I/P Engine, Inc. v. AOL, Inc. et al

Filing 1093

Memorandum in Support re 1092 MOTION to Stay of Requirement that Defendants Provide Revenue Information and Calculations of Ongoing Royalty Payments filed by AOL Inc., Gannett Company, Inc., Google Inc., IAC Search & Media, Inc., Target Corporation. (Noona, Stephen)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
NORFOLK DIVISION
I/P ENGINE, INC.
Plaintiff,
Civil Action No. 2:11-cv-512

v.
AOL, INC., et al.,
Defendants.

BRIEF IN SUPPORT OF DEFENDANTS’ MOTION FOR STAY OF REQUIREMENT
THAT DEFENDANTS PROVIDE REVENUE INFORMATION AND CALCULATIONS
OF ONGOING ROYALTY PAYMENTS
On August 14, 2013, the Court ordered Defendants to make quarterly payments of ongoing
royalties and, at that time, “to certify by penalty of perjury the U.S. revenue attributable to
Defendant's use of AdWords in U.S. Dollars and the calculation of the royalty payment.” (D.N.
963, 6.) On January 28, 2014, the Court then set the royalty rate for post-judgment royalties.
(D.N. 1088.)
The parties have agreed to stay any proceeding to execute or enforce all money judgments
against Defendants, including damages awarded at trial, supplemental damages, interest, and
post-judgment royalties pending resolution of the related pending appeals, and for thirty days
thereafter. The parties have further agreed that a supersedeas bond is not necessary to protect
Plaintiff’s interests pending the appeals of those judgments. (D.N. 932, 1085.) Plaintiff, however,
will not agree to forego the quarterly statement detailing the U.S. revenue attributable to
Defendants’ use of AdWords in U.S. Dollars and the calculation of the owed royalties (all subject
to the same appeal) for that quarter.

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Defendants, therefore, respectfully request that the Court stay its Order requiring the
certification of the revenue information and calculation of ongoing royalty payments. These
requirements place a heavy burden on Defendants to collect and produce highly confidential and
commercially sensitive information, where the certifications may become moot after the pending
appeals in this case. In contrast, the stay would cause no perceivable harm to Plaintiff.
Thus, the prudent course is to stay the requirement for Defendants to provide revenue
information and the calculations of ongoing royalties until those appeals are decided, consistent
with the parties’ agreement to stay enforcement of judgments at issue in these appeals.
Argument
I.

GRANTING A STAY IS PRUDENT GIVEN THE PENDING APPEALS, WOULD
ELIMINATE AN UNNECESSARY BURDEN ON DEFENDANTS, AND WOULD
CAUSE NO HARM TO PLAINTIFF.
Plaintiff and Defendants have each challenged the jury’s verdict regarding damages, and

Defendants have further appealed the Court’s order regarding ongoing royalties.1 (See Appeal
Nos. 2013-1307, 2013-1313, 2014-1289 (Fed. Cir.).) Thus, both parties agree that the jury’s
damages calculations should be amended. (See also D.I. 1088 at 3-4 (recognizing that the jury
verdict is the starting point for an ongoing royalty analysis).) In addition, Defendants have
challenged the jury’s findings as to infringement and validity. (See Appeal Nos. 2013-1307,
2013-1313 (Fed. Cir.).) A holding for Defendants on either issue would necessarily nullify any

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Defendants appealed the jury’s findings on infringement, validity, and damages (D.N.
914), and Plaintiff cross-appealed challenging the jury’s damages awards. (D.N. 912.) That
appeal is fully briefed and scheduled for oral argument on May 6, 2014. On February 5, 2014,
Defendants filed a notice of appeal challenging the Court’s award of post-judgment royalties.
(D.N. 1089.) The Federal Circuit consolidated this appeal with Defendants’ appeal of this Court’s
order granting Plaintiff supplemental damages and interest. (See D.N. 1082; Appeal Nos.
2014-1233, 2014-1289 (Fed. Cir.).) If Defendants prevail on any aspect of the initial appeal, or on
their appeal regarding the award of ongoing royalties, the award of ongoing royalties would
necessarily be nullified or changed.
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and all damage awards, including the award of ongoing royalties. The Federal Circuit has already
scheduled oral argument in the first appeal for May 6, 2014. Thus, Defendants respectfully ask the
Court to eliminate the burden and risk of requiring Defendants to provide highly confidential
revenue information and calculations until at least the initial appeal is decided.
Indeed, it is only logical that the revenue information to be provided should go
hand-in-hand with the actual royalty payment. The accounting information assures the payments
are correct. But if no payments are required yet, there is no need for the accounting. This is
especially true given that the certification of revenue requirement places a heavy burden on
Defendants, as it is an expensive and time-consuming process, as detailed previously to the Court.
(Kuethe Dec., D.N. 939.)
In contrast to the heavy burden for Defendants from the certification requirements,
Plaintiff would not be deprived of anything if the Court grants the requested stay. That Plaintiff
would even demand this information when the parties have agreed to stay any execution of the
judgment smacks of harassment. Plaintiff’s suggestion during the parties’ meet and confer process
that Defendants’ revenue information would help Plaintiff to formulate settlement strategies rings
hollow. Were there a genuine interest in pursuing settlement strategies for which Plaintiff
legitimately needed updated financial information beyond the voluminous information it already
has, there is no need for it to be done through the Court ordered certification, which was ordered
for an entirely different purpose.
Given such practical considerations, Defendants request that the Court exercise its
discretion in granting the stay requested. Fed. R. Civ. P. 62(a)(2); Beaver Cloth Cutting Machines,
Inc. v. H. Maimin Co., 37 F.R.D. 47, 50-51 (S.D.N.Y. 1964) (granting stay of accounting
proceedings upon posting of $5000 bond by the defendant); Schlegel Mfg. Co. v. King Aluminum

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Corp., 381 F. Supp. 649, 656 (S.D. Ohio 1974) aff'd and remanded sub nom. Schlegel Mfg. Co. v.
U.S.M. Corp., 525 F.2d 775 (6th Cir. 1975) (granting stay of accounting pending appeal);
Wright & Miller, Fed. Prac. & Proc. Civ. § 2902 (3d ed.) (“Stay of an accounting in a
patent-infringement case, upon an appropriate bond, would be consistent with the statutory
scheme to avoid a useless waste of time and money.”).
Conclusion
For the foregoing reasons, Defendants respectfully request that this Court grant their
Motion to Stay and stay any and all requirements that Defendants provide revenue information or
other financial reports concerning post-judgment royalties to Plaintiff or to participate in any
related audits until the Federal Circuit has ruled on all pending appeals. (See Appeal Nos.
2013-1307, 2013-1313 (Fed. Cir.); Appeal Nos. 2014-1233, 2014-1289 (Fed. Cir.).)

DATED: March 27, 2014

/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]
David Bilsker
David A. Perlson
QUINN EMANUEL URQUHART &
SULLIVAN, LLP
50 California Street, 22nd Floor
San Francisco, California 94111
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Counsel for Google Inc., Target Corporation, IAC
Search & Media, Inc., and Gannett Co., Inc.

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/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 W. Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
Robert L. Burns
FINNEGAN, HENDERSON, FARABOW, GARRETT &
DUNNER, LLP
Two Freedom Square
11955 Freedom Drive
Reston, VA 20190
Telephone: [phone]
Facsimile: [phone]
Cortney S. Alexander
FINNEGAN, HENDERSON, FARABOW, GARRETT &
DUNNER, LLP
3500 SunTrust Plaza
303 Peachtree Street, NE
Atlanta, GA 94111
Telephone: [phone]
Facsimile: [phone]
Counsel for Defendant AOL, Inc.

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CERTIFICATE OF SERVICE
I hereby certify that on March 27, 2014, I will electronically file the foregoing with the
Clerk of Court using the CM/ECF system, which will send a notification of such filing (NEF) to
the following:
Jeffrey K. Sherwood
Kenneth W. Brothers
DICKSTEIN SHAPIRO LLP
1825 Eye Street NW
Washington, DC 20006
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Donald C. Schultz
W. Ryan Snow
Steven Stancliff
CRENSHAW, WARE & MARTIN, P.L.C.
150 West Main Street, Suite 1500
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]
Counsel for Plaintiff, I/P Engine, Inc.

/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]

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