United States District Court, E.D. Texas, Sherman Division
WAPP TECH LIMITED PARTNERSHIP and WAPP TECH CORP.
BANK OF AMERICA CORP.
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE
before the Court is Defendant Bank of America Corp.'s
Motion to Stay (Dkt. #12). Having considered the motion and
the relevant pleadings, the Court finds that the motion
should be denied as premature.
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. Wells Fargo & Co., 4:18-CV-501-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”).
The Micro Focus Subsidiary Suit
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.
The Delaware Litigation
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.
The HP Suit
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. 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.
Wells Fargo & Company and Bank of America
case-and Plaintiffs' case against Wells Fargo
Co.-Defendant also moves to stay the case pending the outcome
of the Subsidiary Suit or the Delaware Litigation. (Dkt.
#11); see Wells Fargo & Co., 4:18-CV-501-ALM,
Dkt. #11. Unlike the HP Suit, Defendant argues that
the customer-suit doctrine, among other factors, warrants a
stay of this case (Dkt. #12). Defendant filed its motion to
stay on October 17, 2018 (Dkt. #12). Plaintiffs filed a
response in opposition to the motion on November 1, 2018
(Dkt. #14). Defendant filed a reply in support of the motion
on November 8, 2018 (Dkt. #15).
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 ...