Square, Inc. et al v. REM Holdings 3, LLC

Filing 212

MEMORANDUM AND ORDER re: #145 MOTION to Lift Stay PLAINTIFFS ROBERT E. MORLEY, JR. AND REM HOLDINGS 3, LLC'S MOTION TO LIFT STAY AND MEMORANDUM IN SUPPORT filed by Defendant REM Holdings 3, LLC, Consolidated Filer Plaintiff Robert E. Morley, Jr. IT IS HEREBY ORDERED that plaintiffs' motion to lift stay (#145) is DENIED. Signed by District Judge Stephen N. Limbaugh, Jr on 9/10/15. (CSG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

ROBERT E. MORLEY, JR., et al.
Plaintiffs,
vs.

SQUARE, INC., et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)

Case No. 4:14cv172
Case No. 4:10cv2243 SNLJ
CONSOLIDATED

and
SQUARE, INC., et al.
Plaintiffs,
vs.
REM HOLDINGS 3, LLC,
Defendant.

)
)
)
)
)
)
)
)
)
)

MEMORANDUM AND ORDER
This matter pertains to two consolidated matters, case numbers 4:10-cv-2243 and
4:14-cv-172. The parties include Robert Morley (“Morley”) and his company REM
Holdings 3, LLC (“REM”) (collectively, “Morley”) on the one hand, and Square, Inc. and
its founders, defendants Jack Dorsey and James McKelvey (collectively, “Square”), on the
other hand. The litigation pertains to the intellectual property rights surrounding an
invention that allows credit card transactions to be processed using a mobile smart phone.

1

Two of the Square defendants brought Case No. 4:10-cv-2243 against Morley and
REM. Because that matter primarily involved matters of patent law surrounding three
United States Patents, and all three patents were the subject of proceedings before the
Patent and Trademark Office (“PTO”), that case was stayed in 2011. It remains stayed.
In 2014, Morley filed Case Number 4:14-cv-172 against Square. Morley’s
complaint brings patent-related and state law claims against Square pertaining to the same
set of facts at issue in 4:10-cv-2243. The two matters were consolidated. Shortly
thereafter, the Square defendants filed a motion to stay the Counts 4, 10, and 11 of the
4:14-cv-172 action because each of those counts relates to U.S. Patent No. 8,584,946,
which itself was pending reexamination by the PTO. This Court granted that motion over
Morley’s objection and in light of Square’s promise to cooperate with discovery on
Morley’s non-stayed, non-patent claims. Thus, Counts 4, 10, and 11 of Morley’s
complaint were stayed.
As expected, the PTAB issued a final written decision with respect to Patent ‘946 in
July 2015. The Morley plaintiffs thus moved to lift the stay of Counts 4, 10, and 11 of
Morley’s complaint so that the parties can proceed with discovery (#145). The Square
defendants oppose the motion.
The Court declines to lift the stay of Counts 4, 10, and 11 at this time. It is
undisputed that litigation before the PTAB has not concluded regarding that patents at
issue. Although the PTAB apparently confirmed patentability of five of the ‘946 Patent’s
claims, it rejected twelve of that patent’s claims. The Square defendants have filed for a

2

rehearing with the PTAB, so proceedings are incomplete. It is still true that if the patent’s
claims do not “survive the reexamination process, in the absence of a stay, the parties will
have wasted time, effort, and expense on infringement contentions, counter-infringement
contentions, invalidity contentions, and claim construction.” (#140 at 2.) Thus, all the
factors that caused this Court to stay the patent-related counts are still present now. (See
id.)
Accordingly,
IT IS HEREBY ORDERED that plaintiffs’ motion to lift stay (#145) is DENIED.

Dated this

10th

day of September, 2015.

____________________________________
STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

3