Microsoft Corporation v. Barnes & Noble, Inc. et al

Filing 27

MOTION for Extension of Time to Respond to Counterclaims of Barnes & Noble Inc. and Barnesandnoble.com, LLC by Counter Defendant Microsoft Corporation, Plaintiff Microsoft Corporation. (Attachments: # 1 Proposed Order) Noting Date 5/6/2011, (Wion, Christopher)

HONORABLE RICHARD A. JONES

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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MICROSOFT CORPORATION,

Case No. 11-485 RAJ

Plaintiff,
vs.
BARNES & NOBLE, INC.,
BARNESANDNOBLE.COM LLC, HON
HAI PRECISION INDUSTRY CO., LTD.,
FOXCONN INTERNATIONAL
HOLDINGS LTD., FOXCONN
ELECTRONICS, INC., FOXCONN
PRECISION COMPONENT (SHENZHEN)
CO., LTD., and INVENTEC
CORPORATION,

PLAINTIFF MICROSOFT
CORPORATION'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFENDANTS
BARNES & NOBLE, INC. AND
BARNESANDNOBLE.COM LLC
NOTED: FRIDAY, MAY 6, 2011

Defendants.
Plaintiff Microsoft Corp. ("Microsoft") respectfully requests an additional 30 days to
respond to the Counterclaims filed by Defendants Barnes & Noble, Inc. and
barnesandnoble.com LLC (together, "B&N"). Microsoft's response is due on May 16, 2011.
However, under 28 U.S.C. § 1659, B&N has until May 19 to demand that this action be stayed

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PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 1

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]

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pending resolution of a parallel action between the parties that is currently pending before the

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International Trade Commission.

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The deadline for Microsoft's response to B&N's Counterclaims should be extended

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until a reasonable period after expiration of B&N's deadline to request a stay under § 1659.

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Microsoft should not be required to invest the time and effort to develop a response to B&N's

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Counterclaims when B&N unilaterally could render such a response unnecessary and moot at

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any point within the next three weeks.
I. FACTUAL AND PROCEDURAL BACKGROUND

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A.

Microsoft's Commencement of this Action

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On March 21, 2011, Microsoft filed its Complaint in the above-captioned action.

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Barnes & Noble, Inc. was served on March 23, 2011 and barnesandnoble.com LLC was served

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on April 1, 2011.
The Complaint asserts that B&N and its co-defendants are infringing and/or inducing

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others to infringe by making, using, offering to sell, and/or selling in the United States, and/or

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importing into the United States, products or processes that practice one or more inventions

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claimed in each of five patents owned by Microsoft: U.S. Patent No. 5,778,372, U.S. Patent

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No. 6,339,780, U.S. Patent No. 5,889,522, U.S. Patent No. 6,891,551, and U.S. Patent No.

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6,957,233 (collectively, the “Microsoft Patents”). The claims implicate certain features
implemented by Barnes & Noble's Nook and Nook Color e-book readers.
On or about April 12, 2011, counsel for B&N requested a 30-day extension of the

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deadline to respond to Microsoft's Complaint. On April 13, 2011 (the deadline for Barnes &
Noble, Inc. to file its answer) counsel for Microsoft agreed to grant Barnes & Noble, Inc. a 30day extension, through May 13, 2011.1 The parties filed a stipulation and proposed order that

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The deadline for barnesandnoble.com to file its answer was likewise extended from April 22, 2011 to May 13,
2011.
PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 2

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]

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same day, which the Court granted. See Dkt. No. 11. Microsoft is now seeking a similar

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accommodation.

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B.

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Parallel Proceedings before the International Trade Commission ("ITC")
On March 21, 2011, the same day Microsoft filed this action, Microsoft also filed a

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Complaint with the ITC against B&N and its co-defendants, captioned "In the Matter of

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Certain Handheld Electronic Computing Devices, Related Software, and Components

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Thereof."

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The ITC is a quasi-judicial federal agency charged with investigating claims of unfair
trade practices arising under 28 U.S.C. § 1337. Among other things, § 1337 prohibits the

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importation into the United States, the sale for importation, or the sale within
the United States after importation by the owner, importer, or consignee, of
articles that ... infringe a valid and enforceable United States patent[.]

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In its ITC Complaint, Microsoft alleges that B&N and its co-defendants are in violation

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of § 1337 in connection with the importation and sale of the Barnes & Noble Nook and Nook

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Color e-book readers, which practice one or more inventions claimed in each of the same five

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Microsoft Patents at issue in the instant action.

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On April 19, 2011, the ITC issued a "Notice of Investigation," thereby formally

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initiating the investigation (the "Notice"). See Declaration of Christopher Wion (“Wion

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Decl."), Ex. A. As stated in the Notice, B&N and the other respondents must submit any

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response within 20 days of service by the ITC of the Complaint and Notice.

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ITC investigations are conducted in accordance with procedural rules that are similar in

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many respects to the Federal Rules of Civil Procedure (see 19 C.F.R. Part 210). A formal

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evidentiary hearing on the merits will be conducted -- typically on an expedited basis -- by the

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presiding Administrative Law Judge in conformity with the adjudicative provisions of the

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PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 3

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]

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Administrative Procedure Act (5 U.S.C. §§ 551 et seq.). The ALJ's initial determination is

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then reviewed by the Commission.
If the Commission determines that the defendants have violated § 1337, it can issue an

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"exclusion order" barring the infringing products from importation into the United States,

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and/or a cease and desist order directing Defendants to cease engaging in the unlawful conduct

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at issue. Microsoft has requested such relief.
As explained in greater detail below, under 28 U.S.C. § 1659, B&N has the right to

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demand a stay of this district court action pending final resolution of the ITC's investigation.

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In order to exercise that right, B&N must request a stay within 30 days of initiation of the

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investigation - i.e., by May 19, 2011.

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C.

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B&N Files Its Answer & Counterclaims; Microsoft Requests Additional Time to
Respond.
On April 25, 2011, B&N filed its Answer & Counterclaims in this action.
In its Answer, B&N asserts the following affirmative defenses to Microsoft's claims of

patent infringement: patent misuse; non-infringement; invalidity; failure to mark; and
inequitable conduct. For its Counterclaims, B&N seeks a declaratory judgment as to each such
defense, with the exception of the "failure to mark" defense. B&N's Answer & Counterclaims
(Dkt. No. 12), pp. 27-48.
Under Fed. R. Civ. P. 12(a)(1), Microsoft's response to B&N's Counterclaims is due by
May 16.
On April 27, counsel for Microsoft asked counsel for B&N for an additional 30 days to
respond to B&N's Counterclaims, by which time the stay issue under § 1659 will have been
resolved, one way or the other. Wion Decl., ¶ 3. B&N has not yet responded to the request.
Id. If B&N consents to the extension after receiving this Motion, Microsoft will withdraw this
Motion.
PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 4

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]

II. ARGUMENT & AUTHORITY

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B&N has the right, under 28 U.S.C. § 1659, to demand that this action be stayed until

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resolution of the ITC's parallel investigation. To exercise that right, B&N must seek a stay

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within 30 days of the ITC's initiation of its investigation -- i.e., by May 19, 2011. Microsoft

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should not be required to respond to B&N's Counterclaims by May 16, but should be afforded

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additional time so that the stay issue will be resolved before Microsoft's response is due.

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Under § 1659, upon B&N's timely application to the Court, this action must be stayed
pending resolution of the parallel ITC proceedings. The statute provides that:
In a civil action involving parties that are also parties to a proceeding before the
United States International Trade Commission under section 337 of the Tariff
Act of 1930 [19 U.S.C. § 1337], at the request of a party to the civil action that
is also a respondent in the proceeding before the Commission, the district court
shall stay, until the determination of the Commission becomes final,
proceedings in the civil action with respect to any claim that involves the same
issues involved in the proceeding before the Commission, but only if such
request is made within -(1) 30 days after the party is named as a respondent in the proceedings
before the Commission, or
(2) 30 days after the district court action is filed,
whichever is later.
28 U.S.C. § 1659(a).
If B&N intends to exercise its rights under § 1659 and this action is stayed, there is no
sense in requiring Microsoft to respond to B&N's Counterclaims until after the ITC case is
resolved. In the ITC proceedings, B&N presumably will raise each defense that forms the
substantive basis of its counterclaims for declaratory judgment here. If and when the stay is
lifted, "the record developed in the proceeding before the commission may be used to 'expedite
proceedings and provide useful information to the court.'" Sandisk Corp. v. Phison Electronics
Corp., 538 F.Supp.2d 1060, 1067 (W.D. Wisc. 2008). In other words, "waiting for the
PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 5

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]

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commission to complete its investigation may help simplify this case." Id. As a practical

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matter, any response to B&N's Counterclaims submitted now would be outdated and of limited

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utility if and when this action is resumed after full development and adjudication of the issues

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in the ITC case.

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On the other hand, if B&N opts not to request a stay within the deadline imposed by

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§ 1659, the additional time Microsoft is requesting to respond to B&N's Counterclaims would

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provide Microsoft a sufficient opportunity to develop a response to the Counterclaims once

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that deadline has passed.
III. CONCLUSION

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For the foregoing reasons, the Court should grant Microsoft's request for an additional

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30 days to respond to B&N's Counterclaims, consistent with the Proposed Order submitted

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herewith.

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DATED this 28th day of April, 2011.
DANIELSON HARRIGAN LEYH & TOLLEFSON LLP

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By __/s/ Christopher Wion______________________
Arthur W. Harrigan, Jr., WSBA #1751
Christopher Wion, WSBA #33207
Shane Cramer, WSBA #35099
T. ANDREW CULBERT (WSBA #35925)
[e-mail]
DAVID E. KILLOUGH (WSBA #40185)
[e-mail]
MICROSOFT CORPORATION
1 Microsoft Way
Redmond, Washington 98052
Telephone: [phone]
Facsimile: 425-869-1327

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PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 6

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]

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JEFFREY W. LESOVITZ (pro hac vice)
[e-mail]
DALE M. HEIST (pro hac vice)
[e-mail]
DANIEL GOETTLE (pro hac vice)
[e-mail]
ALEKSANDER J. GORANIN (pro hac vice)
[e-mail]
WOODCOCK WASHBURN LLP
2929 Arch Street, 12th Floor
Philadelphia, PA 19104
Telephone: [phone]
Facsimile: 215-568-3439
DAVID T. PRITIKIN (pro hac vice to be filed)
[e-mail]
RICHARD A. CEDEROTH (pro hac vice to be filed)
[e-mail]
DOUGLAS I. LEWIS (pro hac vice to be filed)
[e-mail]
JOHN W. MCBRIDE (pro hac vice to be filed)
[e-mail]
SIDLEY AUSTIN LLP
One South Dearborn
Chicago, IL 60603
Telephone: [phone]
Facsimile: 312-853-7036
BRIAN R. NESTER (pro hac vice to be filed)
[e-mail]
KEVIN C. WHEELER (pro hac vice to be filed)
[e-mail]
SIDLEY AUSTIN LLP
1501 K Street, NW
Washington, DC 20005
Telephone: [phone]
Facsimile:
202-736-8711
Attorneys for Microsoft Corporation

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PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 7

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]

CERTIFICATE OF SERVICE

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I, Linda Bledsoe, swear under penalty of perjury under the laws of the State of
Washington to the following:

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1.

I am over the age of 21 and not a party to this action.

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2.

On the 28th of April, 2011, I caused the preceding document to be served on

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counsel of record in the following manner:

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Counsel for Defendants Barnes & Noble, Inc.
and barnesandnoble.com LLC

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Louis D. Peterson ([e-mail])
Michael R. Scott ([e-mail])
Mary E. Crego ([e-mail])
Hillis Clark Martin & Peterson
1221 Second Avenue, Suite 500
Seattle, WA 98101-2925
Phone: [phone]
Fax: [phone]

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Messenger
US Mail
Facsimile
ECF
Email

_/s/ Linda Bledsoe_____________
LINDA BLEDSOE

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PLTFF MICROSOFT'S MOTION FOR
ADDITIONAL TIME TO RESPOND TO
COUNTERCLAIMS OF DEFS BARNES &
NOBLE, INC. & BARNESANDNOBLE.COM - 8

LAW OFFICES

DANIELSON HARRIGAN LEYH & TOLLEFSON LLP
999 THIRD AVENUE, SUITE 4400
SEATTLE, WASHINGTON 98104
TEL, [phone] FAX, [phone]