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Wapp Tech L.P. v. Wells Fargo & Co.

United States District Court, E.D. Texas, Sherman Division

August 19, 2019

WAPP TECH LIMITED PARTNERSHIP and WAPP TECH CORP.
v.
WELLS FARGO & CO.

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendant Wells Fargo & Co.'s Motion to Stay (Dkt. #11). Having considered the motion and the relevant pleadings, the Court finds that the motion should be denied as premature.

         BACKGROUND

         Between July 2, 2018, and July 20, 2018, Plaintiffs Wapp Tech Limited Partnership and Wapp Tech Corp. filed this case and three other related cases in this Court. See Wapp Tech Ltd. P'ship v. Hewlett-Packard Enter. Co., 4:18-CV-00468-ALM; Wapp Tech Ltd. P'ship v. Micro Focus Int'l PLC, 4:18-CV-469-ALM; Wapp Tech Ltd. P'ship v. Bank of Am. Corp., 4:18-CV-519-ALM. In these cases, Plaintiffs allege that certain software products once owned by Hewlett-Packard Enterprise Company (“HP”) and now owned by Micro Focus International plc (“Micro Focus”) and its subsidiaries infringe on United States Patent Numbers 9, 971, 678, 9, 298, 864, and 8, 924, 192 (collectively, “patents-in-suit”).

         I. The Micro Focus Subsidiary Suit

         In Plaintiffs' case against Micro Focus, Micro Focus filed a motion to dismiss for lack of personal jurisdiction. Micro Focus Int'l PLC, 4:18-CV-469-ALM, Dkt. #12. After conducting jurisdictional discovery, Plaintiffs responded contending that the contacts of Micro Focus's subsidiaries operating in Texas could be imputed to Micro Focus because the subsidiaries were Micro Focus's alter egos. Id. at Dkt. #30. Considering the motion and relevant pleadings, the Court found that Plaintiffs could not establish a prima facie case that Micro Focus's subsidiaries were Micro Focus's alter egos. Id. Therefore, the Court dismissed Micro Focus from the suit, but allowed Plaintiffs to add five of Micro Focus's alleged subsidiaries to the suit: Seattle SpinCo Inc. (“SSI”), EntIT Software LLC (“EntIT”), EntCo Interactive (Israel) Ltd., Entco Government Software LLC, and Micro Focus (US) Inc. (collectively, the “Subsidiary Suit” or “Subsidiary Defendants”). Id.

         II. The Delaware Litigation

         Instead of seeking to intervene in one of the cases filed in this Court, on October 15, 2018, SSI and EntIT filed a declaratory judgment action against Plaintiffs in the United States District Court for the District of Delaware (“Delaware Litigation”). Seattle SpinCo, Inc. v. Wapp Tech Ltd. P'ship, 1:18-CV-01585-RGA (D. Del.). In the Delaware Litigation, SSI and EntIT assert that they manufacture and sell the Application Testing and Delivery Management (“ADM”) software at issue and seek a declaratory judgment of non-infringement, invalidity, and ineligibility concerning the patents-in-suit. Id. at Dkt. #1 ¶¶ 21-22, 32-96. On November 27, 2018, Plaintiffs moved to dismiss, transfer, or stay the Delaware Litigation. Id. at Dkt. #9; Dkt. #10. In their opening brief, Plaintiffs argued the District of Delaware lacked subject matter jurisdiction over the Delaware Litigation and, alternatively, that the case should be dismissed, stayed, or transferred pending the litigation in this Court. Id. at Dkt. #10. On March 15, 2019, the Honorable Richard G. Andrews stayed the Delaware Litigation and dismissed, without prejudice to re-urging, Plaintiffs' dismissal and transfer arguments. Id. at Dkt. #39.

         III. The HP Suit

         In Plaintiffs' suit against HP (the “HP Suit”), HP moved to stay the case pending the outcome of the Subsidiary Litigation. Hewlett-Packard Enter. Co., 4:18-CV-00468-ALM, Dkt. #13. HP alleged that prior to September 1, 2017, it possessed a software business that included the ADM software (Dkt. #13 at pp. 7-8). In September 2017, HP entered into a transaction termed the “Seattle Transaction” in which HP transferred the ADM software to its subsidiary SSI and SSI's subsidiaries. SSI and its subsidiaries then separated from Defendant.[1] Defendant claims that in the Seattle Transaction, SSI and its subsidiaries assumed all responsibility for the ADM software and, therefore, Defendant divested itself of any liability arising from the ADM software. As part of its motion to stay, HP agreed to be bound by the infringement and invalidity findings in the Subsidiary Suit. The Court granted HP's motion to stay finding: (1) substantial overlap between Plaintiffs' cases against HP and the Subsidiary Defendants; (2) no undue prejudice to Plaintiffs caused by a stay; (3) that a stay would simplify the issues in the HP and Subsidiary Suits; and (4) the HP Suit was in its infancy.

         IV. Wells Fargo & Company and Bank of America Corporation

         In this case-and Plaintiffs' case against Bank of America Corporation-Defendant also moves to stay the case pending the outcome of the Subsidiary Suit or the Delaware Litigation. (Dkt. #11); see Bank of Am. Corp., 4:18-CV-519-ALM, Dkt. #12.[2] Unlike the HP Suit, Defendant argues that the customer-suit doctrine, among other factors, warrants a stay of this case (Dkt. #11). Defendant filed its motion to stay on October 17, 2018 (Dkt. #11). Plaintiffs filed a response in opposition to the motion on November 1, 2018 (Dkt. #13). Defendant filed a reply in support of the motion on November 8, 2018 (Dkt. #14).

         LEGAL STANDARD

         A district court possesses the inherent power to control its own docket, including the power to stay proceedings. Clinton v. Jones, 520 U.S. 681, 706 (1997). In managing its docket, a district court must exercise judgment, weigh competing interests, and maintain an even balance. Landisv. N. Am. Co., 299 U.S. 248, 254-55 (1936). “The Supreme Court has repeatedly observed that under the doctrine of comity, when cases involving substantially overlapping issues are pending before two federal district courts, there is a ...


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