United States District Court, N.D. California
ORDER GRANTING MOTION TO STAY Re: Dkt. No. 99
HAYWOOD S. GILLIAM, Jr., District Judge
On March 12, 2015, Defendant Apple Inc. filed a motion to stay the case pending completion of inter partes review ("IPR") proceedings. Dkt. 99 ("Mot."). The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Civ. L.R. 7-1(b). For the reasons articulated below, the motion is GRANTED.
A. America Invents Act
By enacting the Leahy-Smith America Invents Act ("AIA"), Congress sought 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." 77 Fed. Reg. 48, 680-01 (Aug. 14, 2014) (to be codified at 37 C.F.R. § 42.100 et seq ). To that end, AIA created the IPR procedure, by which the Patent and Trademark Office's ("PTO") Patent Trial and Appeal Board ("PTAB") may review the patentability of one or more claims in a patent. See 35 U.S.C. §§ 311-319. IPR replaces the previous inter partes reexamination procedure and converts the process from an examinational to an adjudicative one. See Abbott Labs. v. Cordis Corp., 710 F.3d 1318, 1326 (Fed. Cir. 2013).
IPR allows any party other than the patent owner to challenge patent validity under 35 U.S.C. § 102 or § 103 "on the basis of prior art consisting of patents or printed publications." 35 U.S.C. § 311(a)-(b). The petitioning party must establish "a reasonable likelihood that the petitioner would prevail with respect to at least [one] of the claims challenged in the petition" in order for the PTO to institute IPR. 35 U.S.C. § 314(a). If the PTO decides to institute IPR, the proceeding is conducted before a panel of three technically-trained Administrative Patent Judges of the PTAB. See 35 U.S.C. §§ 6(a)-(c), 316. Following a final determination, the petitioning party is estopped from asserting invalidity during a later civil action "on any ground that the petitioner raised or reasonably could have raised during" the IPR. 35 U.S.C. § 315(e)(2).
B. This Litigation
Plaintiff DSS Technology Management, Inc. filed its complaint against Defendant on November 26, 2013 in the Eastern District of Texas, alleging infringement of U.S. Patent Nos. 6, 128, 290 (the 290 patent) and 5, 699, 357 (the 357 patent). Dkt. 1. Plaintiff later withdrew all infringement allegations as to the 357 patent, so presently only the 290 patent is at issue. See Dkt. 96. On November 7, 2014, the Eastern District of Texas granted Defendant's motion to transfer the case to the Northern District of California. Dkt. 85. On February 13, 2015, the case was reassigned to this Court.
On December 4, 2014, Defendant filed two petitions for IPR of the 290 patent. Mot. at 1. All of the 290 patent claims asserted by Plaintiff are covered by Defendant's petitions. Id. at 3. A decision on institution is expected from the PTO by June 30, 2015. Dkt. 105 ("Opp.") at 6.
Discovery is underway. The parties have exchanged multiple sets of infringement and invalidity contentions. Id. at 3-4. The parties have also exchanged three sets of written interrogatories and have collectively produced over 100, 000 pages of documents. Id. at 4. Plaintiff deposed the named inventor of the 209 patent in September 2014. Id. Defendant has served a number of document and deposition subpoenas on third parties. Id. at 5. The deadline for the parties to complete fact discovery is November 2, 2015. Dkt. 106. The parties have fully briefed claim construction issues, and a patent technology tutorial and Markman hearing are scheduled for May 15, 2015. Id.
A. Legal Standard
"Courts have 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) (citations omitted). While courts are "under no obligation to stay proceedings pending parallel litigation in the PTAB, ... judicial efficiency and the desire to avoid inconsistent results may, after a careful consideration of the relevant factors, counsel in favor of a limited stay, even before the PTAB has acted on a petition for IPR." Delphix Corp. v. Actifio, Inc., No. 13-cv-04613-BLF, 2014 WL 6068407, at *2 (N.D. Cal. Nov. 13, 2014). Indeed, some courts in this district have recognized "a liberal policy in favor of granting motions to stay proceedings pending the outcome of USPTO reexamination or reissuance proceedings." Pragmatus AV, LLC v. Facebook, Inc., No. 11-cv-02168-EJD, 2011 WL 4802958, at *2 (N.D. Cal. Oct. 11, 2011).
Courts consider three factors when determining whether to grant a stay pending IPR: "(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 non-moving party." Evolutionary Intelligence, LLC v. Facebook, Inc., No. 13-cv-04202-SI, 2014 WL 261837, at *1 (N.D. Cal. Jan. 23, 2014). The moving party bears the burden of demonstrating that a ...