Enhanced Sec. Research LLC v. Cisco Sys. Inc., C.A. No. 09-571-JJF (D. Del. June 25, 2010) (Farnan,...

8/9/2019 Enhanced Sec. Research LLC v. Cisco Sys. Inc., C.A. No. 09-571-JJF (D. Del. June 25, 2010) (Farnan, J.).

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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF DELAWARE

ENHANCED SECURITY RESEARCH, LLC,and SECURITY RESEARCH HOLDINGSLLC,

P l a i n t i f f s ,v.

CISCO SYSTEMS, INC.,INTERNATIONAL BUSINESS MACHINESCORPORATION, CHECK POINT SOFTWARETECHNOLOGIES, LTD., CHECK POINTTECHNOLOGIES INC., SONICWALL,INC., 3COM CORPORATION, NOKIACORPORATION, NOKIA, INC.,FORTINET, INC., and SOURCEFIRE,INC. Defendants.

C.A. No. 09-571-JJF

Martin R. Lueck, E s q u i r e ; Sara A. Poulos, E s q u i r e ; Cole M.Fauver, E s q u i r e ; J u l i a Dayton Klein, E s q u i r e ; Brenda L. J o l y ,Esquire ; and Loren L. Hansen, Esquire o f ROBINS, KAPLAN, MILLER &CIRESI L . L . P . , Minneapol i s , Minnesota.Steven J . B a l i c k, E s q ui r e ; John G. Day, E s q u i r e ; T i f f a n y GeyerLondon, E s q u i r e ; and C a r o l i n e Hong, Esquire o f ASHBY & GEDDES,Wilmington, Delaware.Attorneys f o r P l a i n t i f f s Enhanced S e c u r i t y Research, LLC andS e c u r i t y Res ea rc h Ho ld ings LLC.Henry B. Gutman, E s q u i r e ; Noah M. Leibowi tz , E s q u i r e ; and V i c t o rCole, Esquire o f SIMPSON THACHER & BARTLETT LLP, New York, NewYork.J e f f r e y E. Ostrow, Esquire o f SIMPSON THACHER & BARTLETT LLP,Palo Alto , C a l i f o r n i a .Jack B. Blumenfeld, E s q u i r e , and Rodger D. Smith I I , Esquire o fMORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilm ingto n, Delawa re .Attorneys f o r Defendants Cisco Systems, I n c . and 3ComCorporat ion .Charles L. P a n n e ll , E sq ui r e ; Holmes J . Hawkins, I I I , E s q u i r e ; andNatasha H. M o f f i t , Esquire o f KING & SPALDING LLP, A t l a n t a ,Georgia.Richard L. Horowitz, Esquire and David E. Moore, Esquire o fPOTTER ANDERSON & CORROON, LLP, Wilm ingto n, Delawa re .


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Attorneys fo r I n t e rna t i ona l Business Machines Corpora t ion .Edward J . DeFranco, Esquire of QUINN EMANUEL URQUHARRT OLIVER &HEDGES, LLP, New York, New York.Jack B. Blumenfeld, Esquire , and Rodger D. Smith I I , Esquire ofMORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington , Del aware.Attorneys fo r Defendants Check Point Software Technologies Ltd .and Check Point Software Technolog ie s Inc .Chris t ine S. Watson, Esqui re ; Colby B. Spr in ge r, E sq uir e; andKenneth B. Wilson, Esquire of CARR 7 FERRELL, LLP, Palo Alto ,Cal i fo rn ia .George Pazuniak, Esquire of WOMBLE CARLYLE SANDRIDGE & RICE PLLC,Wilmington, Delaware.Attorneys fo r Defendant Sonic Wall, Inc .Robert F. P erry , E squ ire of KING & SPALDING LLP, New York, NewYork.Steven T. Snyder, Esquire of KING & SPALDING LLP, Char lo t t e ,North Caro l ina .Je f f rey L. Moyer, Esqui re , and Sarah R. Staf fo rd , Esquire ofRICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware.Attorneys fo r Defendants Nokia Inc . and Nokia Corpora t ion .Stefani E. Shanberg, Esqui re , and Robin L. Brewer, Esquire ofWILSON SONSINI GOODRICH & ROSATI, Palo Alto , Cal i f o rn i a .Richard H. Morse, Esqui re , and James L. Higgins, Esquire of YOUNGCONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware.Attorneys fo r Defendant For t ine t , Inc.Peter J . Davis, Esquire; Alexander J . Had jis , E su ire ; andElizabeth A. R ic ha rd son, E squir e of MORRISON & FOERSTER LLP,Washington, D.C.Mary B. Graham, Esquire of MORRIS, NICHOLS, ARSHT & TUNNELL LLP,Wilmington, Delaware.Attorneys fo r Defendant Sourcef i re Inc.

MEMORANDUM OPINION

June , 2010Wilmingt on , Delawa re


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P re se ntly before the Cour t are the fo l lowing Motions: (1)Motion To Consolidate Cases (0 .1 . 50) f i l ed by Pla in t i f f sEnhanced Secur i ty Research, LLC and Secur i ty Res ea rc h Ho ld ingsLLC; (2) Motion To Stay Pending Outcome Of ReexaminationProceedings (0 .1 . 82) f i l ed by Defendant For t ine t , Inc . l ; and (3)Motion To Supplement The Record On For t ine t ' s Motion To Stay(0 .1 . 124) f i l ed by Defendant For t ine t , Inc . For th e reasons tobe discussed , P l a i n t i f f s ' Motion To Consolidate wi l l be denied asmoot, For t ine t ' s Motion To Supplement wi l l be denied , andDefendants ' Motion To Stay wil l be gran ted .I . Background

On May 29, 2009, P l a i n t i f f Enhanced Secur i ty Research, LLCf i l ed a pa ten t inf r ingement a ctio n a ga in st Defendants CiscoSystems, Inc . ("Cisco") , In te rna t iona l Business MachinesCorporation ("IBM"), Check Point Software Technologies , Ltd . ,Check Point Software Technolog ie s Inc . ("Check Poin t " ) ,SonicWALL, I nc . , 3Com Corporat ion ("3Com"), Nokia Corporat ion,Nokia, Inc . ("Nokia") , F or t in et , In c. , and Source f i re , Inc .( co l lec t ive ly , "Defendants") .2 On August 3, 2009, Pla in t i f f sEnhanced Secur i ty Research, LLC and Secur i ty Research Holdings

I Defendants 3Com, Cisco, Sourcef i re , IBM, Sonicwal l , Nokia,Check Point have jo ined For t ine t ' s Motion To Stay . (0 .1 . 104,105, 106, 107, 108, 112.)

2 Enhanced Sec. Research, LLC v. Cisco Sys . , Inc . , e t a l . ,09-390-JJF.


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LLC ( co l l ec t ive ly , " P la in ti f fs ") f ile d t h i s pa ten t in f r ingementa ctio n a ga in st Defendants. Both act ions a l l ege t h a t Defendantsd i r e c t l y and con t r i bu to r i l y i n f r inged U.S. Patent Nos. 6,119,236(the " '236 patent" ) and 6,304,975 BI ( the " '975pa tent" ) ( co l l ec t ive ly , the "pa t en t s - i n - su i t " ) . 3

On Ju ly 20, 2009, t h i r d par ty Juniper Networks, Inc . f i l ed areques t fo r i n t e r par te s reexaminat ion of the '975 pa ten t . (0 .1 .103, Garber Decl . , Ex. A.) The U.S. Patent and Trademark Office("PTO") granted reexaminat ion with respec t to every claim of th e'975 pa ten t on August 28, 2009. ( Id . , Ex. B .) For t ine t thenf i l ed a reques t fo r ex par te reexaminat ion of the o the r pa t en t -i n - su i t , th e '236 pa ten t , with the PTO on November 24, 2009.( Id . , Ex. D.) Although th e PTO had not ru l ed on t h i sreexaminat ion reques t a t the tim e Defe nd an ts f i l ed t h e i r MotionTo Stay, it has s ince granted reexaminat ion wi th r e spec t to everyclaim of the '236 pa ten t on Apr i l 7, 2010. (0 .1 . 160, a t 1 . )Accordingly, th e pa t en t s - i n - su i t a re both in reexaminat ion , andwi l l be reexamined by the same Primary Examine r.II . Part ies ' Contentions

(Id . )

By t h e i r Motion To Stay, Defendants ask th e Cour t to s tayt h i s lawsui t pending the reexaminat ions of the pa t en t s - i n - s u i t by

3 The f i r s t pa ten t infr ingement act ion wi l l be dismissedbecause the Cour t concludes t ha t Enhanced Secur i t y Research, LLClacks Art ic le I I I s tanding . Accordingly, P l a i n t i f f s ' Motion ToConsol idate cases wi l l be denied as moot.

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the PTa. (0 .1 . 102, a t 1 .) Defendants genera l ly contend t ha tt he re i s a l i b e r a l po l icy in favor of grant ing motions to s taypending the outcome of PTa reexaminat ion proceed ings , and makemuch of the f ac t t ha t th e reexaminat ion proceedings fo r th e '975pa ten t a re a l l eged ly moving a t an "ex t r ao rd ina r i l y rap id andresounding r a t e " . ( Id . a t 1, 5.) More spec i f i c a l l y , Defendantscontend t ha t a s t ay i s warranted in t h i s ac t ion becausePla in t i f f s do not prac t i ce the pa t en t s - i n - su i t and wi l l not beharmed or p re ju dic ed in any s i gn i f i c an t way, and t ha t a delay inth e r e so lu t ion of t h i s act ion i s not undue pre jud ice , in and ofi t s e l f . (Id. a t 6 .) According to Defendants , no pre jud ice wi l lr e su l t from a s tay because t h i s act ion i s still in th e ea r lys tages of l i t i g a t i o n , Pla in t i f f s seek only monetary damages andany add i t iona l delay can be compensated by t h a t l ega l remedy, andth e pa t en t s - i n - su i t do not exp ire fo r severa l yea r s . ( Id . a t 6-7 .) Fur ther , De fendan ts c on te nd t h a t a s t ay i s warran ted becauseit wi l l s i gn i f i c an t l y reduce the burden and expense on both th eCourt and the pa r t i e s . (Id. a t 8 .) Defendants argue t ha ts impl i f i ca t ion of the i s sues i s espec ia l ly l i ke ly in t h i sins tance because some or a l l of the c laim s of the pa t en t s - i n - s u i ta re l i ke ly to be c an ce lle d o r amended. ( Id . a t 9.)

Pla in t i f f s oppose a s t ay , and contend t ha t th e reexaminat ionproceedings fo r th e '975 pa ten t a re unremarkable . (0 .1 . 109, a t4.) P l a i n t i f f s contend t h a t the es tim ated leng th of the PTa's

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reexaminat ion process i s up to s ix and a ha l f yea r s , and t h a t as tay would make it d i f f i c u l t fo r P l a i n t i f f s to l ic en se th epa t e n t s - i n - s u i t . ( Id . a t 5 .) Accord ing ly , P la in t i f f s argue t h a tal though the pa t e n t s - i n - s u i t are not due to exp ire fo r qu i t e somet ime, a s t ay could e f f e c t i ve l y ev i s ce r a t e P l a i n t i f f s ' r i gh t s o fexc lus iv i ty fo r the remainder o f the l i v e s o f the pa t en t s - i n - s u i tand cause undue pre jud ice . ( Id . ) Fur ther , P la in t i f f s contendt h a t they wi l l be pre jud iced by being forced to spend l a rge

amounts of money defending th e pa t e n t s - i n - s u i t duringreexaminat ion p ro c eedi ng s w ith ou t th e bene f i t o f being able toenforce t h e i r r i gh t s o f exc l u s i v i ty . ( Id . a t 5-6 . ) P l a i n t i f f sa lso contend t h a t a s ta y w il l no t s im p lify th e i s sues because th ei n t e r par t e s r eexaminat ion of the '975 pa ten t i s no t b in din g andwi l l no t have a prec lus ive e f f e c t on any of Defendan t s 'arguments, and th e ex par t e reexaminat ion o f th e ' 236 pa ten t wi l lnot have a prec lus ive e f f e c t on any of Defendants ' arguments .( Id . a t 7 . ) Fina l ly , P l a i n t i f f s contend t ha t th e f a c t t ha t th ecase remains in i t s ea r ly s t ages i s not d i spo s i t i v e o f whether as tay should be granted . ( Id . a t 9 .)

Defendants r ep ly t h a t the es t imated leng th o f r eexaminat ioni s not as long as P la in t i f f s sugges t , and r e i t e r a t e t h a t non-p rac t i c i ng en t i t i e s such as Pla in t i f f s a re no t pre jud iced whenl i t i g a t io n is s tayed pending r eexaminat ion . (0 .1 . 116, a t 1 -2 . )Defendants add i t i ona l l y contend t ha t P l a i n t i f f s are ac tua l l y

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responsib le fo r unduly delaying th e reexaminat ion proceedings byrequest ing f i l i ng ex tens ions from the PTO. (Id . a t 2 .) In i t sMotion To Supplement, For t ine t reques t s l eave to supplement therecord with a copy o f the O ffice Action Response and assoc ia tedpapers t h a t Enhanced Secur i ty Research, LLC f i l ed with the PTO onJanuary 29, 2010 in connect ion with th e '975 pa t e n t ' sreexaminat ion . ( 0 . 1 . 141, a t 1 . ) For t ine t contends t h a t t h i svoluminous f i l ing of over 2800 pages demonstra tes " the l eg i t imacyof For t ine t ' s concerns regarding wasted resources , dup l ica t ivee f fo r t , po t en t i a l l y incons i s ten t r e su l t s , as wel l as thel ike l ihood t h a t th e reexaminat ion wi l l resolve a l l re l evan ti ssues in t h i s l i t i g a t i on . " ( Id . )

In response, Pla in t i f f s s t a t e t h a t while they do not opposeFor t ine t ' s proposed f i l i ng , supplementat ion i s unnecessarybecause it i s i r r e l evan t to the i s sues presen ted by th e Motion ToStay . ( 0 . 1 . 143, a t 1 . ) Pla in t i f f s contend t h a t submit t ing ane nt i re o ff ic e ac t ion response does not add to For t i n e t ' sarguments in favor of s t ay , and does not con t rad ic t the f ac t t h a ta s tay wi l l not serve j ud i c i a l economy.I I I . Discussion

(Id. a t 1-2 . )

A. Whether For t inen t Will Be Permi t ted To Supplement TheRecord

The Cour t concludes t h a t fu r ther supplementat ion of therecord i s not necessary for cons idera t ion of Defendants ' MotionTo Stay, and accordingly , the Motion To Supplement wi l l be

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denied. The Cour t fu l ly comprehends For t ine t ' s arguments infavor o f s up plemen ta tio n: t h a t such a voluminous o f f i c e ac t ionresponse undercu ts P l a i n t i f f s ' content ions t ha t th e '975reexamination i s unremarkable, and t ha t the record before the PTOi s highly dup l ica t ive of what wi l l be pu t before the Court int h i s ac t ion . The se a rg umen ts wi l l be considered in the contextof Defendants ' Motion To Stay , and in the Cour t ' s view, a vas tsupplementat ion of the record wi l l not s ign i f i c an t ly enhance theCourt ' s understanding or cons idera t ion of these arguments.

B. Whether Li t iga t ion Will Be Stayed Pending Reexamina ti onProceedingsThe d ec is io n to gran t o r deny a s tay i s w ith in the cour t ' s

broad range of d isc re t ionary powers. Dentsply I n t ' l , Inc. v.Kerr Mfg. Co. , 734 F. Supp. 656, 658 (D. Del. 1990) (c i t ingBechte l Corp. v. Laborers ' I n t ' l Union, 544 F.2d 1207, 1215 (3dCir . 1976)) ) . In determining whether a s tay i s appropr i a t e , thecour t should "weigh th e competing i n t e r e s t s of the pa r t i e s andat tempt to maintain an even ba lance ." Id . Courts t yp i ca l l y c i t ethree f ac to r s t h a t should guide th e exerc ise of a cou r t ' sd isc re t ion when dec iding whether a s tay i s appropr i a t e : 1)whether the grant ing of a s tay would cause th e non-moving pa r tyto su f fe r undue pre jud ice from any delay or allow th e movingpar ty to gain a c l ea r t a c t i c a l advantage over the non-movingpar ty ; 2) whether a s tay wil l s impl i fy the i s sues fo r t r i a l ; and3) whether discovery i s complete and a t r i a l date se t . See e . g . ,

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S t. Cla i r I n t e l l e c t ua l Prop. Consu l tan ts v. Sony Corp. , C.A. No.01-557-JJF , 2003 WL 25283239, a t *1 (D. Del. Jan . 30, 2003) . Inbalancing these f ac to r s , cour t s must be pa r t i cu l a r ly mindful ofthe consequences of th e s tay on o the r pa r t i e s . Dentsply I n t ' l ,734 F. Supp. a t 658 (recognizing t ha t Court must consider whether" there i s 'even a f a i r pos s i b i l i t y ' t ha t th e s tay would workdamage on ano ther par ty") (c i t a t ions omi t t ed) .

The Cour t concludes t h a t s tay ing t h i s ac t ion pending thePTO's reexaminat ion of the pa t en t s - i n - s u i t i s warran ted . As ani n i t i a l mat te r , th e Cour t notes t ha t no t r i a l date has been se t ,and t ha t discovery i s not ye t complete . (See 0 .1 . 115,Schedul ing Order . ) Iden t i f i c a t i on of f ac t witnesses and documentproduct ion was scheduled to be completed by Apr i l 30, 2010, buti n t e r r oga to r i e s and d ep os it io ns a re scheduled to take p lace fo rseve ra l more months. Thus, t h i s l i t i g a t i on remains in i t s ear lys tages . While th e Cour t cannot specu la te on the outcome ofreexaminat ion proceedings before th e PTO, it i s noteworthy t ha tevery claim of both the '975 and '236 pa ten t s i s cu r r en t l y beingreexamined by th e same PTO Exam iner, and t h a t th e PTO has a l readyissued an o f f i c e ac t ion r e j ec t i ng a l l c la ims of th e '975 pa ten t .Also, i n t e r par te s reexaminat ion of the '975 pa ten t was grantedin view of t h i r t y p r i o r a r t r e f e rences , a l l of which For t ine tmaintains t h a t it in tends to r e ly on fo r i t s i nva l id i t y defense .(0 .1 . 102, a t 3 n .2 ; 0 .1 . 103, Garber Decl . , Ex. A.) Ex par te

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reexaminat ion of the '236 patent was granted in view of f i f t e enp r io r a r t re fe rences . (0 .1 . 102, a t 3; 0 .1 . 160, Ex. 1 . ) Inthese c i rcumstances , th e Court i s persuaded t h a t the re i s as t rong l i ke l ihood t h a t a s tay pending reexaminat ion wi l l s impl i fythe pr io r a r t i s sues and i nva l i d i t y defenses which are l i k e l y tobe ra ised in t h i s ac t ion .

Turning to th e r i sk of undue pre judice , P l a i n t i f f s contendthey wi l l be pre jud iced by th e expense of defending th e pa t en t s i n - su i t du ri ng r eex am ina ti on . While t h i s may be so , the Cour t i sn ot p ersu ad ed by P l a i n t i f f s ' argument in view of th e f ac t t h a tt h i s l i t i g a t i on invo lves ten defendan ts , and wi l l l i ke ly en t a i ls ign i f i can t d is co v er y expendi tu re s by a l l pa r t i e s invo lved .Addi t iona l ly , P l a i n t i f f s ' content ion t h a t a s t ay pendingreexaminat ion wi l l pre jud ice t h e i r r i gh t s to enforce th eexc lus iv i ty of the '975 and '236 pa ten t s i s l a r ge ly specu la t ive ,and in any even t , i s counterbalanced by the f ac t t h a t th e pa ten t sdo not exp i re un t i l 2016. Fina l ly , th e Cour t recognizes t h a t as tay may delay r eso lu t ion of the l i t i g a t i on , but t h i s alone doesn ot w arran t a f ind ing t h a t P l a i n t i f f s wi l l be unduly pre judiced.

Although it i s a c lose ca l l , the Cour t concludes t h a t on thewhole, the competing i n t e r e s t s in t h i s l i t i g a t i on favor a s t ay .v. Conclusion

For th e reasons discussed , P l a i n t i f f s ' Motion To Conso l ida tewi l l be denied as moot, For t i n e t ' s Motion To Supplement wi l l be

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denied, and Defendants ' Motion To Stay wi l l be gran ted .An appropr i a t e Order wil l be en tered .

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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF DELAWARE

ENHANCED SECURITY RESEARCH, LLC,and SECURITY RESEARCH HOLDINGSLLC,

Pla in t i f f s ,v.

CISCO SYSTEMS, INC.,INTERNATIONAL BUSINESS MACHINESCORPORATION, CHECK POINT SOFTWARETECHNOLOGIES, LTD., CHECK POINTTECHNOLOGIES INC., SONICWALL,INC., 3COM CORPORATION, NOKIACORPORATION, NOKIA, INC.,FORTINET, INC., and SOURCEFIRE,INC. Defendants.

ORDER

C.A. No. 09-571-JJF

r -At Wilmington, t h i s ~ ) day of June 2010, fo r the reasons se t

fo rth in th e Memorandum Opinion i ssued t h i s da te ;IT IS HEREBY ORDERED t ha t :

1. P l a i n t i f f s ' Motion To Consolidate Cases (0 .1 . 50) i s DENIEDAS MOOT.

2. Defendant For t ine t Inc . ' s Motion To Stay Pending Outcome OfReexamination Proceedings (0 .1 . 82) i s GRANTED.

3. Defendant For t ine t I nc . ' s Motion To Supplement The Record OnFor t ine t ' s Motion To Stay (0 .1 . 124) i s DENIED.

DISTRICT

Enhanced Sec. Research LLC v. Cisco Sys. Inc., C.A. No. 09-571-JJF (D. Del. June 25, 2010) (Farnan,...

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Transcript of Enhanced Sec. Research LLC v. Cisco Sys. Inc., C.A. No. 09-571-JJF (D. Del. June 25, 2010) (Farnan,...