Beacon Navigation GmbH v. Audi AG et al.

Filing 30

OPINION AND ORDER granting 17 Motion to Stay. Signed by District Judge Patrick J. Duggan. (MOre)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BEACON NAVIGATION GMBH,
Plaintiff,
Case No. 13-cv-11389
Honorable Patrick J. Duggan

v.
AUDI AG, AUDI OF AMERICA, INC., and
AUDI OF AMERICA LLC,
Defendants.
/
BEACON NAVIGATION GMBH,
Plaintiff,

Case No. 13-cv-11511
Honorable Patrick J. Duggan

v.
VOLKSWAGEN AG, VOLKSWAGEN
GROUP OF AMERICA, INC., and
VOLKSWAGEN GROUP OF AMERICA
CHATTANOOGA OPERATIONS LLC,
Defendants.
_______________________________/

OPINION AND ORDER GRANTING DEFENDANTS’ RENEWED
MOTIONS TO STAY THE PROCEEDINGS PENDING REEXAMINATION
OF THE ASSERTED PATENTS
I.

Introduction
On October 11, 2011, Beacon Navigation GmbH (“Beacon”) filed thirty-

eight patent infringement lawsuits in the United States District Court for the

District of Delaware (“Delaware court”) against more than fifty manufacturers
and/or sellers of automobiles. Beacon alleges that products each defendant
manufactures and/or sells infringe one or more claims of one or more of Beacon’s
eight patents. Specifically, in its initial complaints, Beacon alleges infringement of
at least: claims 1, 10, and 17 of U.S. patent No. 6,029,111 (“the ’111 patent”);
claims 1 and 32 of U.S. Patent No. 6,360,167 (“the ’167 patent”); claim 1 of U.S.
Patent No. 6,374,180 (“the ’180 patent”); claims 1, 12 and 18 of U.S. Patent
5,819,201 (“the ’201 patent”); claims 1, 7 and 11 of U.S. Patent 6,163,269 (“the
’269 patent”); claims 1 and 15 of U.S. Patent No. 5,878,368 (“the ’368 patent”);
and/or claims 1 and 3 of U.S. Patent No. 5,862,511 (“the ’511 patent”). All of the
cases were transferred to this District when the Delaware court granted the
defendants’ motions to transfer on March 28, 2013.1

1

The defendants sued by Beacon and the case numbers of the lawsuits in this
District in which they are named are: Chrysler Grp. LLC (13-cv-11378 and 11380); Ford Motor Co. (13-cv-11381 and -11382); General Motors LLC (13-cv11386 and -11387); Audi AG, Audi of Am., Inc., and Audi of Am. LLC (13-cv11389 and -11405); Bayerische Motoren Werke AG, BMW of NA, LLC, and
BMW Mfg. Co., LLC (13-cv-11407 and -11410); Honda Motor Co., Ltd., Honda
NA, Inc., Am. Honda Motor Co., Inc., Honda Mfg. of Alabama, LLC, Honda Mfg.
of Indiana, LLC, and Honda of Am. Mfg., Inc. (13-cv-11412 and -11413); Hyundai
Motor Co., Hyundai Motor Am., and Hyundai Motor Mfg. Alabama LLC (13-cv11414 and -11416); Jaguar Land Rover NA, LLC, Jaguar Cars Ltd., and Land
Rover (13-cv-11422 and -11424); Kia Motors Corp., Kia Motors Am., Inc., and
Kia Motors Mfg. Georgia, Inc. (13-cv-11440 and -11441); Mazda Motor Corp. and
(continued...)

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Before that date, the defendants in several cases had filed motions to stay the
proceedings pending reexamination of the asserted patents by the United States
Patent and Trademark Office (“PTO”).2 Some of those motions were renewed
1

(...continued)

Mazda Motor of Am., Inc. (13-cv-11444 and -11448); Daimler AG, Daimler NA
Corp., Mercedes-Benz USA, LLC, and Mercedes-Benz U.S. Int’l, Inc. (13-cv11452 and -11455); Nissan Motor Co., Ltd. and Nissan NA, Inc. (13-cv-11459 and
-11497); Dr. Ing. h.c. F. Porsche AG and Porsche Cars NA, Inc. (13-cv-11499 and
-11504); Saab Automobile AB and Saab Cars NA, Inc. (13-cv-11505 and -11506);
Fuji Heavy Indus. Ltd, Fuji Heavy Indus. USA, Inc., and Subaru of Am., Inc. (13cv-11507 and -11508); Toyota Motor Corp., Toyota Motor NA, Inc., Toyota Motor
Sales U.S.A., Inc., Toyota Motor Eng’g & Mfg. NA, Inc., Toyota Motor Mfg.
Alabama Inc., Toyota Motor Mfg. Indiana Inc., Toyota Motor Mfg. Kentucky Inc.,
Toyota Motor Mfg. Mississippi Inc., Toyota Motor Mfg. Texas Inc., and Toyota
Motor Mfg. Virginia Inc. (13-cv-11509 and -11510); Volkswagen AG,
Volkswagen Grp. of Am., Inc., Volkswagen Grp. of Am. Chattanooga Operations
LLC (13-cv-11511 and -11512); Volvo Car Corp. and Volvo Cars of NA LLC (13cv-11513 and -11514); and Suzuki Motor Corp. and Am. Suzuki Motor Corp. (13cv-11516 and -11517).
On August 5, 2013, this Court granted Beacon’s motion to dismiss without
prejudice the actions against Saab Automobile AB and Saab Cars NA, Inc. due to
bankruptcy proceedings involving those defendants. Order, Beacon v. Saab
Automobile AB, et al., Nos. 13-cv-11505 and -11506 (ECF No. 15). Beacon’s
actions against America Suzuki Motor Corporation have been stayed due to that
defendant’s bankruptcy filing. See Order, Beacon v. Suzuki Motor Corp., et al.,
Nos. 13-cv-11516 and -11517 (ECF No. 8).
2

Motions to stay pending the PTO’s reexamination of the asserted patents
were filed in the Delaware court in the following cases (referred to by their
Delaware court case numbers): Beacon v. Audi AG, et al., No. 1:11-cv-00928 (filed
July 23, 2012) (“Audi I”); Beacon v. Audi AG et al., No. 1:11-cv-00929 (filed July
23, 2012) (“Audi II”); Beacon v. Volkswagen AG, et al., No. 1:11-cv-00957 (filed
July 23, 2012) (“VW I”); Beacon v. Volkswagen AG, et al., No. 1:11-cv-00958
(filed July 23, 2012) (“VW II”); Beacon v. Suzuki Motor Corp., et al., No. 1:11-cv(continued...)

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after the transfer.3 Additional defendants filed motions to stay pending
reexamination for the first time after the transfer.4
At a status conference held before this Court on July 10, 2013, Beacon’s
counsel represented that Beacon would agree to stay all of the related cases if the
Court grants the motions to stay filed in Beacon v. Audi AG, et al., No. 13-cv11389 (“Audi I”) and Beacon v. Volkswagen AG, et al., No. 13-11511 (“VW I”)
(hereafter cited to as the “Audi Defs.’ Mot.” and the “VW Defs.’ Mot.”,
respectively). Thus the Court is deciding only those motions here.5

2

(...continued)

00953 (filed Nov. 12, 2012) (“Suzuki I”); and Beacon v. Suzuki Motor Corp., et al.,
No. 1:11-cv-00954 (filed Nov. 12, 2012) (“Suzuki II”).
3

Renewed motions to stay were filed in Audi I, VW I, and Suzuki I and II.

4

After the cases were transferred, motions to stay were filed for the first time
in the following cases (referred to by this District’s case numbers): Beacon v.
Nissan Motor Co. Ltd, et al., No. 13-cv-11459 (filed July 2, 2013) (“Nissan I”);
Beacon v. Nissan Motor Co. Ltd., et al., No. 13-cv-11497 (filed July 2, 2103)
(“Nissan II”); Beacon v. Mayerische Motoren Werke AG, et al., No. 13-cv-11407
(filed July 9, 2013) (“BMW I”); Beacon v. Mayerische Motoren Werke AG, et al.,
No. 13-cv-11410 (filed July 9, 2013) (“BMW II”); Beacon v. Hyundai Motor
Corp., et al., No. 13-cv-11414 (filed July 30, 2013) (“Hyundai I”); and Beacon v.
Hyundai Motor Corp., et al., No. 13-cv-11416 (filed July 30, 2013) (“Hyundai II”).
5

Beacon’s eight patents are not all at issue in Audi I and VW I, however.
Beacon alleges infringement of the ’167, ’201, ’269, and ’368 patents in Audi I,
and of only the ’167 and ’368 patents in VW I. Therefore this decision contains
information found in other pending motions to stay relevant to the remaining
patents at issue. Specifically, the Court incorporates information concerning the
(continued...)

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II.

The Reexamination Proceedings & Beacon’s Resulting Attempt to
Amend
Subsequent to Beacon’s initiation of these related cases, the PTO ordered

reexamination of all of the asserted claims in all of the patents in suit. The PTO’s
reexaminations have resulted in the following actions as of July 17, 2013:
Patent

Claim(s)
Last Action
Reexamined

Date of Last
Action

Status

’111
patent

1, 10 & 17

Final Office Action
rejecting claims as
unpatentable (BMW
Defs.’ Mot. Ex. 22)

8/28/12

PTO canceled the
claims on 3/28/13
when no appeal
filed (BMW Defs.’
Mot. Ex. 23)

’167
patent

1 & 32

Final Office Action
rejecting claims as not
patentable (VW Defs.’
Mot. Ex. 16)

12/19/12

pending a decision
on Beacon’s
4/23/13 appeal
brief

’180
patent

1

claim rejected as
unpatentable (BMW
Defs.’ Mot. Exs. 16-18)

2/1/12

PTO canceled the
claim on 5/2/13
when no appeal
filed (BMW Defs.’
Mot. Ex. 19)

5

(...continued)

reexamination proceedings presented in the motion filed in BMW I and II (hereafter
cited as the “BMW Defs.’ Mot.”) as those cases also cover the ’180, ’111, and ’511
patents, and the motion filed in Nissan II (hereafter cited as the “Nissan Defs.’
Mot.”), which covers the ’380 patent.
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Patent

Claim(s)
Last Action
Reexamined

Date of Last
Action

Status

’201
patent

1, 12 & 18

Office Action
rejecting claims as
unpatentable (BMW
Defs.’ Mot. Ex. 4)

2/15/13

in prosecution
following
Beacon’s notice
of appeal filed
7/1/13

’269
patent

1, 7 & 11

Advisory Action
denying Beacon’s
request for
reconsideration of
Final Office Action
rejecting claims as not
patentable

3/8/13

awaiting PTO
cancellation as
appeal not filed
by deadline of
4/24/13

’368
patent

1 & 15

Advisory Action of
final rejection of
claims as not
patentable (BMW
Defs.’ Mot. Ex. 9)

6/5/13

notice of appeal
filed by Beacon
on 7/1/13

’380
patent

1, 26 & 29

PTO cancelled
claims as a result
of reexamination
proceedings
(Nissan Defs.’
Mot. Ex. 11)

’511
patent

1&3

Stayed on 2/5/13
pending request
for reexamination
filed by unrelated
party of all
claims of the
patent (see infra
at n.6)

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Thus as of July 17, 2013, the PTO has initially or finally rejected as unpatentable
all of the claims of the asserted patents, except the ’511 patent.6
Presumably in response to the PTO’s actions, Beacon filed a motion in each
of the related cases on May 30, 2013, seeking leave to file an amended complaint.
None of the proposed amended complaints assert infringement of the ’167 or ’269
patents. Beacon seeks to drop many of the rejected claims of the remaining patents
and to add other claims of those patents. Specifically, Beacon’s proposed amended
complaints allege infringement of: claims 5, 12, and 19 of the ’111 patent; claims 7
and 8 of the ’180 patent; claims 1, 12, and 18 of the ’201 patent; claims 1, 10-11,
and 15 of the ’368 patent; claims 18-20, 28, and 31 of the ’380 patent; and/or
claims 1 and 3 of the ’511 patent. The claims underlined are not specifically
asserted in Beacon’s initial complaints.
DENSO Corporation (“DENSO”) and Clarion Co., Ltd. (“Clarion”)– parties

6

On October 18, 2012, DENSO Corporation (“DENSO”) petitioned for inter
partes review of all 17 claims of the ’511 patent. Beacon responded to the petition
on January 21, 2013, and the PTO denied the petition on April 2, 2013. (See BMW
Defs.’ Mot. Exs. 31, 32.) DENSO moved for rehearing, but the PTO denied the
motion on June 24, 2013. An appeal of that decision is now pending.
In the meantime, Volkswagen Group of America, Inc. (“VWGoA”) filed a
second request for ex parte reexamination of claims 1 and 3 of the ’511 patent on
December 17, 2012. The PTO ordered reexamination based on that request on
January 23, 2013 (id. Ex. 36), but stayed the proceedings until completion of the
review initiated first by DENSO.
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not involved in the related cases before this Court– previously initiated
reexamination proceedings that included all of the claims in the ’111 patent that
Beacon now seeks to assert (i.e., claims 5, 12, and 19). (See Nissan Defs.’ Br. in
Supp. of Mot. at 8.) On March 18, 2013, the PTO granted the petition as to claims
5, 12, and 19, among others, finding that there was a reasonable likelihood that all
of the claims were anticipated by one or more prior art references. (Id. Ex. 9.)
Beacon informs the Court that oral argument is scheduled for December 13, 2013.
(See July 17, 2013 Letter from Counsel, No. 13-cv-11499, ECF No. 20.)
Defendants contend that the PTO likely will reject claims 10 and 11 of the
’368 patent because the claims depend from claim 1 of the patent which the PTO
already has rejected. (See, e.g., BMW Defs.’ Br. in Supp. of Mot. at 9-10; Nissan
Defs.’ Br. in Supp. of Mot. at 7.) The same argument is asserted with respect to
newly asserted claims 7 and 8 of the ’180 patent (see BMW Defs.’ Br. in Supp. of
Mot. at 10), and claims 28 and 31 of the ’380 patent (see Nissan Defs.’ Br. in Supp.
of Mot. at 8.)
III.

Applicable Law and Analysis
In patent cases, courts have the inherent and discretionary authority to stay

litigation pending reexamination. See Ethicon Inc. v. Quigg, 849 F.2d 1422, 142627 (Fed. Cir. 1988) (“Courts have inherent power to manage their docket and stay
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proceedings . . . including the authority to order a stay pending conclusion of a
PTO reexamination.”) (internal citations omitted). Courts routinely exercise this
discretion and grant motions to stay litigation pending the outcome of PTO
reexamination proceedings. See, e.g., Softview Computer Prods. Corp. v. Haworth,
Inc., 56 U.S.P.Q.2d 1633, 1635 (S.D.N.Y. 2000); ASCII Corp. v. STD Ent. USA,
Inc., 844 F. Supp. 1378, 1381 (N.D. Cal. 1994). This is because courts recognize
many advantages to awaiting the completion of reexamination proceedings,
including the narrowing or elimination of issues, the alleviation of discovery
problems relating to prior art, the encouragement of settlement, initial
consideration of issues by the PTO with its particular expertise, and reduction of
costs for the parties and the court. See, e.g., Ralph Gonnocci Revocable Living
Trust v. Three M Tool & Mach., Inc., 68 U.S.P.Q.2d 1755, 1757 (E.D. Mich. 2003)
(citing Emhart Indus. v. Sankyo Seiki Mfg. Co., 3 U.S.P.Q.2d 1889, 1890 (N.D. Ill.
1987) (additional citations omitted)). Congress in fact established the reexamination process “to provide an inexpensive and rapid resolution that would
provide the federal courts with the expertise of the PTO in resolving patent
claims.” Magna Donnelly Corp. v. Pilkington N. Am., Inc., No. 06–cv–126, 2007
WL 772891, at *2 (W.D. Mich. Mar. 12, 2007) (citing Patlkex Corp. v.
Mossinghoff, 758 F.2d 594, 602 (Fed. Cir. 1985)).
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In the Sixth Circuit, courts consider three factors in deciding whether to stay
litigation pending reexamination of the patents-in-suit: “(1) whether a stay would
unduly prejudice or present a clear tactical disadvantage to the non-moving party;
(2) whether a stay will simplify the issues in question and trial of the case; and (3)
whether discovery is complete and whether a trial date has been set.” Ralph
Gonnocci Revocable Living Trust, 68 U.S.P.Q.2d at 1757 (internal quotation marks
and citations omitted). In response to the defendants’ motions to stay, Beacon
concedes that these related cases “are still in their early ages.” (See, e.g., Pl.’s
Resp. Br. at 7, No. 13-11389, ECF No. 22.). The third factor thus favors a stay.
For the reasons that follow, the Court finds that the remaining factors favor a stay
as well.
The moving defendants contend that a stay will not prejudice or present
tactical disadvantage to Beacon. They argue that because Beacon is a patent
holding company that does not compete with the named defendants, it will not lose
customers or market share if the case is stayed. Monetary damages in fact have
been found sufficient to compensate a plaintiff not practicing the patents. See, e.g.,
Visual Interactive Phone Concepts, Inc. v. Samsung Telecomm. Am., LLC., No. 1112945, 2012 WL 1049197, at *3 (E.D. Mich. Mar. 28, 2012); NetJumper Software,
LLC v. Google, Inc., No. 04-70366, 2008 WL 2761022, at *2 (E.D. Mich. July 15,
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2008); see also Magna Donnelly Corp., 2007 WL 772891, at *4 (finding no
prejudice resulting from a stay where the plaintiff did not seek a preliminary
injunction).
Beacon does not dispute the moving parties’ contention, but claims that a
stay will impair its ability to obtain third-party discovery. Beacon proffers that
while the case is stayed key employees from third parties, such as the suppliers of
the navigation systems found in the defendants’ accused products, may depart their
employment and evidence, such as earlier source codes and the defendants’
accused vehicles, may be lost or otherwise become unavailable for inspection
and/or testing. (See, e.g., Pl.’s Resp. Br. at 5, No. 13-11389, ECF No. 22.)
Beacon’s fears, however, are speculative. It offers no basis from which to conclude
that the loss of evidence or witnesses is likely. If, in fact, Beacon feared that
evidence might be lost or destroyed during the pendency of these proceedings, the
Court wonders why it did not request discovery or the preservation of relevant
evidence earlier in this litigation– which already has been pending for almost two
years.7 In any event, the probability of Beacon suffering any actual prejudice is
diminished by the anticipated short period that any stay will be in effect.

7

Notably, after filing these cases, Beacon pursued its patent claims in the
International Trade Commission which resulted in an automatic stay of some of the
lawsuits.
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Reexamination of the claims asserted by Beacon in its initial complaints
were sought promptly after these lawsuits were filed. As a result, the
reexamination proceedings are completed or close to completion. Further, by
statute, the reexamination of any claim at issue in this stayed litigation will proceed
on an expedited schedule. See 35 U.S.C. § 305 (“All reexamination proceedings
under this section, including any appeal to the Patent Trial and Appeal Board, will
be conducted with special dispatch within the Office.”) (emphasis added); see also
Ethicon, Inc., 849 F.2d at 1426-27 (concluding that Congress did not contemplate
suspension of reexamination proceedings pending the outcome of a district court
case involving invalidity of the same patent, reasoning that the language of § 305
reflects that “Congress intended the reexamination process to provide an efficient
and relatively inexpensive procedure for reviewing the validity of patents which
would employ the PTO’s expertise”).
The Court, in comparison, finds it highly probable that a stay will result in
simplification of the issues in question and for trial. The PTO proceedings already
have altered the scope of Beacon’s complaints by finding many of the asserted
claims not patentable. To proceed with this litigation while the PTO reexamines
other asserted claims only to have the PTO possibly reject all or some of the
remaining claims would be a tremendous waste of judicial resources. And the
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results of the proceedings before the PTO to date suggest a strong likelihood that
future proceedings will alter the landscape of this litigation further.
Beacon argues that “[t]here are several issues in this case that cannot be
resolved by the USPTO.” (See, e.g., Pl.’s Resp. Br. at 6, No. 13-11389, ECF No.
22.) As examples, Beacon lists “infringement, defenses such as laches, estoppel,
lack of standing, license, patent exhaustion, and damages.” (Id.) Beacon also
notes that several reexaminations are ex parte and thus statutory estoppel will not
prevent re-litigation of issues presented to the PTO. In other words, the defendants
can re-litigate the patentability of the asserted claims even if the party challenging
the patentability of the same claims fails to prevail before the PTO.
Beacon’s arguments may have merit. Nevertheless, this Court will be able
to tackle any issues the PTO cannot resolve more efficiently if the issues the PTO
can resolve– and which the PTO has greater expertise to resolve– are decided first
during the reexamination proceedings. If the PTO finds additional claims not
patentable in those proceedings, the defendants will have no need to assert any
arguments relevant to those claims, including non-patentability, in this litigation.
In short, the relevant factors weigh in favor of granting the motions seeking
to stay these proceedings pending the PTO’s reexamination of the asserted claims.
Accordingly,
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IT IS ORDERED that the defendants’ motions to stay are GRANTED and
the above-captioned proceedings are STAYED pending completion of the
reexaminations of the patents at issue in Beacon’s initial and/or proposed amended
complaints.8
IT IS FURTHER ORDERED that Plaintiff Beacon Navigation GmbH
shall submit a letter to the Court when the reexamination proceedings conclude,
informing the Court of the results of those proceedings and how it suggests this
litigation should proceed.9
Dated: August 12, 2013

s/PATRICK J. DUGGAN
UNITED STATES DISTRICT COURT

8

In accordance with the representation made at the July 10, 2013 status

conference, in response to this Opinion and Order, the Court anticipates that
counsel for Beacon will prepare a stipulated order staying the remaining cases,
present the proposed stipulation to opposing counsel in each case, and once agreed
upon, submit the order for the Court’s signature. The stipulated order should
contain the multiple case captions; however, it should be submitted to the Court in
only one case (preferably the lowest case number). Once the order is signed by the
Court, it will be filed by the Court’s Deputy Clerk in all of the related cases.
9

The Court requests that Beacon specifically indicate in this letter whether:
(1) it wishes to pursue its pending motions to amend its complaints; (2) it intends
to seek leave to file different proposed amended complaints; or (3) no amendment
will be sought. If Beacon no longer seeks to amend its complaint as proposed
currently, it should file a notice in each case withdrawing the pending motion for
leave to amend. Relatedly, the Court advises the parties that a notice withdrawing
a motion should be filed by any movant who believes the relief sought in the
motion is rendered moot by the reexamination proceedings (or any change in
circumstances), rather than a motion asking the Court to find the motion moot.
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Copies to:
Counsel of Record

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