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Pragmatus Telecom, LLC v. Netgear

May 13, 2013

PRAGMATUS TELECOM, LLC,
v.
NETGEAR, INC.,
PLAINTIFF,



The opinion of the court was delivered by: Saundra Brown Armstrong United States District Judge

PENDING THE RESOLUTION OF THE VALIDITY OF THE ORDER GRANTING DEFENDANT'S MOTION TO STAY PATENTS-IN-SUIT 10 against NETGEAR, Inc. ("NETGEAR") alleging infringement of U.S. Patent Nos. 6,311,231 ("'231 Patent"), 6,668,286 ("'286 Patent") and 7,159,043 ("'143 Patent"). The 16 parties are presently before the Court on NETGEAR's Motion to Stay Pending Resolution 17 of the Validity of the Patents-in-Suit. Dkt. 19. Having read and considered the papers filed 18 in connection with this matter and being fully informed, the Court hereby GRANTS the 19 motion and stays the action. The Court, in its discretion, finds this matter suitable for 20 resolution without oral argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b). 21

I.BACKGROUND 22

23 pending reexamination proceedings before the United States Patent and Trademark Office 24 ("PTO") and/or other federal district court lawsuits. More specifically, on December 12, 25 2012, the PTO issued an Order on a third party request for inter partes reexamination of the 26 '286 Patent which rejected Claims 9-10, 16-17, 21-25 and 28. See Wang Decl. ¶¶ 5-8, Exs. 27 C & D, Dkt. 20-3, 20-4. As for the '231 Patent, which is the subject of an ex parte 28 reexamination, the PTO found that there is a "substantial new question of patentability" for Defendant. Docket 19

Pragmatus Telecom, LLC ("Pragmatus") brings this patent infringement action Pragmatus is the owner of the three patents-in-suit, all of which are being litigated in Claims 9-12. See id. Ex. E, Dkt. 20-5.1 The request for inter partes reexamination of '043 2 patent was denied on November 26, 2012. See Pl.'s Opp'n at 2, Dkt. 24. In addition to the 3
PTO actions, all three of the patents-in-suit are at issue in pending lawsuits involving 4 Pragmatus in the District of Delaware and the Eastern District of Texas. See LivePerson 5 Inc. v. Pragmatus Telecom LLC, No. 1:2012-cv-147 (D. Del.); Pragmatus Telecom LLC v. 6 Neiman Marcus Group, Inc., No. 6:2011-cv-620 (E.D. Tex.). The validity of the patents-7 in-suit is at issue in those cases. See Wang Decl. ¶¶ 35-40. 8 On December 6, 2012, Pragmatus filed the instant patent infringement action in this Court. Pragmatus does not allege that any of NETGEAR's products infringe the patents-in-10 suit. Rather, Pragmatus claims that the software used on NETGEAR's website to facilitate 11 a "click-to-chat" feature is infringing. See id. Ex. B at 1, Dkt. 20-2. NETGEAR does not 12 own and did not develop the click-to-chat software; rather it licenses the software from a 13 third party for approximately $7,000 per year. See Sze Decl. ¶ 6, Dkt. 21. Nonetheless, 14 Pragmatus has demanded a $400,000 licensing fee from Pragmatus. See Wang Decl. Ex. B 15 at 2. 16 17 resolution of the reexamination proceedings. Pragmatus opposes the motion. The matter 18 has been fully briefed and is ripe for adjudication. 19

II.LEGALSTANDARD 20

of a patent. Amado v. Microsoft Corp., 517 F.3d 1353, 1358 (Fed. Cir. 2008). In 22 determining whether to grant a stay pending reexamination, courts consider: (1) whether 23 discovery is complete and whether a trial date has been set; (2) whether a stay will simplify 24 the issues in question and trial of the case; and (3) whether a stay would unduly prejudice 25 or present a clear tactical disadvantage to the non-moving party. Spectros Corp. v. Thermo 26 A third party requestor may participate in an inter partes reexamination, but not in an ex parte reexamination. 35 U.S.C. §§ 305, 314(b)(2). NETGEAR did not initiate the 28 reexamination proceedings involving the patents-in-suit.

NETGEAR now moves the Court for an Order staying the instant action pending

A district court has the discretion to stay judicial proceedings pending reexamination Fisher Scientific, Inc., No. C 09-1996 SBA, 2010 WL 338093, at *2 (N.D. Cal. Jan. 20,

III.DISCUSSION 4

outcome of the PTO reexamination or reissuance proceedings, especially in cases that are 7 still in the initial stages of litigation and where there has been little or no discovery. 8 Yodlee, Inc. v. Ablaise Ltd., No. C 06-7222 SBA, 2009 WL 112857, at *2 (N.D. Cal. Jan. 9 2010).

A.STAGE OF THE LITIGATION

There is a liberal policy in favor of granting motions to stay proceedings pending the 16, 2009). Here, the action was filed only a few months ago on December 6, 2012, and no 10 trial date or other pretrial deadlines have been established. 11

contends that the reexamination proceedings are in their "infancy," and therefore, the Court 13 must, in turn, "balance the stage of the reexamination proceedings against the stage of the 14 patent litigation." Opp'n at 6, Dkt. 24. In this Court's view, however, it is the stage of the 15 instant action, not the reexamination, that is germane to whether a stay is appropriate. See 16 AT & T Intellectual Property I v. Tivo, Inc., 774 F. Supp. 2d 1049, 1052 (N.D. Cal. 2011); 17 accord Sonics, Inc. v. Arteris, Inc., No. C 11-5311 SBA, 2013 WL 503091, at *1 (N.D. Cal. 18 Feb. 8, 2013); Ho Keung Tse v. Apple, Inc., No. C 06-6573 SBA, at *2 (N.D. Cal. May 5, 19 2010); Esco Corp. v. Berkeley Forge & Tool, Inc., No. C 09-1635 SBA, 2009 WL 20 3078463, at *2 (N.D. Cal. Sept. 28, 2009); Yodlee, 2009 WL 112857, at *3. The Court 21 thus finds that the fact that the stay is being sought early in the litigation militates in favor 22 of a stay. 23 25 issues in question and trial of the case." AT & T Intellectual Property I, 774 F. Supp. 2d at 26 1052; see also Gould v. Control Laser ...


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