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Segin Systems, Inc. v. Stewart Title Guar. Co.

United States District Court, E.D. Virginia, Norfolk Division

March 31, 2014

SEGIN SYSTEMS, INC., and SEGIN SOFTWARE, LLC d/b/a RYNOHLIVE, Plaintiffs,
v.
STEWART TITLE GUARANTY COMPANY, PROPERTYINFO CORPORATION, and FIRST BANKING SERVICES, INC., Defendants

Page 477

For Segin Systems, Inc., Segin Software, LLC, doing business as RYNOHLIVE, Plaintiffs: Ann Marie Duffy, LEAD ATTORNEY, Mayer Brown LLP, Washington, DC; Ethan G. Ostroff, John C. Lynch, LEAD ATTORNEYS, Troutman Sanders LLP, Virginia Beach, VA; Robert Armistead Angle, LEAD ATTORNEY, Troutman Sanders LLP, Richmond, VA; A. John Peter Mancini, Elizabeth Montyne Winokur, Vanessa Marie Biondo, PRO HAC VICE, Mayer Brown LLP (NY-NA), New York, NY.

For Stewart Title Guaranty Company, PropertyInfo Corporation, Defendants, Counter Claimants: Brett Ashley McKean, Jayme Partridge, PRO HAC VICE, Fulbright & Jaworski LLP (TX-NA), Houston, TX; David Marion Foster, Fulbright & Jaworski LLP, Washington, DC; Jon Collins Rice, PRO HAC VICE, Norton Rose Fulbright, Houston, TX.

For First Banking Services, Inc., Defendant: W. Ryan Snow, LEAD ATTORNEY, David Caldwell Hartnett, Crenshaw Ware & Martin PLC, Norfolk, VA; John Paul Doyle, PRO HAC VICE, Law Office of John P. Doyle, Murfreesboro, TN.

For Segin Software, LLC, Segin Systems, Inc., Counter Defendants: Ann Marie Duffy, LEAD ATTORNEY, Mayer Brown LLP, Washington, DC; A. John Peter Mancini, Elizabeth Montyne Winokur, Vanessa Marie Biondo, PRO HAC VICE, Mayer Brown LLP (NY-NA), New York, NY; Ethan G. Ostroff, Troutman Sanders LLP, Virginia Beach, VA.

For First Banking Services, Inc., Counter Claimant: W. Ryan Snow, LEAD ATTORNEY, Crenshaw Ware & Martin PLC, Norfolk, VA; John Paul Doyle, Law Office of John P. Doyle, Murfreesboro, TN.

For Segin Software, LLC, Segin Systems, Inc., Counter Defendants: Ann Marie Duffy, LEAD ATTORNEY, Mayer Brown LLP, Washington, DC; A. John Peter Mancini, Elizabeth Montyne Winokur, Vanessa Marie Biondo, Mayer Brown LLP (NY-NA), New York, NY; Ethan G. Ostroff, Troutman Sanders LLP, Virginia Beach, VA.

Page 478

MEMORANDUM OPINION & ORDER

Raymond A. Jackson, United States District Judge.

Before the Court is Defendants' Joint Motion to Stay. ECF No. 43. Plaintiffs developed, own, and employ a patented real estate settlement fraud prevention software system. Eight months after Plaintiffs filed this suit against Defendants for patent infringement and breach of contract, Defendants filed a petition for a review of the patent at issue with the Patent Trial and Appeal Board of the United States Patent and Trademark Office. Shortly thereafter, Defendants filed the instant motion asking the Court to stay this action pending that review pursuant to section 18(b) of the America Invents Act. For the reasons stated below, Defendants' Joint Motion is DENIED WITHOUT PREJUDICE to renew it.

I. FACTUAL AND PROCEDURAL HISTORY

On April 24, 2012, the U.S. Patent and Trademark Office (" PTO" ) issued a patent to Plaintiff Segin Software entitled " Method of Settling a Real Estate Transaction and System Implementing the Method." Compl. ¶ 50. Plaintiff Segin Systems had designed the patented software system as a method of combating and detecting fraud in the real estate settlement field. Compl. ¶ ¶ 10-11. It launched the system, called Rynoh Live, in early 2009. Compl. ¶ 12. Plaintiff Segin Software, LLC is a subsidiary of Plaintiff Segin Systems and now

Page 479

owns the rights to the patent. Compl. ¶ 17.

When this software system was in its early development stages in 2004, one of the founders of Segin Systems communicated with Defendant Stewart Title Guaranty Company (" Stewart Title" ) about the project. Compl. ¶ 22. Shortly thereafter, the parties entered into Nondisclosure Agreements to restrict the disclosure of information about the project. Compl. ¶ ¶ 23-24. The parties continued to meet and discuss the prospect of Defendant Stewart Title purchasing the rights to use Rynoh Live. Compl. ¶ ¶ 30-31. Stewart Title made an offer in 2008, which Segin Systems rejected. Compl. ¶ ¶ 32-33. In late 2009, Stewart Title launched its own real estate settlement technology system developed by Defendant First Banking Services (" FBS" ). Compl. ¶ 37. Plaintiffs now contend that system is an infringing " clone" of Rynoh Live that directly competes with it, and that Stewart Title passed on the information it learned about Plaintiffs' patented system to FBS so that FBS could develop the competing system. Compl. ¶ ¶ 36-38.

On April 12, 2013, Segin Systems and Segin Software filed a complaint against Stewart Title, PropertyInfo Corporation, and FBS for patent infringement and breach of contract. Defendants were served with the complaint on or about July 25, 2013. Joint Mot. to Stay 3. Plaintiffs allege that all three Defendants have infringed and continue to infringe the patent. They also raise a breach of contract claim against Stewart Title and its affiliate PropertyInfo Corporation, and allege that those two Defendants breached and continue to breach the Nondisclosure Agreements. On September 23, 2013, Defendants filed their Answers to the Complaint generally denying the allegations. Defendants Stewart Title and PropertyInfo also raised counterclaims seeking a declaration that the patent is invalid. Defendant FBS filed an Amended Answer on October 15, 2013 that raised a similar counterclaim, and on November 18, 2013, Plaintiffs filed their answer to the counterclaims.

On December 26, 2013, Defendants filed the instant Motion to Stay. They noted that on December 20, 2013, they had filed a petition with the Patent Trial and Appeal Board (" PTAB" ) of the PTO challenging the validity of all claims of the patent pursuant to 35 U.S.C. § § 101 & 112. Joint Mot. to Stay 4. A Rule 16(b) scheduling conference was held on January 13, 2014. The Scheduling Order set the Markman hearing for July 28, 2014, the completion of discovery (except as to expert witnesses) for September 16, 2014, and the trial for October 28, 2014. ECF No. 51. The day after the scheduling conference, Plaintiffs filed their ...


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