I/P Engine, Inc. v. AOL, Inc. et al
Opposition to 1092 MOTION to Stay of Requirement that Defendants Provide Revenue Information and Calculations of Ongoing Royalty Payments filed by I/P Engine, Inc.. (Sherwood, Jeffrey)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
I/P ENGINE, INC.,
AOL INC. et al.,
Civ. Action No. 2:11-cv-512
PLAINTIFF I/P ENGINE, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR
STAY OF REQUIREMENT THAT DEFENDANTS PROVIDE REVENUE
INFORMATION AND CALCULATIONS OF ONGOING ROYALTY PAYMENTS
It has been 73 days since this Court awarded I/P Engine post-verdict damages and
ordered Defendants to provide quarterly reports for Defendants’ willful infringement. D.I. 963,
1086 and 1088. Defendants should have provided a report for the five outstanding quarters
ending December 31, 2013. But they failed to do so. Under Fed. R. Civ. P. 62(a), Defendants
are not entitled to a stay as a matter of right where an appeal is taken from an “order that directs
an accounting in an action for patent infringement.”1 Yet Defendants have granted themselves a
stay by refusing to produce any reports as of this date. Only now that the report for the first
quarter of 2014 is coming due are Defendants finally making a formal request that this Court stay
their reporting obligations.2 D.I. 1093 (“Motion”).
An accounting in patent infringement cases “refers to infringement damages pursuant to 35
U.S.C. § 284.” Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1343 n.2 (Fed. Cir. 2001).
Here, pursuant to § 284, this Court awarded I/P Engine post-verdict damages and ordered
Defendants to provide quarterly reports. D.I. 963, 1086 and 1088.
I/P Engine has already reasonably agreed to stay the enforcement of Defendants’ payment
obligations of the post-verdict damages judgment pending the resolution of the related appeals,
and for thirty (30) days thereafter.
While it is within the discretion of this Court to grant or deny such a stay, Defendants
must first demonstrate that: (1) the stay applicant has made a strong showing that they are likely
to succeed on the merits; (2) the stay applicant will be irreparably injured absent a stay; (3)
issuance of a stay will not substantially injure the other parties interested in the proceeding; and
(4) it is in the public’s interest. ePlus, Inc. v. Lawson Software, Inc., 946 F. Supp. 2d 503, 507
(E.D. Va. 2013) (citing Hilton v. Braunskill, 481 U.S. 770, 776 (1987) (emphasis added)).
Defendants, however, do not even attempt to argue these factors in their Motion, much less
demonstrate that they weigh in favor of granting a stay. A review of the first two factors alone
demonstrates that Defendants are not entitled to a stay and that their Motion should be denied.
First, Defendants are unlikely to succeed on the merits – with regard to infringement, the
jury found that Defendants infringed all asserted claims of both patents, this Court affirmed that
finding, subsequently held that Defendants’ purported design-around also infringed, and found
their post-verdict infringement to be willful; with regard to validity, the jury, using a special
verdict form, found that all asserted claims were not invalid, this Court affirmed that finding, and
found the claims to be non-obvious. Additionally, all asserted claims of both patents have
survived reexamination based on the same prior art that was overcome at trial.
Second, Defendants cannot demonstrate that they will be irreparably harmed as a result of
complying with this Court’s Order because calculating post-verdict damages is straightforward.
This Court has already done the heavy lifting by establishing the royalty rate (6.5%) and
apportionment factor (20.9%). The only unknown variable is Defendants’ U.S. revenues, which
can be easily determined – as Google’s 30(b)(6) designee testified. See Datta, Depo. Tr. (201206-12), 57:6-18 and 58:1-6. Google could have simply multiplied its applicable quarterly
revenue (which it has on hand) by the apportionment factor and royalty rate. But instead
Defendants are wasting time and judicial resources arguing for a stay.
Defendants’ position is even shakier given that Defendants have already done the
calculations. The results of the calculations appear in Defendants’ Confidential Opening Brief in
their appeal of this Court’s supplemental and post-verdict damages awards (filed April 7, 2014).
This fact undercuts any argument that calculating post-verdict damages is “expensive and timeconsuming” (D.I. 1093 at 3) and would irreparably harm Defendants. Plainly, there is no
justification to impose a delay on I/P Engine – the prevailing and injured party. See In re
Mahurkar Patent Litig., 831 F. Supp. 1354, 1397 (N.D. Ill. 1993), aff’d, 71 F.3d 1573 (Fed. Cir.
1995) (refusing to stay enforcement of injunction pending appeal because prevailing plaintiff
entitled to immediate relief and defendants failed to show likelihood of success on appeal).
In their Motion, Defendants articulate two arguments in support of their request for a
stay: (1) that the ordered accounting only assures that payments are correct and if no payments
are required, then there is no need for the accounting, and (2) that I/P Engine would not be
deprived of anything if this Court granted the requested stay. D.I. 1093 at 3. Neither argument
addresses the relevant Hilton factors or supports granting a stay. The accounting allows I/P
Engine to not only verify payment amounts, but to immediately value its judgment.
Defendants also argue that their reporting obligations should be delayed because
providing such information is burdensome since it is “highly confidential.” D.I. 1093 at 3. But
this Court entered a protective order in this case for this exact purpose – producing highly
confidential information. In fact, all of the financial information Defendants produced in this
case is under the entered Protective Order. Defendants therefore cannot now arbitrarily refuse to
produce such information just because they do not want I/P Engine to have current revenue
information. Moreover, Google publicly reports its financials to the U.S. Securities and
Exchange Commission each quarter, and thus it seems practical that Google has already
completed much of the necessary work.
While I/P Engine agrees that no supersedeas bond is necessary,3 Defendants are unfairly
forcing I/P Engine to operate in the dark and are depriving I/P Engine of its rightful ability to
assess the value of its own claim. Without Defendants providing their revenues, I/P Engine is
incapable of accurately calculating post-verdict damages itself. If Defendants provided their
revenues, I/P Engine would at least be able to formulate settlement strategies from an informed
position – a course of action that Defendants have thus far made unnecessarily difficult.
Considering Defendants continue to willfully infringe and simultaneously continue to
avoid their obligations to pay for that infringement, I/P Engine is entitled to at least know the
value of its judgment. I/P Engine has already been injured by Defendants’ infringement; there is
no reason it should sustain the additional peril of being uninformed. Furthermore, I/P Engine
should not assume that additional burden simply for the convenience of a willful infringer.
Accordingly, I/P Engine respectfully requests that Defendants’ Motion be denied and,
within 20 days of this Court’s denial, that Defendants be ordered to produce the quarterly reports
detailing the outstanding post-verdict damages through the first quarter of 2014.
Dated: April 10, 2014
By: /s/ Jeffrey K. Sherwood
Donald C. Schultz (Virginia Bar No. 30531)
W. Ryan Snow (Virginia Bar No. 47423)
CRENSHAW, WARE & MARTIN PLC
150 West Main Street
Norfolk, VA 23510
I/P Engine acknowledges that there is minimal risk that Google – the party satisfying the entire
judgment against Defendants – will become insolvent prior to the resolution of the pending
appeals, and therefore does not request that Defendants post a supersedeas bond.
Jeffrey K. Sherwood (Virginia Bar No. 19222)
Frank C. Cimino, Jr.
Kenneth W. Brothers
Charles J. Monterio, Jr.
DICKSTEIN SHAPIRO LLP
1825 Eye Street, NW
Washington, DC 20006
Dawn Rudenko Albert
DICKSTEIN SHAPIRO LLP
New York, NY 10019
Counsel for Plaintiff I/P Engine, Inc.
CERTIFICATE OF SERVICE
I certify that on this 10th day of April 2014 I electronically filed the foregoing with the
Clerk of Court using the CM/ECF system, which will send notification to the following:
Stephen Edward Noona
Kaufman & Canoles, P.C.
150 W Main St, Suite 2100
Norfolk, VA 23510 email@example.com
Quinn Emanuel Urquhart & Sullivan LLP
50 California Street, 22nd Floor San Francisco, CA 94111
Robert L. Burns
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Two
11955 Freedom Drive Reston, VA 20190
Cortney S. Alexander
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
3500 SunTrust Plaza
303 Peachtree Street, NE Atlanta, GA 94111
/s/ Jeffrey K. Sherwood
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