United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOTION TO STAY AND MOTION TO INTERVENE
[RE: ECF 43, 47]
LAB SON FREEMAN United States District Judge
Joseph Prencipe and McLear & Co. d/b/a NFC Ring
(“NFC Ring”) bring this suit against Kerv
Wearables LTD (“Kerv”), for infringement of
Plaintiffs' patent, U.S. Patent No. 9, 313, 609 (the
'609 patent) and violation of the Lanham Act, as well as
the Defense of the Trade Secret Act, based on allegations
relating to Kerv's contactless payment ring. First Am.
Compl. (“FAC”), ECF 14. Before the Court are the
parties' joint motion to stay litigation and a motion by
non-party Esos Rings, Inc. (“Esos”) to intervene
in this action. Stay Mot., ECF 43; Mot. to Intervene, ECF 47.
Pursuant to Civ. L.R. 7-1(b), the Court finds these motions
suitable for submission without oral argument and hereby
VACATES the hearing scheduled for October 5, 2017. For
reasons set forth below, the Court GRANTS the stay motion and
GRANTS the motion to intervene.
respect to non-party Esos' motion to intervene, Esos
moves on the basis that it (and not NFC Ring) is the rightful
owner of the '609 patent, and that all the claims in the
FAC are premised on the infringement of the '609 patent.
ECF 47. Kerv does not oppose Esos' intervention but urges
the Court to grant the stay motion. ECF 57. Accordingly, the
Court GRANTS Esos' motion to intervene in this case.
to Kerv's stay motion, Kerv moves to stay this case
pending the resolution of state court litigation that bears
directly on NFC Ring's ownership of and authority to
enforce the '609 patent. Stay Mot. 2. NFC Ring is
currently embroiled in state court litigation with Esos, who
claims to be the true owner of the '609 patent and seeks
an order restraining NFC Ring from taking any action with
respect to the '609 patent. Id. at 2-3; Ex. C to
Stay Mot., ECF 44-3. After meeting and conferring, NFC Ring
and Kerv agree that litigating this action prior to resolving
the dispute regarding the '609 patent would be a waste of
judicial and parties' resources. Stay Mot. 3. NFC Ring
thus does not oppose the stay motion. Id. at 2.
submits a proposed opposition to the stay motion, assuming
that this Court permits it to intervene. Esos' Proposed
Opp'n, ECF 50-3. Given that the Court is granting
Esos' motion to intervene, Esos' opposition to the
stay request will be considered. Esos first argues that no
standing or procedural issues would bar Esos'
intervention. Id. at 4-5. It then avers that it
would suffer irreparable harm and loss of goodwill if the
case is stayed. Id. at 3.
considering whether a stay is appropriate, the Court weighs
three factors:  the possible damage which may result from
the granting of a stay,  the hardship or inequity which a
party may suffer in being required to go forward, and  the
orderly course of justice measured in terms of the
simplifying or complicating of issues, proof, and questions
of law which could be expected to result from a stay.”
See Gustavson v. Mars, Inc., Case No.
13-cv-04537-LHK, 2014 WL 6986421, at *2 (N.D. Cal. Dec. 10,
2014) (internal quotation marks and citation omitted)
(brackets in original).
Ring submits that a stay would be beneficial because the
clarity provided by the resolution of the ownership dispute
would enable it to assert the patent in this and other cases.
A stay would also avoid hardship and inequity to Kerv. Kerv
persuasively argues that it would suffer hardship or inequity
if the state court eventually determines that NFC Ring is not
the rightful owner of the patent, subjecting it to liability
from a different party and having to litigate against
multiple parties. In the Court's view, a resolution of
the patent ownership dispute would simplify issues in this
matter and preserve the orderly course of justice. The Court
finds that these factors weigh strongly in favor of a stay.
its opposition fails to demonstrate how any of the factors
discussed above should weigh against a stay. First, Esos
contends that there are no standing or procedural issues
barring its intervention and that its intervention would
eliminate Kerv's concern of being “subject to
another lawsuit from the true owner.” Esos'
Proposed Opp'n 3-4. However, whether there are standing
or procedural issues does not bear on the factors pertinent
in determining a stay motion. Moreover, while Kerv might no
longer be concerned about being “subject to another
lawsuit from the true owner, ” Esos fails to address
the “hardship or inequity” that Kerv may suffer
by being compelled to litigate against an additional party
only later to be informed by the state court judgment that
only one of the plaintiffs is the rightful owner of the
patent in suit. If this case were to proceed with Esos as a
newly added plaintiff, Kerv would have to litigate against
both NFC Ring and Esos, including responding to motions and
discovery requests from two parties. See e.g.,
Gen-Probe, Inc. v. Amoco Corp., 926 F.Supp. 948, 963
(S.D. Cal. 1996) (granting the motion to stay due to a
pending state court litigation over patent ownership). Kerv
would be further deprived of any possibility of a settlement
as an alternative to litigation due to the ownership dispute.
Reply 4. Accordingly, the factor of hardship and inequity
against Kerv remains favorable of a stay.
further argues that “justice does not require a stay,
” and attempts to distinguish from cases where courts
have granted a stay given similar circumstances. Esos'
Proposed Opp'n 6. First, this argument pertaining to
“justice” fails to demonstrate how a denial of
stay advances “the orderly course of justice measured
in terms of the simplifying or complicating of issues, proof,
and questions of law.” See CMAX, Inc. v. Hall,
300 F.2d 265, 268 (9th Cir. 1962). Second, the
distinguishable facts do not bear on any of the factors to be
evaluated in determining whether a stay is warranted. For
example, Esos attempts to distinguish Loral Fairchild
Corp. v. Matsushita Elec. Indus. Co. because the
plaintiff there sought to add claims against parties involved
in the patent ownership dispute, unlike here where Esos has
not asserted any claims against NFC Ring. 840 F.Supp. 211,
213 (E.D.N.Y. 1994); Esos' Proposed Opp'n 6. Esos
also attempts to distinguish Intermedics Infusaid, Inc.
v. Regents of Univ. of Minn. because the state court
action could “preclude or moot” the federal
case, while here, this case would be litigated regardless of
who is ultimately determined to be the owner of the '609
patent. 804 F.2d 129, 135 (Fed. Cir. 1986); Esos'
Proposed Opp'n 7. However, the granting of the stay in
those cases did not turn those differences highlighted by
Esos. Rather, in both of these cases, the courts noted the
importance of prejudice to the parties or potential for the
duplicative or piecemeal litigation as factors in determining
whether to grant a stay. Intermedics, 804 F.2d at
135 (finding no prejudice to the plaintiff resulting from a
stay); Loral Fairchild, 840 F.Supp. at 218 (noting
that “avoidance of piecemeal adjudication” is one
of the most important factors in Colorado River abstention
Esos conclusorily avers that it would suffer irreparable harm
and loss of goodwill if the case is stayed. Esos'
Opp'n 3. However, Esos fails to make a showing why money
damages would be insufficient to remedy those harms. Given
that this claim of irreparable harm is unsubstantiated, it
does not overcome the other reasons favoring a stay discussed
above. See, e.g., CMAX, 300 F.2d at 269 (holding
that where the party opposing the stay seeks money damages, a
delay in recovery of damages “is not the kind of
prejudice which should move a court to deny a requested
postponement”). Accordingly, in light of the factors
favoring a stay and Esos' failure to make a strong
showing against a stay, the Court finds that a stay would be
appropriate and GRANTS the motion to stay pending the
resolution of the ownership dispute in connection with the
foregoing reasons, the Court GRANTS the motion to stay and
GRANTS the motion to intervene. The case is stayed until the
state court action disposes of the claim relating to the
ownership of the '609 patent. The parties are directed to
jointly submit a status update by November 30, 2017 or when
the state ...