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Audatex North America Inc. v. Mitchell Int'l, Inc.

United States District Court, S.D. California

September 11, 2014

AUDATEX NORTH AMERICA INC., Plaintiff,
v.
MITCHELL INTERNATIONAL INC., Defendant

Decided September 12, 2014

For Audatex North America Inc., Plaintiff: David Brandon Clark, LEAD ATTORNEY, Patrick McGill, Irell & Manella LLP, Newport Beach, CA; David C McPhie, LEAD ATTORNEY, Irell and Manella, Newport Beach, CA; Jack B. Blumenfeld, LEAD ATTORNEY, Morris, Nichols, Arsht & Tunnell, Wilmington, DE; Jennifer Ying, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE.

For Mitchell International, Inc., Defendant: Colm F. Connolly, LEAD ATTORNEY, Morgan Lewis & Bockius LLP, Wilmington, DE; Mario Moore, LEAD ATTORNEY, Morgan, Lewis & Bockius, LLP, Irvine, CA; Jason C. White, Mansi H Shah, PRO HAC VICE, David Nicholas Patariu, Morgan, Lewis & Bockius LLP, Chicago, IL.

Page 1020

ORDER DENYING MOTION TO STAY [Docket No. 64]

HON. ROGER T. BENITEZ, United States District Judge.

Before this Court is a Motion to Stay, filed bye Defendant Mitchell International, Inc. (Docket No. 64). Defendant asks this Court to stay this matter pending the resolution of three Covered Business Method (CBM) petitions by the Patent Trial and Appeal Board (PTAB). For the reasons stated below, the Motion is DENIED WITHOUT PREJUDICE as premature with leave to re-file the motion if a CBM review is instituted.

BACKGROUND

I. Litigation

On February 6, 2012, Plaintiff Audatex North America, Inc. commenced this action by filing an action against Defendant in the District of Delaware. (Docket No. 1). The Complaint accused Defendant of infringing upon U.S. Patent No. 7,912,740 B2 ('740 Patent), which claims an invention entitled " System and Method for Processing Work Products for Vehicles Via the World Wide Web." (Compl. ¶ ¶ 6-14) The '740 Patent was dated March 22, 2011, and was subsequently assigned to Plaintiff. (Compl. ¶ ¶ 6, 7 & Ex. A). A First Amended Complaint was filed on August 13, 2012. (Docket No. 12). Plaintiff alleged that Defendant was also infringing U.S. Patent No. 8,200,513 B2 ('513 Patent), entitled " System and Method for Processing Work Products for Vehicles Via the World Wide Web." (First Am. Compl. ¶ ¶ 19-31 & Ex. B). The '513 Patent is dated June 12,

Page 1021

2012, and was assigned to Plaintiff. ( Id. ¶ ¶ 20, 21 & Ex. B).

A District of Delaware judge granted a motion to transfer venue to this District on June 28, 2013. (Docket No. 27). On April 22, 2014, this Court granted Plaintiff's unopposed Motion for Leave to File Supplemented First Amended Complaint. (Docket No. 55).

The Supplemented First Amended Complaint for Patent Infringement, which is the operative complaint in this matter, added a third claim of patent infringement. (Docket No. 57). Defendant is alleged to have infringed upon U.S. Patent No. 8,468,038 B2 ('038 Patent), also entitled " System and Method for Processing Work Products for Vehicles Via the World Wide Web." (Supp. First Am. Compl. ¶ ¶ 32-44). The patent is dated June 18, 2013. ( Id. ¶ 33, 34 & Ex. C). Defendant answered the Supplemented Complaint on May 12, 2014. (Docket No. 60). Defendant filed the instant Motion to Stay on August 14, 2014.

II. Covered Business Method Review

On August 11, 2014, Defendant filed three CBM petitions with the Patent and Trademark Office (PTO), challenging the validity of all claims of the '740, '513, and '038 Patents.

Section 18 of the Leahy-Smith America Invents Act (AIA) permits parties who have been sued for, or accused of, infringement to file a petition for review. Pub. L. No. 112-29, 125 Stat. 284, 329-31 (2011). The review is limited to challenges to the validity of " covered business method patents," which are patents that claim " a method or corresponding apparatus for performing data processing or other operations in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions." AIA, § 18(d)(1).

Defendant contends that all three asserted patents are: (1) invalid under 35 U.S.C. § 101 because they have ineligible subject matter, (2) invalid under 35 U.S.C. § 102 based on a prior art reference that anticipates the asserted claims, and (3) invalid under 35 U.S.C. § 103 based on prior art references that render obvious all asserted claims. (Mot. at 4-5 (citing Ex. C at 14, 20, 68; Ex. D at 13, 19, 75; Ex. E. at 14, 20, 72)).

LEGAL STANDARD

Section 18(b)(1) of the AIA lists four factors which courts are to consider when determining whether to grant a motion to stay pending CBM review. Courts are to decide based on: (A) whether a stay or the denial thereof, will simplify the issues in question and streamline the trial; (B) whether discovery is complete and whether a trial date has been set; (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

This test resembles the test applied in assessing motions to stay pending inter partes or ex parte reexamination by the PTO. Zillow, Inc. v. Trulia, Inc., No. C12-1549, 2013 WL 5530573, at *3 (W.D. Wash. Oct. 7, 2013) (citation omitted). The primary ...


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