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Hewlett-Packard Co. v. Servicenow, Inc.

United States District Court, N.D. California, San Jose Division

April 9, 2015

HEWLETT-PACKARD COMPANY, Plaintiff,
v.
SERVICENOW, INC., Defendant.

ORDER DENYING MOTION FOR STAY; AND SETTING CASE MANAGEMENT CONFERENCE [RE: ECF 92]

BETH LABSON FREEMAN, District Judge.

Defendant ServiceNow, Inc. ("ServiceNow") moves for a stay of litigation pending inter partes review ("IPR") and covered business method ("CBM") review of the patents-in-suit. Plaintiff Hewlett-Packard Company ("HP") opposes the motion. The Court has considered the briefing as well as the oral argument presented at the hearing on April 2, 2015. For the reasons discussed below, the motion for stay is DENIED and a further Case Management Conference is HEREBY SCHEDULED for September 17, 2015 at 1:30 p.m.

I. BACKGROUND

HP filed the complaint in this action on February 6, 2014, alleging ServiceNow's infringement of eight patents covering a variety of products and services. The asserted patents are United States Patent Nos. 7, 925, 981; 7, 945, 860; 7, 392, 300; 7, 027, 411; 7, 890, 802; 7, 610, 512; 8, 224, 683; and 6, 321, 229. In November 2014, HP filed amended infringement contentions, asserting infringement of forty-four claims across the eight patents-in-suit.

In December 2014, ServiceNow filed a motion for summary judgment pursuant to Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 135 S.Ct. 2347 (2014), seeking summary judgment of invalidity with respect to the asserted claims of the '802, '512, '683, and '229 patents. Shortly thereafter, ServiceNow filed petitions for IPR challenging the validity of all of the claims identified by HP in its amended infringement contentions. ServiceNow also filed a petition for CBM review of the asserted claims of the '981 patent. The parties expect that the Patent Trial and Appeal Board ("PTAB") of the United States Patent and Trademark Office will act on those petitions by late August 2015.

In February 2015, ServiceNow filed the present motion for stay pending IPR and CBM review. After HP filed opposition but before ServiceNow filed a reply, the Court granted the Alice motion in its entirety, reducing the number of patents-in-suit from eight to four. ServiceNow thereafter filed a reply to HP's opposition to the motion for stay.

At the April 2, 2015 hearing on the stay motion, the Court indicated that it was not inclined to stay the litigation but that it would continue the scheduled tutorial and Markman hearing beyond the last date that the PTAB could be expected to act on the petitions. The Court directed the courtroom deputy clerk to reschedule the June 5, 2015 tutorial for December 11, 2015 and the June 12, 2015 Markman hearing for December 18, 2015. The courtroom deputy clerk did so by clerk's notice entered April 2, 2015. See Clerk's Notice, ECF 112.

II. LEGAL STANDARD

The factors relevant to a stay pending IPR have been developed by the courts. In this district, courts consider three factors to determine whether a stay of litigation is warranted: "(1) whether discovery is complete and whether a trial date has been set; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party." PersonalWeb Tech., LLC v. Apple Inc., ___ F.Supp. 3d ___, 2014 WL 4757816, at *2 (N.D. Cal. Sept. 24, 2014) (internal quotation marks and citation omitted).

The factors relevant to a stay pending CBM review are mandated by statute. Those factors, which are set forth in the America Invents Act ("AIA"), have been summarized by the Federal Circuit as follows: "(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." VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1309 (Fed. Cir. 2014) (citing AIA ยง 18(b)(1)). "This test resembles the one that courts have applied in assessing a motion to stay pending inter partes or ex parte reexamination by the PTO." Xilidev, Inc. v. Boku, Inc., No. 13cv2793 DMS (NLS), 2014 WL 3353256, at *1 (S.D. Cal. July 1, 2014) (internal quotation marks and citation omitted). "The primary difference between this test and the one employed by courts in the ordinary patent reexamination context is the inclusion of the fourth factor regarding whether a stay will reduce the burden of litigation." Id. (internal quotation marks and citation omitted). With respect to motions for stay pending CBM review, "Congress apparently adopted the fourth factor to place a thumb on the scale in favor of granting stays." Moneycat Ltd. v. Paypal Inc., No. 14-cv-02490-JST, 2014 WL 5689844, at *2 (N.D. Cal. Nov. 4, 2014).

III. DISCUSSION

A. Stage of the Litigation (IPR & CBM)

The stage of the litigation generally is measured as of the time that the motion for stay was filed. See VirtualAgility, 759 F.3d at 1317 ("Generally, the time of the motion is the relevant time to measure the stage of the litigation."). At the time ServiceNow filed the present motion, the action had been pending for approximately one year. The parties had exchanged infringement and invalidity contentions and the Court had heard and submitted a motion for partial summary judgment (since decided) directed to four out of eight patents-in-suit. The parties were starting to gear up for the Markman hearing, which at that time was scheduled for June 12, 2015. Some discovery had been conducted, but a great deal more remained (and remains) to be done. Fact discovery does not cut off until sixty days after the Markman order issues, and trial is not set to commence until May 16, 2016. Thus although the Court would not characterize this case as being in its "infancy" as asserted by ServiceNow, see Def.'s Reply at 1, ECF 109, neither would the Court characterize it as being at an "advanced" stage as asserted by ...


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