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Allen v. World - A Pattern of "Do-Overs" - UPDATED
Friday, July 08 2011 @ 09:00 AM EDT

My father had a sign hanging in his office that said "If you don't have time to do it right the first time, what makes you think you will have time to do it over?" With the clear exception of my typing, this is an approach I have long worked to embrace.

It would seem Interval Licensing could stand to do the same. When you watch a party's actions in a case long enough, you start to see patterns to their behavior, and in Interval's case it is the failure to meet deadlines and/or make the best argument the first time.

We see that again in the case of Interval's motion for reconsideration [PDF] of the order granting a stay in the case pending the outcome of the reexaminations by the U.S. Patent and Trademark Office. Why should the court reconsider? What new facts does Interval say have come to its attention to justify the reconsideration? That is exactly the point that the defendants make in their response [PDF] to the motion.

As stated in the defendants' response, the legal standard for reconsideration is (a) manifest error in the prior ruling or (b) new facts or legal authority which could not have been brought to the court's attention earlier with reasonable diligence. Moreover, these errors or new information must be specifically denominated.

While we agreed that Interval had raised an interesting issue in its argument that:

not all of the defendants are parties to the reexaminations and thus they can further delay any future trial by seeking further reexaminations (only the party(ies) petitioning for reexamination are bound by the resulting USPTO decision; other parties may still seek further reexamination)

this is not a new fact or new legal authority that Interval couldn't have been aware of in its earlier response to the motion to stay. In fact, Interval's only hope is that the court agrees this was an oversight or error on the part of the court.

As for the missed deadlines, they show up in two of the reexaminations - USPTO Case Nos. 95/001576 and 95/001577. In each of those cases Interval pleaded that, due to the fact it had lost its patent counsel as a result of a subsequent conflict of interest (one of the defendants had acquired a client represented by patent counsel and patent counsel had to withdraw due to the subsequent conflict of interest) and had required a whole week in which to find new counsel, it now needed four months instead of the typical two months in which to respond to the first office action in each case. The USPTO, in an abundance of sympathy, agreed to an extension in each case of . . . one week.

It will be interesting to see if this pattern of "do over" requests continues.

***************

Defendants' Response to Interval's Motion for Reconsideration

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

INTERVAL LICENSING LLC, Plaintiff, v. AOL, INC. et al, Defendants. CASE NO. C10-1385-MJP

DEFENDANTS’ JOINT RESPONSE TO PLAINTIFF’S MOTION FOR RECONSIDERATION
OF ORDER STAYING CASES PENDING REEXAMINATION

Note on Motion Calendar: July 5, 2011

LEAD CASE NO. C10-1385-MJP

Pursuant to the Court’s Minute Order dated June 29, 2011 (Dkt. 255), Defendants respectfully file this joint response to Plaintiff’s motion for reconsideration. (Dkt. 254.) Plaintiff’s motion should be denied because Plaintiff has not presented a proper basis for reconsideration of the Court’s order staying this action. The Court’s order was correct and based on a reasoned analysis. Plaintiff does not identify any error, let alone any “manifest error,” in the Court’s reasoning or analysis. The Court considered the same three factors used by district courts throughout the United States (factors not disputed by Interval), and properly granted a stay in this case following the PTO’s decision to order reexamination of all four patents-in-suit. (Dkt. 251.) Plaintiff does not identify new legal authority to alter that outcome, and Plaintiff’s purported “new facts” are neither new nor provide a basis to alter the Court’s Order.

I. Legal Standard for Motions for Reconsideration

“Motions for reconsideration are disfavored” and will ordinarily be denied “in the absence of manifest error in the prior ruling or a showing of new facts or legal authority which could not have been brought to [court’s] attention earlier with reasonable diligence.” L.R. 7(h)(1); Avocent Redmond Corp. v. Rose Elecs., Inc., No. C 06-1711 MJP, 2008 WL 3875869, at *1-2 (W.D. Wash. Aug. 18, 2008) (Pechman, J.) (denying motion for reconsideration of order staying patent litigation pending reexamination). Failure to “point out with specificity the matters which the movant believes were overlooked or misapprehended by the court [and] any new matters being brought to the court’s attention for the first time” may be grounds for denial of the motion. L.R. 7(h)(2). Interval’s motion does not meet these requirements for reconsideration.

II. Interval Fails To Identify Any New Facts, New Legal Authority or Manifest Error

Interval’s argument that a stay would be inappropriate given its allegedly significant investment in the litigation is not a basis for reconsideration. As reflected in the Order, the Court considered the current stage of the litigation and that the parties were about to submit claim construction briefs and argue claim construction. (Dkt. 251 at 2:2-4, 2:16-3:1.) The Court specifically rejected the argument that work done on the case to date would be wasted. (Id. at 2:22-3:1.) Moreover, the “work” Plaintiff claims to have done is typical of patent litigation, certainly could have been (and was) raised by Plaintiff earlier, and was consistent with the Scheduling Order in place during the original briefing on the Motion to Stay.

Interval has made no credible showing that any of the work of its experts would be “wasted,” and its argument provides no basis for reconsideration. The Protective Order expressly allows Interval’s experts to memorialize the results of their analysis by taking notes and printing out portions of the Defendants’ source code to the extent necessary to prepare expert reports or infringement contentions. (Dkt. 222, at 15:16-20, 15:24-26.) Interval’s experts could simply pick up where they left off in the unlikely event the patents-in-suit survive reexamination in their current form. None of the purportedly “additional work” identified by Plaintiff (Dkt. 255 at 4:1-5:25) was unexpected or unknown to Interval when it opposed the Defendants’ initial motion or when it filed a further opposition on June 7, 2011. (Dkt. 246.)

Interval’s allegedly wasted effort pales in comparison to the enormous waste of judicial resources that might have resulted had the Court proceeded with claim construction while all four patents-in-suit are under reexamination. Claim construction would waste the Court’s and parties’ time and resources if even one of the following events takes place: (1) the claims do not survive reexamination, (2) the claims are amended, or (3) Interval makes arguments to the Patent Office attempting to distinguish its purported inventions from the prior art. (Dkt. 198 at 6:15- 8:13, 11:5-12:2; Dkt. 211 at 4:14-5:15.) The Court’s Order came just in time to eliminate this potential waste by saving the Court and the parties from investing further resources in claim construction and the work that would follow.

Interval does not dispute that the PTO has issued Office Actions rejecting nearly all of the asserted claims (29 of 31 claims rejected) of two of the patents-in-suit. (Dkt. 247-2 at p. 26 (rejecting 14 of 16 claims at issue in ’682 patent); Dkt. 247-5 at p. 15 (rejecting all 15 claims at issue in the ’314 patent).) Interval is now obligated to concede the invalidity of those claims, amend them, or make arguments to the PTO as to their validity that will necessarily affect claim scope. See, e.g., Vitronics Corp. v. Conceptronic, Inc., 36 F. Supp. 2d 440, 442 (D.N.H. 1997) (“Because determining the scope of the disputed claim is central to the resolution of this case, it would be inefficient for the court to expend time and resources engaging in claim interpretation while the scope of the claim is still under review at the PTO.”). Nor does Interval dispute that the PTO has also ordered a reexamination of all asserted claims of the other two patents-in-suit (the ’507 and ’652 patents). Interval’s re-argument that certain defendants joined particular petitions (Dkt. 206, at p. 6) misses the point. The proper construction of the patents-in-suit necessarily affects all defendants, and there is no doubt that the intrinsic record that the Court must consult to construe those patents will change as a result of the ongoing reexaminations.

The first argument in the only claim construction brief Interval filed (for the ’652/’314 patents) is an example of the reasons that a stay was appropriate here. In that claim construction brief, Interval argued that the asserted claims of the ’314 patent do not cover the screen saver embodiment disclosed in the specification. (Dkt. 251, at pp. 4-5.) In ordering reexamination and rejecting the ’314 patent claims over Kjorsvik’s disclosure of a screen saver, the Examiner appears to have reached exactly the opposite conclusion. (Dkt. 247-5 at p. 7.) Thus, contrary to Interval’s arguments (which it could have raised before), the PTO’s actions confirm that pursuing litigation while the intrinsic record remains in flux is certain to waste judicial and party resources.

Interval’s assertion that the Patent Office has not adopted the Defendants’ invalidity proposals is misleading. All four orders granting reexamination and the two Office Actions issued to date rely exclusively on the prior art cited in the reexamination requests. That the Examiner used somewhat different grounds for the rejections does not change the fact that the claims were rejected, or that Interval is now obligated to respond to those rejections. Interval’s related contention that the Examiner used only a subset of the prior art identified in the reexamination requests is also irrelevant, and Interval concedes that the Examiner is free to use that art later in the reexaminations. (Dkt. 254, at 6:13-14, 6:22-24.)

Interval’s argument that the stay imposes an undue burden on its experts due to their continuing obligations under the Protective Order is not a “new” fact and has no bearing here. Interval has been on notice that Defendants were likely to pursue reexamination since the parties submitted their first Joint Status Report. Interval’s experts voluntarily undertook paid positions knowing that there would be restrictions on their participation in patent prosecution matters going forward, and they knew that there were no guarantees as to how long those obligations would continue. In fact, the Protective Order makes clear that the prosecution bar does not expire until a full year “after the final resolution of this action, including all appeals.” (Dkt. 222, at 5:24-6:1.) Interval has not approached any defendant seeking release from these provisions, nor has it explained why relief as to a particular individual is presently required.

Finally Interval’s suggestion of a recent trend denying stays pending reexamination despite the resulting waste of judicial resources and prejudice to defendants is unsupported and raises no new facts or law. In their original moving papers, Defendants detailed both the potential for undue prejudice to the Defendants and the inaccuracy of Interval’s argument about any “trend” to deny stay motions. (Dkt. 198 at 10:27-12:2; Dkt. 211 at 5:16- 6:24 and 2:20- 3:19.) Further, upon a brief review, Defendants have identified several new cases confirming that district courts continue to routinely grant stays pending reexamination. See, e.g., Ohio Willow Wood Co. v. Alps South LLC, No. 2:05–cv–1039, 2011 WL 2358649, at *5 (D. Ohio June 9, 2011); LMT Mercer Group, Inc. v. Maine Ornamental, LLC, No. 10–4615, 2011 WL 2039064, at *13 (D.N.J. May 24, 2011); Microsoft Corp. v. TiVo Inc., No. 10–CV–00240, 2011 WL 1748428, at *7 (N.D. Cal. May 6, 2011). There simply is no “trend” against granting stays.

CONCLUSION

Interval’s request for reconsideration should be summarily denied because it fails to meet the requirements for reconsideration. Interval does not identify a manifest error, nor does it identify new facts or new legal authority. Moreover, the “facts” Interval does rely upon and the arguments it makes were either considered by the Court, confirm the Court’s decision was correct – or both. Defendants respectfully request that the Court deny Plaintiff’s motion for reconsideration.

DATED this 5th day of July, 2011.

/s/Molly A. Terwilliger (with permission) Molly A. Terwilliger, WSBA No. 28449
mollyt@summitlaw.com
SUMMIT LAW GROUP PLLC
315 Fifth Avenue S., Suite 1000
Seattle, Washington 98104
Tel: (206) 676-7000
[And other counsel on behalf of the defendants.]

Here are the most recent filings:

06/29/2011 - 255 - MINUTE ORDER - The Court invites the Defendants to file a joint response of no more than four pages that shall be due by Tuesday, July 5, 2011. (Dkt. No. 254) Plaintiff's motion for reconsideration, by Judge Marsha J. Pechman. (Minute Order posted in C10-1385MJP and all related actions)(MD) (Entered: 06/29/2011)

07/05/2011 - 256 - RESPONSE RE 254 MOTION for Reconsideration, by Defendants AOL Inc, Apple Inc, Facebook Inc, Google Inc, Netflix Inc, Office Depot Inc, OfficeMax Inc, Staples Inc, Yahoo! Inc, YouTube LLC, eBay Inc, (Jost, Shannon) Modified on 7/5/2011: added link to motion (HBR). (Entered: 07/05/2011)

**************

UPDATE

Well, the defendants didn't have the last word after all. Interval subsequently filed a reply [PDF] to the defendants' reply. In it Interval argues that the cases cited by defendants with respect to district courts routinely granting stays missed the mark. Interval then cites to several cases where stays were denied. The problem with this (and it goes to the point above about Interval consistently failing to make the right argument at the right time) is Interval is not arguing about the law pertaining to reconsideration, i.e., manifest error or new law or facts that weren't previously available, it is arguing simply that other court's have not been so generous in granting stays. On point, this from a judge's order in another infringement case:

"The Supreme Court has long recognized that district courts have broad discretion to manage their dockets, including the power to grant a stay of proceedings." Procter & Gamble Co. v. Kraft Foods Global. Inc., 549 F.3d 842, 848-49 (Fed. Cir. 2008) (citing Landis v. N. Am. Co., 299 U.S. 248,254-55 (1936)). "It is well-settled law that a district court may exercise [such] discretion when ruling on a motion to stay proceedings pending reexamination of the patents-in-suit by the PTO." NTP. Inc. v. Research In Motion. Ltd., 397 F. Supp. 2d 785, 787 (E.D. Va. 2005).

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

INTERVAL LICENSING LLC,
Plaintiff,
v.
AOL, INC. et al,
Defendant.

Lead Case No. 2:10-cv-01385-MJP

REPLY TO INTERVAL’S MOTION FOR RECONSIDERATION OF COURT’S ORDER GRANTING

Interval respectfully files this Reply to its Motion for Reconsideration of the Court’s Order Granting Defendants’ Motions to Stay (Dkt. # 254; the “Motion”). Defendants filed a joint opposition to the Motion on July 5, 2011. (Dkt. # 256). Interval files this short Reply to respond to two of the arguments raised in defendants’ opposition.

Defendants argue that “district courts continue to routinely grant stays pending reexaminations.” Opposition at 4. But none of the three cases that defendants cite supports their position that a stay is appropriate here. In LMT Mercer Group v. Maine Ornamental, LLC, 2011 WL 2039064, *4 (D.N.J. May 24, 2011), the parties had not produced a single document, had not responded to discovery requests, and no trial date had been set. Similarly, the Ohio Willow Wood Co. v. Alps South LLC action had not proceeded past the initial stages of discovery—the parties had only recently exchanged infringement and validity contentions and no Markman hearing or trial date had been set. 2011 WL 2358649, *4 (S.D. Ohio June 9, 2011). Likewise, there was no trial date set in Microsoft Corp. v. TiVo Inc., 2011 WL 1748428, *3, *6 (N.D. Cal. May 6, 2011), and the parties had exchanged a total of 834 documents. In addition, Microsoft had filed a complaint with the International Trade Commission in which it accused the same TiVo products and asserted patents that are related to the patents asserted in the district court. Id. at *2.

Unlike the cases cited by defendants, two recent cases denying motions to stay pending reexamination are on point. The Northern District of California recently denied Apple’s request for a stay pending reexamination in Affinity Labs of Texas, LLC v. Nike, Inc. and Apple Inc., 2011 WL 1833122 (N.D. Cal. May 13, 2011). In that action, Apple moved to stay the case at a time when the parties had “exchanged very little discovery,” “[n]o trial date ha[d] been set, and the parties ha[d] not yet appeared for a case management conference.” Id. at *1. But Judge Wilken denied the stay because she concluded that the “second factor—whether a stay would simplify the issues presented in this action—is neutral.” Id. As Judge Wilken correctly noted, “it is unlikely that the reexamination proceeding will resolve all of the issues regarding the two patents in question in this lawsuit. Thus, the Court would be left to adjudicate the remaining issues.” Id. In addition, the court noted that “[a] stay may prejudice Affinity’s ability to enforce and license its patents, and could lead to a loss of evidence.” Id. at 2. The court also pointed out that “Apple waited nine months after Affinity filed the present suit before requesting the reexaminations.” Id. Here, the facts supporting a denial of the stay are even more compelling than in Affinity Labs because the parties have engaged in substantial discovery and the actions are set for trial in approximately one year.

Similarly, the District of Delaware recently denied a motion to stay in Nokia Corp. v. Apple Inc., 2011 WL 2160904 (D. Del. June 1, 2011). Importantly, in that case Apple opposed the stay, relying on many of the same arguments that Interval has asserted here. Apple argued that “[a]s to the five re-examination requests that the Patent Office has granted, they are weak on the merits. Thus, the likelihood that re-examination will eliminate or narrow Apple’s infringement claims is very low and, at this point, speculative.” Ex. 1 at p. 5 of 23 (Apple’s Opposition to Motion for a Stay)1. [FN.1 - When the District of Delaware denied the stay, the PTO had issued a notice of allowance of one patent and issued three rejections of the other patents. See Ex. 2 (Jan. 3, 2011 Letter to The Honorable Gregory M. Sleet.). Relevant portions of Exhibits 1 and 2 are highlighted in yellow.] Similar to Interval’s argument here, Apple pointed out that “[t]he whole re-examination process can thus be expected to take at least two years and perhaps over six years. By that time, the district court trial and appeal should be long finished.” Id. at 12 of 23. Apple also noted that “Nokia has sought ex parte re-examination, and therefore, even if Nokia loses completely on every argument before the Patent Office, it will no doubt seek to return to this Court and repeat the same losing arguments based on the same prior art.” Id. at 14 of 23. The same is true here. Two of the four reexaminations are ex parte reexaminations, and not all of the defendants against whom the patents are asserted signed on to the two inter partes reexaminations. Finally, Apple argued that the reexamination would not necessarily simplify the case because the “Patent Office review on a re-examination is limited to a narrow scope of issues; specifically whether prior art or printed publications are invalidating. See 35 U.S.C. §§ 301, 302. Nokia can lose on those issues and still return to this Court and continue to litigate the validity of the patents under different theories and evidence.” Id. at 15 of 23. Apple is absolutely correct, and that argument applies with equal weight here.

Defendants contend that “Interval’s re-argument that certain defendants joined particular petitions [] misses the point.” Opposition at 3. Not true. Despite multiple opportunities, defendants have made no attempt to explain why only certain defendants signed the requests for reexamination. As Interval made clear in its motion, the only explanation for such conduct is gamesmanship. Interval will vigorously oppose any attempt by defendants (1) to evade the results of the reexamination by arguing that a particular defendant did not sign a particular request or (2) to perpetuate the stay by having a party who did not originally sign the request for reexamination submit a new request for reexamination.

CONCLUSION

For the reasons set forth in its Motion, Interval respectfully requests that this Court reconsider its Order staying the actions pending reexamination, and order that they proceed to trial on a schedule consistent with the Court’s revised scheduling order (Dkt. # 248).

Dated: July 6, 2011

/s/ Justin A. Nelson
Justin A. Nelson
WA Bar No. 31864
E-Mail: jnelson@susmangodfrey.com
Edgar G. Sargent
WA Bar No. 28283
E-Mail: esargent@susmangodfrey.com
Matthew R. Berry
WA Bar No. 37364
E-Mail: mberry@susmangodfrey.com
SUSMAN GODFREY L.L.P.
1201 Third Ave, Suite 3800
Seattle, WA 98101
Telephone: (206) 516-3880
Facsimile: (206) 516-3883
[and other counsel for Interval]

and the further filings:

07/06/2011 - 257 - REPLY, filed by Plaintiffs Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, Interval Licensing LLC, TO RESPONSE to (Attachments: # 1 Exhibit 1, # 2 Exhibit 2)(Nelson, Justin) (Entered: 07/06/2011)


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