Slingshot Printing LLC v. HP Inc.

Western District of Texas, txwd-6:2019-cv-00362

Opposed MOTION to Stay Case Pending Resolution of its Motion To Dismiss by HP Inc.

Interested in this case?

Current View

Full Text

0 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION § SLINGSHOT PRINTING LLC, § § Plaintiff, § § § CIVIL ACTION NO. 6:19-cv-362-ADA v. § § JURY TRIAL DEMANDED HP INC., § § Defendant. § § § HP INC.'S MOTION TO STAY PENDING RESOLUTION OF ITS MOTION TO DISMISS 0 TABLE OF CONTENTS I. INTRODUCTION .............................................................................................................1 II. LEGAL STANDARD ........................................................................................................1 III. ARGUMENT .....................................................................................................................3 A. Granting a Stay Would Not Unduly Prejudice Slingshot ......................................3 B. A Stay Will Simplify the Issues in Question and Trial of the Case ........................................................................................................................3 C. The Early Stage of the Case Favors a Stay ............................................................4 D. A Stay Will Reduce the Burden of Litigation on the Parties and the Court.................................................................................................................4 IV. CONCLUSION ..................................................................................................................4 i 0 TABLE OF AUTHORITIES Page(s) Cases Clinton v. Jones, 520 U.S. 681 (1997) ...................................................................................................................1 Crossroads Sys., Inc. v. Dot Hill Sys. Corp., No. A–13–CA–800, 2015 WL 3773014 (W.D. Tex. June 16, 2015) ........................................2 Datatreasury Corp. v. Wells Fargo & Co., 490 F. Supp. 2d 749 (E.D. Tex. 2006) .......................................................................................2 e-Watch, Inc. v. FLIR Sys., Inc., No. H–13–0638, 2013 WL 8695916 (S.D. Tex. Aug. 8, 2013).................................................4 EchoStar Techs. Corp. v. TiVo, Inc., No 5:05 CV 81, 2006 WL 2501494 (E.D. Tex. July 14, 2006) .................................................2 Gould v. Control Laser Corp., 705 F.2d 1340 (Fed. Cir. 1983)..................................................................................................1 Landis v. N. Am. Co., 299 U.S. 248 (1936) ...............................................................................................................1, 2 Landry v. Air Line Pilots Ass'n Int'l AFL-CIO, 901 F.2d 404 (5th Cir. 1990) .....................................................................................................2 NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058, 2015 WL 1069111 (E.D. Tex. Mar. 11, 2015) ..................................1, 3, 4 Norman IP Holdings, LLC v. TP-Link Techs. Co., No. 6:13-CV-384, 2014 WL 5035718 (E.D. Tex. Oct. 8, 2014) ...............................................3 PersonalWeb Techs., LLC v. Facebook, Inc., No. 5:13-CV-01356, 2014 WL 116340 (N.D. Cal. Jan. 13, 2014) ............................................3 Petrus v. Bowen, 833 F.2d 581 (5th Cir. 1987) .....................................................................................................2 Scroggins v. Air Cargo, Inc., 534 F.2d 1124 (5th Cir. 1976) ...................................................................................................2 Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005) ...............................................................................3 ii 0 VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307 (Fed. Cir. 2014)..................................................................................................4 Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d 795 (Fed. Cir. 1999)....................................................................................................2 Wolf Designs, Inc. v. Donald McEvoy Ltd., Inc., 341 F. Supp. 2d 639 (N.D. Tex. 2004) ......................................................................................2 Statutes 35 U.S.C. § 281 ................................................................................................................................1 Other Authorities Fed. R. Civ. P. 12(b)(6)....................................................................................................................1 Fed. R. Civ. P. 12(b)(7)....................................................................................................................1 iii 0 Defendant HP Inc. ("HP") respectfully requests that the Court stay this case pending a decision on HP's concurrently filed motion to dismiss Slingshot's First Amended Complaint ("Motion to Dismiss"). If HP's Motion to Dismiss is granted and Slingshot is ordered to join Funai Electric Co., Ltd. ("Funai") as a necessary party, then HP further requests that the case remain stayed until Funai is joined. I. INTRODUCTION HP's concurrently filed Motion to Dismiss demonstrates that: (1) Slingshot does not have all substantial rights in the patents-in-suit and therefore lacks statutory standing under 35 U.S.C. § 281 to bring and maintain this action; (2) Funai is an indispensable party and proceeding in this action without Funai's participation would be prejudicial to all parties and risks wasting Court and party resources; and (3) Slingshot's failure to join Funai warrants dismissal of the case for lack of the statutory right to sue under Fed. R. Civ. P. 12(b)(6) and 12(b)(7). Accordingly, a stay pending decision on HP's Motion to Dismiss is appropriate. A stay should be entered now, before the parties unnecessarily and improperly engage in patent contentions and claim construction without Funai's participation as a patent owner. If HP's motion to dismiss is denied, then the stay can be lifted and the litigation can proceed. If HP's motion to dismiss is granted, then the case should begin only after Funai is joined and the parties owning all substantial rights in the patents-in-suit are present to participate. II. LEGAL STANDARD A district court has the inherent power to control its own docket, including the power to stay proceedings. NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058, 2015 WL 1069111, at *1 (E.D. Tex. Mar. 11, 2015); Landis v. N. Am. Co., 299 U.S. 248, 254 (1936); Gould v. Control Laser Corp., 705 F.2d 1340, 1341 (Fed. Cir. 1983); Clinton v. Jones, 520 U.S. 681, 706 (1997). Management of a court's docket is "left to the sound discretion of the district court," and requires 1 0 only that the court "weigh the competing interests of the parties relating to the appropriateness of a stay." Wolf Designs, Inc. v. Donald McEvoy Ltd., Inc., 341 F. Supp. 2d 639, 642 (N.D. Tex. 2004) (citing Landis, 299 U.S. at 255). The Fifth Circuit has repeatedly recognized that a stay is appropriate where there is an early motion to dismiss the case because such motions are decided without need for discovery and because, if granted, the motion could dispose of the case and/or avoid undue expense and litigation activity. See, e.g., Landry v. Air Line Pilots Ass'n Int'l AFL-CIO, 901 F.2d 404, 435- 36 (5th Cir. 1990); see also Petrus v. Bowen, 833 F.2d 581, 583 (5th Cir. 1987) ("A trial court has broad discretion and inherent power to stay discovery until preliminary questions that may dispose of the case are determined."); Scroggins v. Air Cargo, Inc., 534 F.2d 1124, 1133 (5th Cir. 1976) (affirming a stay of any discovery unrelated to the defendant's motion because if the motion was granted, the parties will have avoided expensive general discovery); Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d 795, 804 (Fed. Cir. 1999) ("When a particular issue may be dispositive, the court may stay discovery concerning other issues until the critical issue is resolved.") (citations omitted). The party seeking the stay bears the burden of showing that the stay is appropriate under the particular circumstances of the case. Landis, 299 U.S. at 255; see also Datatreasury Corp. v. Wells Fargo & Co., 490 F. Supp. 2d 749, 754-55 (E.D. Tex. 2006). In considering a stay request, "[e]ssentially, courts determine whether the benefits of a stay outweigh the inherent costs." EchoStar Techs. Corp. v. TiVo, Inc., No 5:05 CV 81, 2006 WL 2501494, at *1 (E.D. Tex. July 14, 2006). Factors that guide this inquiry include: (1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify the issues in question and trial of the case; (3) whether discovery is complete and a trial date has been set; and (4) whether a stay will reduce the burden of litigation on the parties and the burdens on the Court. See, e.g., Crossroads Sys., Inc. v. Dot Hill Sys. Corp., No. A–13–CA–800, 2015 WL 3773014, at *2 (W.D. Tex. June 16, 2015) (granting stay of district court proceedings pending resolution of IPRs) (citation omitted); 2 0 Norman IP Holdings, LLC v. TP-Link Techs. Co., No. 6:13-CV-384, 2014 WL 5035718, at *2 (E.D. Tex. Oct. 8, 2014) (citing Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005)); NFC Tech., 2015 WL 1069111, at *2. III. ARGUMENT A. Granting a Stay Would Not Unduly Prejudice Slingshot A stay will not unduly prejudice Slingshot. Slingshot is a non-practicing entity that makes nothing and does nothing other than attempt to enforce patents it purportedly acquired. Therefore, Slingshot cannot reasonably claim any prejudice from a stay. HP has acted diligently with respect to its Motion to Dismiss and request for a stay, proceeding with these motions promptly after obtaining the underlying agreements between Slingshot and Funai. Moreover, the inherent delay associated with a stay cannot on its own constitute a basis for undue prejudice. See NFC Tech., 2015 WL 1069111, at *2 (the inevitable delay "factor is present in every case in which a patentee resists a stay, and it is therefore not sufficient, standing alone, to defeat a stay motion."); see also PersonalWeb Techs., LLC v. Facebook, Inc., No. 5:13-CV-01356, 2014 WL 116340, at *5 (N.D. Cal. Jan. 13, 2014) ("[A] delay inherent to a stay does not, in and of itself, constitute prejudice."). Because Slingshot will not suffer any undue prejudice from a stay, this factor weighs strongly in favor of staying the case. B. A Stay Will Simplify the Issues in Question and Trial of the Case As set forth in the Motion to Dismiss, in Funai's absence relief cannot be accorded among the existing parties. Due to Funai's rights in the patents-in-suit (see Motion to Dismiss), HP is at risk of future litigation over the patents-in-suit if this action proceeds without Funai. A stay will also prevent the potential duplication of work that may result from Funai being joined later into an 3 0 ongoing litigation. As an indispensable party, Funai needs to be present for, e.g., the patent contentions and claim construction that occur early in this Court's schedule. Accordingly, this factor also weighs in favor of staying the case. C. The Early Stage of the Case Favors a Stay Courts have recognized that stays early in litigation are favored because of their potential for conserving the parties' and the court's resources. See VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1317 (Fed. Cir. 2014) (holding that the early stage of litigation "heavily favors" a stay where the case was "still at its infancy"); see also e-Watch, Inc. v. FLIR Sys., Inc., No. H–13–0638, 2013 WL 8695916, at *1 (S.D. Tex. Aug. 8, 2013) (granting a stay where the case was "at a very early stage."). This case is in its infancy and no Case Management Conference has occurred. No patent contentions or claim construction positions have been exchanged, and no claim construction hearing or trial date has been set. The early stage of the case strongly favors a stay. D. A Stay Will Reduce the Burden of Litigation on the Parties and the Court When considering whether to stay a case, courts also consider a fourth factor: the burden placed on the parties and the Court. NFC Tech., 2015 WL 1069111, at *2. HP's Motion to Dismiss sets forth the burden on the parties and Court of litigating a case in which a necessary and indispensable party is not present. For example, there exists the prospect of multiple actions and/or multiple sets of contentions and claim construction proceedings on the patents-in-suit if Funai is not joined or joined later in the proceedings. These concerns will be compounded the longer the case is not stayed. This factor also weighs heavily in favor of a stay. IV. CONCLUSION For the foregoing reasons, HP respectfully requests that the Court grant this motion and stay the case pending resolution of HP's Motion to Dismiss. In the event that HP's Motion to Dismiss is granted and Slingshot is ordered to join Funai as a necessary party, HP requests that the 4 0 Court continue the stay until Funai can be joined, or dismiss the case if Funai's joinder is not possible. Dated: December 13, 2019 Respectfully submitted, /s/ Barry K. Shelton Rick L. Rambo Texas State Bar No. 00791479 rick.rambo@morganlewis.com MORGAN, LEWIS & BOCKIUS LLP 1000 Louisiana Street, Suite 4000 Houston, Texas 77002-5006 T: 713.890.5000 F: 713.890.5001 Andrew V. Devkar (pro hac vice) andrew.devkar@morganlewis.com 2049 Century Park East, Suite 700 Los Angeles, CA 90067-3109 T. 310.907.1000 F. 310.907.2000 Amanda S. Williamson (pro hac vice) amanda.williamson@morganlewis.com 77 West Wacker Drive, Fifth Floor Chicago, IL 60601 T. 312.324.1000 F. 312.324.1001 Barry K. Shelton Texas State Bar No. 24055029 SHELTON COBURN LLP 311 RR 620, Suite 205 Austin, TX 78734-4775 bshelton@sheltoncoburn.com (512) 263-2165 (Telephone) (512) 263-2166 (Facsimile) Counsel for Defendant HP Inc. 5 0 CERTIFICATE OF CONFERENCE Pursuant to Local Rule CV-7-1(i), the undersigned hereby certifies that on December 3, 2019 he conferred with counsel for Plaintiff, Mr. Ron Daignault, who stated that Plaintiff is opposed to the relief requested herein. /s/ Barry K. Shelton Barry K. Shelton CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the above and foregoing document has been served on all counsel of record via the Court's ECF system. /s/ Barry K. Shelton Barry K. Shelton 6