Case 1:18-cv-12267-RA Document 54 Filed 08/20/19 Page 1 of 9
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`August 20, 2019
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`VIA ECF
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`The Honorable Ronnie Abrams, U.S.D.J.
`United States District Court
`Southern District of New York
`500 Pearl Street
`New York, New York 10017-1312
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`NetSoc, LLC v. Chegg, Inc. (Lead case)
`U.S.D.C., S.D.N.Y., No: 1:18 Civ. 10262 (RA)
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`Dear Judge Abrams,
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`The parties write to Your Honor in compliance with your order of July 26, 2019
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`requesting that the parties file a joint status letter addressing any issues they wish to discuss.
`Plaintiff and the Defendants’ statement of the issues are set forth below.
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`Plaintiff’s Position
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`Plaintiff writes to inform the Court of its decision to file a Motion for New Trial in
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`the Texas action. The Motion is filed on August 19, 2019, a copy of which is attached as
`Exhibit D, without Exhibits. Plaintiff decision on whether to appeal is deferred until 30
`days after a ruling on the Motion for a New Trial. If a New Trial is granted, the claims of
`the ‘107 patent will not have been invalidated. If the Motion for a New Trial is denied,
`Plaintiff will likely appeal the decision finding the claims invalid.
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`On August 16, 2019, Counsel for Plaintiff and Counsel for the Defendants
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`conferred by phone on the status of the consolidated cases. Plaintiff’s counsel informed
`Defendants’ Counsels that a Motion for a New trial was to be filed in the Texas action.
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`Plaintiff is of the opinion that consolidation of 1:18-cv-10262; 1:18-cv-12215;
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`1:18-cv-12250; and, 1:18-cv-12267 through Markman is appropriate for reason of judicial
`economy as the terms of the ‘591 patent, the ‘344 patent, and the ‘107 patent are largely
`the same. A de-consolidation of the cases will result in multiple courts construing the
`claims.
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`Only the ‘107 patent was asserted in the Lead case, 1:18-cv-10262. Plaintiff
`requests the case stay consolidated and a Markman briefing schedule.
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` In NetSoc, LLC v. LinkedIn, No: 1:18 Civ. 12215, the ‘107 patent and a related
`‘344 patent are asserted. Plaintiff requests the case stay consolidated and a Markman
`briefing schedule.
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`In NetSoc, LLC v. Quora, No: 1:18 Civ. 12250, the ‘591 patent is asserted. Plaintiff
`requests the case stay consolidated and a Markman briefing schedule.
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`In NetSoc, LLC v. Oath, No: 1:18 Civ. 12267, the ‘591 patent is asserted. Plaintiff
`requests the case stay consolidated and a Markman briefing schedule.
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`Consolidated Defendants’ Positions
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`Each individual consolidated defendant’s statement of issues is set forth in detail
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`below. Common among the defendants is the request to continue the present stay of the
`consolidated cases pending resolution of the defendants’ pending motions to dismiss and
`motions to transfer, and in light of forthcoming motions to dismiss. Defendants also do not
`agree with Plaintiff that consolidation is appropriate, for the reasons explained below. Oath
`and Quora also re-raise their request for attorneys’ fees associated with their work defending
`against the now-dismissed ’107 Patent.
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`1. Defendant LinkedIn Corporation’s Position (Case No. 1:18 Civ. 12215)
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`Defendant LinkedIn Corporation (“LinkedIn”) is represented by Christopher Kao
`and Brock Weber of Pillsbury Winthrop Shaw Pittman LLP. We write in response to the
`Court’s Order of July 26, 2019 (Dkt. No. 66 in Lead Case) asking each party to address the
`issues it wishes to discuss at the Status Conference scheduled for August 27, 2019,
`including each party’s position on Plaintiff NetSoc, LLC’s (“NetSoc’s”) request for a stay
`in its letter of July 23, 2019 (Dkt. No. 49 in this member Case No. 18-cv-12250-RA). We
`also respond to Plaintiff’s position, above, which departs from Plaintiff’s original request
`in its July 23 letter.
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`a) NetSoc’s Request for a Markman Schedule
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`NetSoc represents that it filed a motion for a new trial in the Match case in the
`Northern District of Texas, which invalidated U.S. Patent No. 9,978,107 (the “’107 Patent”)
`under 35 U.S.C. § 101 (the “Texas Order”). NetSoc states that it will likely appeal the Texas
`Order if its motion for a new trial is denied. However, NetSoc no longer appears to request
`a complete stay of the action against LinkedIn pending any such appeal and, instead, asks
`that the Court set a Markman schedule.
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`LinkedIn opposes NetSoc’s apparent request to lift the current stay of this case. By
`the Court’s Order on July 3, 2019 (Dkt. No. 44), discovery in this case is stayed pending the
`Court’s resolution of LinkedIn’s Motion to Dismiss under Section 101 (Dkt. Nos. 19-21, 34)
`and Motion to Transfer to the Northern District of California (Dkt. Nos. 35, 45). In staying
`discovery, the Court found that “Defendants have raised substantial arguments in favor of
`dismissal, including that the claims of the patents-in-suit—U.S. Patent No. 9,978,107 and
`U.S. Patent No. 7,565,344 [the “’344 Patent”]—are invalid under 35 U.S.C. § 101.” (Dkt.
`No. 44 at 2.) Now that the ’107 Patent has been invalidated under Section 101 in the Texas
`Order, the Court’s rationale for staying discovery pending resolution of LinkedIn’s Motion
`to Dismiss and Motion to Transfer applies with even greater force. LinkedIn’s Motions are
`ripe for decision and discovery should not proceed and a Markman schedule should not be
`set until the Motions are resolved, as the Court previously ruled.
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`As to the Motion to Dismiss, LinkedIn establishes therein that the ’107 Patent and
`the related ’344 Patent, which was also asserted against LinkedIn, are invalid for attempting
`to claim unpatentable abstract ideas under Section 101. This conclusion is further supported
`by the Texas Order finding that the ’107 Patent is invalid under Section 101. The ’107 Patent
`issued from a chain of applications that began with the ’344 Patent, and the two patents share
`the same specification. The ’344 Patent is invalid under Section 101 for the same reasons as
`the ’107 Patent, as established in LinkedIn’s Motion to Dismiss. Thus, discovery should
`remain stayed pending resolution of LinkedIn’s Motion to Dismiss, as it is fully briefed and
`ready to be decided. Indeed, if the Court were to rule in LinkedIn’s favor on the ’107 and
`’344 Patents, this would conserve judicial resources because it could allow the Federal
`Circuit to consider the related appeals of the Texas Order and this Court’s Order in a
`consolidated appeal, should NetSoc appeal the Texas Order, as it indicates it is likely to do.
`This would help prevent piecemeal litigation. LinkedIn is prepared to present argument on
`its Motion to Dismiss at the Status Conference scheduled for August 27, 2019 or at any time
`thereafter convenient to the Court.
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`As to LinkedIn’s Motion to Transfer, it would conserve judicial and party resources
`for the Court to resolve this issue concerning venue before allowing any further discovery,
`as the Court previously held. Therefore, LinkedIn respectfully requests that discovery
`remain stayed pending resolution of its Motion to Transfer as well.
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`If NetSoc elects not to appeal the Texas Order, LinkedIn also respectfully requests
`the opportunity to be heard on its pending Motion to Dismiss and Motion to Transfer. As
`such, under this scenario, LinkedIn requests that the current stay of discovery continue
`pending the Court’s decision on those Motions. LinkedIn is available at the Court’s earliest
`convenience for a hearing on its Motions.
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`b) Consolidation
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`Given the invalidation of the ’107 Patent in Texas and NetSoc’s request to swap
`patents in two of the other pending cases, LinkedIn believes that these actions should no
`longer be consolidated, as LinkedIn would only share a patent (the invalidated ’107 Patent)
`with one other defendant (Defendant Chegg), and the ’344 Patent is unique to LinkedIn.
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`Further, consolidation is unwarranted now that LinkedIn has moved to transfer to the
`Northern District of California, the clearly more convenient forum, which overrides any
`benefit from consolidation, as shown in LinkedIn’s Motion to Transfer. Because the fact of
`consolidation was NetSoc’s only argument against transfer, and because the reason for
`consolidation no longer exists (i.e., there is no common patent amongst all of these cases),
`LinkedIn believes that its Motion to Transfer should be decided without consideration of the
`other pending actions.
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`2. Defendant Oath Inc.’s Position (Case No. 1:18-cv-12267)
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`Defendant, Oath Inc. (“Oath”) joins the other consolidated defendants in opposing
`NetSoc’s request to lift the current stay of this case and consolidate the present cases,
`concerning three different asserted patents, for claim construction.
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`First, Oath intends to file a motion to dismiss NetSoc’s Second Amended
`Complaint at least on the basis that the ’591 Patent, which NetSoc has characterized as
`“highly related” to the already-invalidated ’107 Patent (see ECF No. 61 in 18-cv-10262
`(RA)) is directed to unpatentable subject matter. Oath will file its motion on or before
`September 6, 2019, and anticipates briefing on the motion will be complete (absent
`extensions) by the end of September. In light of that forthcoming motion, and the other
`consolidated defendants already-filed motions to dismiss and motions to transfer, a
`continued stay of the case would be most economical for the parties and Court. Oath also
`submits that consolidation would be best evaluated once the pending motions have been
`decided so that the final landscape of the patents and parties that remain pending before
`this Court can be determined.
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`Second, Oath asks that this Court award Oath attorneys’ fees relating to work spent
`defending against NetSoc’s admittedly unmeritorious ’107 Patent claims. NetSoc
`concedes that this case as originally filed concerning the ’107 Patent is not based on a
`sufficient pre-filing investigation and is not meritorious. NetSoc’s counsel emailed Oath’s
`counsel on July 8, 2019 admitting that it had “listed the wrong patent number” in the
`original and amended complaint against Oath. (See Ex. A, email of July 8, 2019). NetSoc’s
`counsel likewise argued to Your Honor that NetSoc wants to dismiss the ’107 Patent
`because it determined the ’591 Patent would “read better.” (See Ex. B; 7/19/2019 Conf.
`Tr. 7:16). Moreover, the Northern District of Texas found that the ’107 Patent claims
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`unpatentable subject matter, just as Oath argued in its Motion to Dismiss in this case. (See
`Ex. C; Memorandum Opinion and Order and Final Judgment of July 22, 2019 from NetSoc
`LLC v. Match Group, LLC et al., Case No. 3:18-cv-1809).
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`Notwithstanding these facts, and the other facts set forth in our letter to Your Honor
`of July 15, 2019 (ECF No. 45 in Case No. 1:18-cv-12267), NetSoc unnecessarily prolonged
`this litigation and multiplied Oath’s attorneys’ fees in this case. NetSoc opposed Oath’s
`Motion to Dismiss the ’107 Patent which raised the same § 101 issues raised in Match’s
`earlier-filed motion. NetSoc ignored for over three months and through multiple briefs and
`a letter motion the fact that NetSoc’s Complaint cited claims from another patent in
`support of its ’107 Patent infringement allegations.
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`NetSoc’s conduct, and now Judge Godbey’s Order invalidating the ’107 Patent,
`confirms that sanctions in the form of Oath’s attorneys’ fees are appropriate in this case for
`multiple reasons.
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`First, NetSoc’s suit against Oath on the ’107 Patent, which it has now agreed to
`dismiss with prejudice, is exceptional under 35 U.S.C. § 285 given NetSoc’s failure to
`reasonably assess the merits of its case and its continued pursuit of this case after Oath filed
`its Motion to Dismiss. An exceptional case is “one that stands out from the others with
`respect to the substantive strength of a party’s litigating position or the unreasonable
`manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness,
`Inc., 134 S. Ct. 1749, 1756 (2014). District courts have deemed cases exceptional where
`there was “no question” that the patent-in-suit was patent ineligible under the Federal
`Circuit’s current precedent. Finnavations LLC v. Payoneer, Inc., Civil Action No. 18-444-
`RGA, 2019 WL 1236358, at *1 (D. Del. Mar. 18 2019). They have also awarded fees due
`to a failure to conduct an adequate pre-suit investigation. See Parallel Iron LLC v. NetApp,
`Inc., Civil Action No. 12-769-RGA, D.I. 91 (D. Del. Sept. 12, 2014) (awarding attorneys’
`fees to defendants where plaintiff failed to conduct a sufficient pre-suit investigation and
`pursued claims in bad faith). The deterrence function of awarding fees under § 285 is
`merited in this case—NetSoc’s “mistake” with respect to not just one, but two defendants,
`suggests that NetSoc’s failure to do a reasonable pre-suit investigation of its infringement
`allegations was not isolated to Oath’s case. Lumen View Tech., LLC v. Findthebest.com,
`Inc., 24 F. Supp. 3d 329, 336-337 (S.D.N.Y. 2014).1
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`Second, sanctions are appropriate under 28 U.S.C. § 1927 and the Court’s inherent
`power. “Rule 11 explicitly and unambiguously imposes an affirmative duty on each
`attorney to conduct a reasonable inquiry into the viability of a pleading before it is signed.
`. . . [S]anctions shall be imposed against an attorney and/or his client when . . . after
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`1 The fact that NetSoc’s suit on the ’107 Patent was pending for only a relatively short time
`before NetSoc voluntarily dismissed it is of no moment when it is clear that NetSoc could
`not have expected success on the merits in this case. Id.
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`reasonable inquiry, a competent attorney could not form a reasonable belief that the
`pleading is well grounded in fact . . . .” Eastway Constr. Corp. v. City of New York, 762
`F.2d 243, 253-54 (2d Cir. 1985). Section 1927 allows a federal court to compel an attorney
`“to satisfy personally the excess costs, expenses and attorney’s fees reasonably incurred”
`when that attorney has “unreasonably and vexatiously” multiplied the proceedings in an
`action. 28 U.S.C. § 1927. While “bad faith” is an element of an award under § 1927, the
`Second Circuit has held that “an award under § 1927 is proper when the attorney’s actions
`are so completely without merit as to require the conclusion that they must have been
`undertaken for some improper purpose such as delay.” Oliveri v. Thompson, 803 F.2d
`1265, 1273 (2d Cir. 1986). Sanctions may also be awarded under the Court’s inherent
`sanction power for baseless and bad-faith conduct in litigation, which includes the failure
`of an attorney to perform adequate research before asserting a claim. See Carousel Foods
`of Am., Inc. v. Abrams & Co., 423 F. Supp. 2d 119, 123 (S.D.N.Y. 2006) (awarding
`sanctions under the court’s inherent sanction power based upon, among other things,
`attorney’s failure to provide any “real answer to the suggestion that he performed
`inadequate research into the facts before asserting” a RICO claim). Here, as detailed in
`Oath’s July 15, 2019 letter, NetSoc should have on a “reasonable inquiry” discovered its
`“mistake” in asserting the ’107 Patent before filing the Complaint, or at a minimum, should
`have discovered it after the Motion to Dismiss was filed.
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`Third, Oath is entitled to recover its attorneys’ fees and costs incurred in opposing
`the Complaint and Amended Complaint pursuant to Federal Rule of Civil Procedure 41(d).
`NetSoc’s unauthorized filing of the Second Amended Complaint omitting the ’107 Patent
`is tantamount to a dismissal of the claim. See, e.g., Livingston v. Ferrante, No. 5:16-CV-
`1371 (BKS/DEP), 2017 WL 2791062, at *1 n.1 (N.D.N.Y. May 30, 2017) (citing Shields
`v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir. 1994) & Dicks v. Binding Together,
`Inc., No. 03-CV-7411, 2007 WL 1462217, at *1 n.3 (S.D.N.Y. May 18, 2007)), report and
`recommendation adopted, No. 516CV1371BKSDEP, 2017 WL 2790527 (N.D.N.Y. June
`27, 2017).
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`Rule 41(d) provides as follows:
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`(d) Costs of a Previously Dismissed Action. If a plaintiff who previously dismissed
`an action in any court files an action based on or including the same claim against the same
`defendant, the court:
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`(1) may order the plaintiff to pay all or part of the costs of that previous action; and
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`(2) may stay the proceedings until the plaintiff has complied.
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`“Costs may be imposed under Rule 41(d) where the plaintiff has brought a second
`identical, or nearly identical, claim and has requested identical, or nearly identical, relief.”
`Esquivel v. Arau, 913 F. Supp. 1382, 1387 (C.D. Cal. 1996) (citing Young v. Dole, 1991
`WL 158977 (E.D.N.Y. 1991)). This rule “serves the broader purpose of penalizing a
`plaintiff for re-filing the very suit he has previously dismissed,” and has been interpreted
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`in this Circuit to include payment of attorney’s fees as ‘compensation for work done in the
`first action that cannot be used in a second existing or contemplated action.’” Pelczar v.
`Pelczar, No. 16-CV-55 (CBA) (LB), 2017 WL 3105855, at *2 (E.D.N.Y. July 20, 2017)
`(citations omitted); accord Hanson v. Litton Loan Servicing, LP, No. 3:04CV568 (WWE),
`2004 WL 7339574, at *3 (D. Conn. Dec. 16, 2004).
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`Moreover, an award under Rule 41(d) does not require a showing that NetSoc acted
`in bad faith. Rather, “the court should simply assess whether a plaintiff’s conduct satisfies
`the requirements of Rule 41(d), and whether the circumstances of the case warrant an award
`of costs to prevent prejudice to the defendant.” Id. at 1388. See also Activox, Inc. v.
`Envirotech Corp., 532 F. Supp. 248, 251 (S.D.N.Y. 1981) (granting Rule 41(d) costs for
`previously dismissed patent action because “Whatever the strategy of [Plaintiff] may have
`been in dismissing its prior action, by virtue of Fed. R. Civ. P. 41(d) it is now subject to
`‘the payment of costs of the action previously dismissed.’”).
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`Here, NetSoc concedes in its July 16, 2019 letter to the Court that “both the ‘107
`patent and the ‘591 patent are highly related.” (ECF No. 61 in 18-cv-10262 (RA)
`(emphasis added)). NetSoc provided a chart to “illustrate[] the extreme similarity in the
`independent Claim 1 of the ‘107 patent as compared to the ‘591 patent.” Id. (emphasis
`added). In light of the foregoing, this Court may also in its discretion under Rule 41(d)
`award Oath its reasonable attorneys’ fees and costs incurred to date.
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`For all of the foregoing reasons, Oath seeks $26,220 in attorneys’ fees it has
`incurred to date in its defense of Oath against NetSoc’s baseless allegations concerning the
`’107 Patent. If the Court is not inclined to award attorneys’ fees from the inception of this
`case, Oath would seek at a minimum the fees expended after the date on which Oath filed
`its Motion to Dismiss (March 25, 2019), which amounts to $19,659,50.2
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`Oath appreciates the Court’s attention to this matter and its counsel will be prepared
`to address any questions the Court may have about its request for fees at the August 27,
`2019 hearing.
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`3. Defendant Quora’s Position (Case No. 1:18 Civ. 12250)
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`Defendant, Quora, Inc. (“Quora”) opposes NetSoc’s request for continued
`consolidation and issuance of a Markman briefing schedule in this matter. On March 25,
`2019 Quora filed a Motion to Dismiss for Improper Venue or in the alternative to Transfer
`(Dkt. 017-019) (hereinafter “Motion to Transfer”), which is still pending. Although
`NetSoc has since filed a First Amended Complaint (Dkt. 049), Quora’s previously filed
`Motion to Transfer is still operative and also applies to NetSoc’s First Amended Complaint.
`Quora will make itself available to the Court for oral arguments related to that motion
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`2 Oath is prepared to submit invoices reflecting its attorneys’ fees to date at the Court’s
`request.
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`should it be helpful to the Court. In addition, Quora intends to also file an additional motion
`to dismiss the First Amended Complaint at least on the basis that the ‘591 Patent is directed
`to unpatentable subject matter under 35 U.S.C. § 101. Quora respectfully requests the
`Court set a deadline for Quora to respond to the First Amended Complaint to fourteen (14)
`days after the Court rules on Quora’s pending Motion to Transfer.
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`In light of Quora’s pending Motion to Transfer and its additional forthcoming
`motion to dismiss, Quora respectfully requests the Court continue the current stay of
`discovery (including claim construction) in this matter pending the Court’s resolution of
`those motions. (See Dkt. 048). Quora’s Motion to Transfer is ripe for decision, and
`discovery should not proceed and a Markman schedule should not be set until both its
`Motion to Transfer and any additional motions to dismiss are resolved, as the Court
`previously ruled.
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`In addition, Quora objects to consolidation of the present cases, concerning three
`different asserted patents, for claim construction. Until the Court resolves Quora’s Motion
`to Transfer, which the Court has noted is strong, it is unclear which cases will remain in
`this district for potential consolidation.
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`Finally, Quora continues to reserve its right to seek an award of sanctions in the
`form of attorneys’ fees and costs under 28 U.S.C. § 1927 and/or Fed. R. Civ. Pro. 16(f)(2)
`and also reserves the right to request the case be deemed exceptional and the right to seek
`all of Quora’s legal fees and costs associated with NetSoc’s assertion of the ‘107 Patent.
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`4. Defendant Chegg’s Position (Case No. 1:18 Civ. 10262)
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`Defendant, Chegg, Inc. (“Chegg”) opposes NetSoc’s request for continued
`consolidation and issuance of a claim construction briefing schedule. As discussed herein,
`there are several pending motions before the Court, resolution of which could affect the
`number of Defendants, the number of asserted patents, and the forum(s) in which any
`remaining issues are litigated. Accordingly, Chegg requests that the Court continue the
`current stay of discovery (including claim construction) pending the Court’s resolution of
`those motions.
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`Sincerely,
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`William P. Ramey, III
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`CERTIFICATE OF SERVICE
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`Pursuant to the Federal Rules of Civil Procedure, I hereby certify that all counsel
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`of record who have appeared in this case are being served today August 20, 2019, with a
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`copy of the foregoing via the Court's CM/ECF system.
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`/s/ William P. Ramey, III
`William P. Ramey, III
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