendants’ Reply to the Joint Motion to Dismiss for Failure to State a Claim (ECF No. 50);
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`Plaintiffs’ Response to Defendants’ Motion to Sever and Stay Claims Against Best Buy (ECF No.
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`51); Plaintiff’s Reply in Support of its Motion for Leave to File a Second Amended Complaint
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`(ECF No. 52); Defendants’ Reply in Support of Motion to Sever and Stay Claims Against Best
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`Buy (ECF No. 53); Case Readiness Status Report (ECF No. 54); Defendants’ Sealed Motion to
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`Transfer Venue (ECF No. 58); Defendants’ Certificate of Service for Motion to Transfer (ECF No.
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`60); Redacted Copy of Defendants’ Sealed Transfer Motion (ECF No. 62); Notices of IPRs (ECF
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`Nos. 66, 69, 75, 89); Claim Construction Briefing (ECF Nos. 71, 73, 78, 82, 83); Plaintiff’s
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`Response to Defendants’ Transfer Motion (ECF No. 80); Defendants Reply in Support of Transfer
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`Motion (ECF No. 84); Redacted Version of Defendants’ Reply in Support of Transfer Motion
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`(ECF No. 87); the Protective Order (ECF No. 91); and this Order. The action against the Best Buy
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`Defendants will be stayed pending resolution of DoDots’ claims against Samsung.
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`SIGNED this 20th day of July, 2023.
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