United States District Court, N.D. California, San Jose Division
ORDER (1) CONDITIONALLY GRANTING JOINT MOTION TO STAY
PROCEEDINGS (2) DENYING WITHOUT PREJUDICE MOTION TO DISMISS
[RE: ECF 134]
BETH
LAB SON FREEMAN UNITED STATES DISTRICT JUDGE
The
above-captioned patent infringement actions involve the
patent holder, Dr. Daniel L. Dr. Flamm (“Dr.
Flamm”) who owns patents relating to methods used in
the fabrication of semiconductors; the manufacturer, Lam
Research Corporation (“Lam”) who makes and sells
semiconductor fabrication equipment; and a number of
Lam’s customers including, GLOBALFOUNDRIES U.S. Inc.
(“GLOBALFOUNDRIES”), Intel Corporation
(“Intel”), Maxim Integrated Products, Inc.
(“Maxim”), Micron Technology, Inc.
(“Micron”), and Samsung Electronics Co., Ltd.,
Samsung Electronics America, Inc., Samsung Semiconductor,
Inc., and Samsung Austin Semiconductor, LLC (collectively,
“Samsung”) (collectively together,
“customers”) who use Lam’s products. The
Court refers to Lam and its customers, collectively as
“chipmakers.” Case No. 15-1277 is a declaratory
judgment action filed by Lam against Dr. Flamm asserting
non-infringement of Dr. Flamm’s U.S. Patent Nos. 5,
711, 849 (“the ’849 patent”), 6, 017, 221
(“the ’221 patent”), and RE 40, 264
(“the ’264 patent”) (collectively, the
“asserted patents”). The remaining cases are Dr.
Flamm’s actions claiming infringement of the asserted
patents against each of the customers.
Pending
before the Court are Dr. Flamm’s motion to dismiss
Lam’s declaratory judgment action and a joint motion to
stay by the chipmakers in all of the cases. For the reasons
stated below, the Court CONDITIONALLY GRANTS the joint motion
to stay. As a result, the Court DENIES without prejudice Dr.
Flamm’s motion to dismiss. When the stay is lifted, Dr.
Flamm may re-notice its motion to dismiss or file a new
motion to dismiss.
I.BACKGROUND[1]
Dr.
Flamm is the owner and inventor of the ’849,
’221, and ’264 patents, which claim methods used
in manufacturing semiconductors. Exhs. A-C to SAC, ECF
52-4-52-6. Lam designs, manufactures, and sells semiconductor
processing tools that are used to fabricate semiconductors.
SAC ¶ 2, ECF 52-8; Ans. to SAC ¶ 2, ECF 66.
Around
September 2014, Dr. Flamm’s attorneys sent letters to
some of Lam’s customers accusing them of infringing the
patents-in-suit. SAC ¶¶ 29-30, Ans. to SAC
¶¶ 29-30. Lam, alleging that it may be required to
indemnify its customers, SAC ¶ 47, filed Case No.
15-1277 seeking declaratory judgment of non-infringement on
its own part and in regards to its customers. Dr. Flamm
responded by filing a Third-Party Complaint against the
customers GLOBALFOUNDRIES, Intel, Maxim, and Micron.
Third-Party Complaint, ECF 50-4. Dr. Flamm also filed a
complaint in the Western District of Texas against
Lam’s customer Samsung. Case No. 1:15-cv-00613 (W.D.
Tx.) at ECF 1. The Court severed Dr. Flamm’s claims
against GLOBALFOUNDRIES, Intel, Maxim, and Micron, ECF 120,
and Dr. Flamm filed new complaints against each of those
entities, Case No. 15-1578, 15-1579, 15-1580, 15-1581. On
April 22, 2016, the court in the Western District of Texas
granted Samsung’s motion to transfer the case to the
Northern District of California. Case No. 15-2252, ECF 53.
At the
same time the parties were engaging in litigation in the
district courts, in August 2015, Lam filed five petitions for
inter partes review directed to all claims of the
’221 and ’264 patents. In January 2016, Lam filed
four additional IPR petitions that are directed towards the
’849 and ’264 patents. The status of each of the
IPR petitions is summarized in the chart below:
-
Patent
|
IPR Request Covering Asserted
Claim
|
Instituted?
|
Anticipated Date of Final Written
Decision
|
â849
|
2016-00466
|
No
|
|
â221
|
2015-01767
|
Yes
|
February 24, 2017
|
â264
|
2015-01759
|
No
|
|
2015-01764
|
Yes
|
February 24, 2017
|
2015-01766
|
No
|
|
2015-01768
|
Yes
|
February 24, 2017
|
2016-00468
|
No
|
|
2016-00469
|
No
|
|
2016-00470
|
No
|
|
Although
the customers did not request any of the instituted IPRs or
file motions to join them, they have represented that they
are willing to agree not to reargue invalidity grounds in the
above-captioned cases that the PTAB considers and overrules
in final written decisions on the instituted IPR petitions.
Reply 1, 3, ECF 138.
II.
LEGAL STANDARD
A
district court has inherent power to manage its own docket
and stay proceedings, “including the authority to order
a stay pending conclusion of a PTO reexamination.”
Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed.
Cir. 1988). A court is under no obligation to stay
proceedings pending parallel litigation in the PTAB. See
Aylus Networks, Inc. v. Apple, Inc., No. C-13-4700 EMC,
2014 WL 5809053, at *1 (N.D. Cal. Nov. 6, 2014). The factors
that courts in this district consider when determining
whether to stay litigation are: “(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 Techs., LLC v. Apple,
Inc., 69 F.Supp.3d 1022, 1025 (N.D. Cal. 2014).
III.
DISCUSSION
The
parties dispute whether the Court should defer ruling on the
motion to stay until Dr. Flamm’s motion to dismiss
Lam’s Second Amended Complaint is resolved. Dr. Flamm
argues that it would not be fair for the Court to stay
proceedings without resolving the question of whether federal
subject matter jurisdiction has been established especially
since the motion to dismiss was filed first. Opp. 2-3, ECF
137. The chipmakers argue that Dr. Flamm’s argument
overlooks the fact that Dr. Flamm has admitted that
regardless of the outcome of the motion to dismiss, subject
matter jurisdiction will still exist over Lam’s
declaratory judgment action. Reply 1, ECF 138 (citing Mot. to
Dismiss 4, ECF 64 (noting that “Lam successfully
alleges the existence of a case or controversy regarding
claim 10 of the ’849 Patent….”). As a
result, the chipmakers argue that in the interests of
conserving judicial and party resources, the motion to stay
should be resolved first
The
Court agrees with the chipmakers and finds that in the
interests of judicial economy, the motion to stay should be
decided before the motion to dismiss. First, contrary to Dr.
Flamm’s argument, the Court does not need to resolve
the motion to dismiss to determine whether federal subject
matter jurisdiction has been established. By Dr.
Flamm’s own admission, this Court has subject matter
jurisdiction regardless of the outcome of the motion to
dismiss. Mot. to Dismiss 4, ECF 64 (“Lam successfully
alleges the existence of a case or controversy regarding
claim 10 of the ’849 Patent….”). Second,
the Court notes that Dr. Flamm also filed a prior motion to
stay in Case No. 15-1277 that was pending at the same time as
his motion to dismiss. Yet, Dr. Flamm never argued that the
Court should first rule on his motion to dismiss and defer
ruling on his motion to stay; Dr. Flamm’s new-found
concern about ...