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MoneyCat Ltd. v. Paypal Inc.

United States District Court, Northern District of California

November 4, 2014

MONEYCAT LTD, Plaintiff,
PAYPAL INC, Defendant

For MoneyCat LTD, Plaintiff: Howard Neil Wisnia, LEAD ATTORNEY, Arun Kumar Goel, Mintz Levin Cohn Ferris Glovsky & Popeo P.C., San Diego, CA; Brad M. Scheller, Seth R. Goldman, PRO HAC VICE, Mintz Levin Cohn Ferris Glovsky & Popeo P.C., New York, NY; Michelle Gillette, Mintz Levin Cohn Ferris Glovsky and Popeo P.C., San Francisco, CA.

For Paypal Inc, Defendant: Jared Bobrow, LEAD ATTORNEY, Weil Gotshal & Manges LLP, SiliconValley Office, Redwood Shores, CA; Byron Cain Beebe, Weil, Gotshal & Manges LLP, Redwood Shores, CA; Christopher J. Cox, Weil Gotshal & Manges, Redwood Shores, CA; Melissa LaRue Hotze, Weil Gotshal & Manges LLP, Houston, TX.


JON S. TIGAR, United States District Judge.

Before the Court is PayPal, Inc.'s renewed Motion to Stay Pending Covered Business Method Review. ECF No. 134. For the reasons set forth below, the Court will GRANT the motion.


This is a patent infringement action between MoneyCat, Ltd., a non-practicing entity, and PayPal, Inc., an e-commerce business that allows users to make payments and money transfers through the Internet. MoneyCat alleges infringement involving forty-two claims across three patents: U.S. Patent Nos. 7, 590, 602 (" '602 Patent"); 8, 051, 011 (" '011 Patent"); and 8, 195, 578 (" '578 Patent"). ECF Nos. 1 at 2-4; 134 at 3. The patents relate to electronic payment systems. ECF No. 1 at 2-4. The patents-in-suit were subject to Patent and Trademark Office proceedings prior to this litigation: the '602 Patent has been the subject of two ex parte reexamination proceedings, and the '011 and '578 Patents have each been the subject of one ex parte reexamination proceeding. ECF No. at 134 at 4 n.1.

MoneyCat originally filed its complaint in the District of Delaware on July 30, 2013. ECF Nos. 1, 134 at 3. On February 3, 2014, PayPal filed a motion to transfer this case here, to the Northern District of California. ECF No. 33. On February 20, 2014, MoneyCat served its initial claim charts on PayPal, and on February 27, it served on PayPal a list of terms for claim construction. ECF Nos. 44, 46. On March 14, 2014, PayPal petitioned the Patent Trial and Appeals Board (" PTAB") to institute covered business method (" CBM") review with regard to all claims of the patents-in-suit that are in dispute in this litigation. ECF No. 59 at 1. Four days later, it filed its initial motion to stay before the Delaware court. ECF Nos. 58, 59.

On the same day PayPal filed its initial motion to stay, the parties filed a joint claim construction chart. ECF No. 62. Then, on April 28, 2014, the parties filed opening claim construction briefs. ECF Nos. 84-88.

The Delaware Court granted the motion to transfer on May 15, 2014. ECF No. 97. That court did not decide whether to stay the case before it was transferred here. On July 15, 2014, PayPal filed with this Court its Renewed Motion to Stay Pending Covered Business Method Review. ECF No. 134.

On September 24, 2014, after briefing was complete but prior to the hearing on the motion, the PTAB instituted review of all three patents-in-suit, and all but two dependent claims under those patents. ECF Nos. 164, 165.


" Courts have [the] inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination." Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (internal citations omitted). A stay may be " particularly justified where the outcome of the reexamination would be likely to assist the court in determining patent validity, and if the claims were cancelled in the reexamination, would eliminate the need to try the infringement issue." In re Cygnus Telecomms. Tech., LLC Patent Litig., 385 F.Supp.2d 1022, 1023 (N.D. Cal. 2005) (citing Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983)).

Under § 18(b)(1) of the Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284, 329-32 (2011), Congress codified four factors for courts to consider when determining whether to grant a motion to stay pending CBM review: (1) whether a stay will simplify the issues in question and streamline the trial; (2) whether discovery is complete and a trial date is set; (3) whether a stay would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (4) whether a stay will reduce the burden of litigation on the parties and the court. The U.S Court of Appeals for the Federal Circuit has noted that the first and fourth factors overlap somewhat but nonetheless are " separate, individual factors which must be weighed in the stay determination. [Courts cannot] collapse the four-factor test expressly adopted by Congress into a three-factor test." VirtualAgility Inc. v., 759 F.3d 1307, 1313 (Fed. Cir. 2014).

Congress enacted the AIA in order " 'to establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs' and 'to create a timely, cost-effective alternative to litigation.'" PersonalWeb Techs., LLC v. Facebook, Inc., Nos. 5:13-CV-01356-EJD, 5:13-CV-01358-EJD, 5:13-CV-01359-EJD, 2014 WL 116340 (N.D. Cal. Jan. 13, 2014) (citing U.S. Patent and Trademark Office, Changes to Implement Inter Partes Review Proceedings, Post-Grant Review Proceedings, and Transitional Program for Covered Business Method Review Patents, 77 Fed. Reg. 48680-01 (Aug. 12, 2012) (codified at 37 C.F.R. § § 42.100 et seq .)). Although the first three factors of the AIA test largely track the test federal courts have previously used to evaluate motions to stay pending earlier types of patent review, Congress apparently adopted the fourth factor to place a thumb on the scale in favor of granting stays. Market-Alerts Pty. Ltd. v. Bloomberg Finance L.P., 922 F.Supp.2d 486, 496 & n.14 (D. Del. Feb. 5, 2013) (noting that " [i]t appears the intent of [the fourth factor] was to ensure that district courts would grant stays pending CBM review proceedings at a higher rate than they have allowed stays pending ex parte reexaminations.") (citations ...

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