United States District Court, N.D. California
ORDER GRANTING MOTION TO STAY
PHYLLIS J. HAMILTON United States District Judge
Fisher-Price, Inc. (“Fisher-Price”) and Mattel,
Inc. (“Mattel”) filed this action on January 17,
2017, alleging that defendant Dynacraft BSC, Inc.
("Dynacraft") infringed U.S. Patent Nos. 7, 222,
684 ("the '684 patent"), 7, 487, 850 ("the
'850 patent"), 7, 621, 543 ("the '543
patent"), 7, 950, 978 ("the '978 patent").
Mattel is the owner of the patents-in-suit by way of
assignment, and has granted Fisher-Price exclusive licenses
to make, use, and sell the inventions claimed by the four
patents. See Cplt ¶¶ 8-16.
case was originally filed in the District of Delaware, and
was ordered transferred to the Northern District of
California on June 26, 2017, for improper venue. On October
9, 2017, Dynacraft filed petitions for inter-partes review
(“IPR”) of the asserted claims in the
patents-in-suit. Now before the court is Dynacraft's
motion for an order staying the above-entitled action pending
the IPR. Plaintiffs oppose the motion. Having read the
parties' papers and carefully considered their arguments
and the relevant legal authority, the court hereby GRANTS the
motion as follows.
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). In determining whether to grant a stay
pending IPR, courts consider "(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., 2014 WL 261837 at *1 (N.D. Cal. Jan. 23, 2014);
Universal Elecs., Inc. v. Universal Remote Control,
Inc., 943 F.Supp.2d 1028, 1030-31 (C.D. Cal. 2013).
court finds that the first factor (stage of the litigation)
favors a stay, because the parties have not engaged in
discovery, the claims have not been construed, and no
pretrial or trial dates have been set. While it is true that
the motion to transfer venue (necessitated in part by the
U.S. Supreme Court's ruling in TC Heartland LLC v.
Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017)),
resulted in some delay in the progress of the case, it also
appears from the entries on the docket that other factors
entered into creating the delay. There is certainly no
indication that Dynacraft was solely responsible for any
second factor (simplification of issues and trial) favors a
stay or is at least neutral. Plaintiffs argue that because
the Patent Trial and Appeal Board (“PTAB”) has
not yet determined whether to institute the IPRs, it is not
possible to determine whether a stay will simplify the issues
and the trial, and thus, assert that this factor favors
denying the stay. The court notes, however, that the scope of
the litigation will likely be significantly simplified and
narrowed should the PTAB institute the IPRs and cancel or
narrow any of the asserted claims. Accordingly, the court
finds that a stay is appropriate at least until the PTAB has
determined whether to institute the IPRs.
third factor (prejudice to the nonmoving party) also favors a
stay. Plaintiffs seem to be arguing that a delay in
adjudicating their patent infringement claims will cause them
prejudice, but courts have generally found that granting a
stay does not cause the nonmoving party undue prejudice where
the party has not invested substantial time and expense in
the litigation. See, e.g., KLA-Tencor
Corp. v. Nanometrics, Inc., 2006 WL 708661, at *3 (N.D.
Cal. Mar. 16, 2006) (citing Rohm and Haas Co. v. Brotech
Corp., 24 U.S.P.Q.2d 1369, 1372 (D. Del. 1992)); see
also Longitude Licensing Ltd. v. Apple Inc., 2015 WL
12778777 at *6 (N.D. Cal. Oct. 29, 2015) (delay alone does
not constitute undue prejudice because "parties having
protection under the patent statutory framework may not
'complain of the rights afforded to others by that same
statutory framework") (citations omitted).
District of Delaware evaluates prejudice to the plaintiff and
potential undue tactical advantage to the defendant by
considering "(1) the timing of the reexamination
request; (2) the timing of the request for stay; (3) the
status of reexamination proceedings; and (4) the relationship
of the parties.” Ever Win Int'l Corp. v.
Radioshack Corp., 902 F.Supp.2d 503, 508 (D. Del. 2012).
regard to the timing of the reexamination request, Dynacraft
filed its IPR petitions within the one-year statutory limit
set in 35 U.S.C. § 315(b). Providing an accused
infringer is diligent, delay due to preparing an IPR
petition, ascertaining the plaintiff's theories of
infringement, or otherwise researching the patents, does not
unduly prejudice the patent holder. See Asatek Holdings,
Inc. v. Cooler Master Co., Ltd., 2014 WL 1350813 at *5
(N.D. Cal. Apr. 3, 2014). Given (as it appears from the
docket) that plaintiffs did not serve Dynacraft with the
summons and complaint until April 14, 2017, and given the
necessity for Dynacraft to move for a change of venue, the
court finds that Dynacraft did not delay unduly in filing the
regard to the timing of the stay request, the request for the
stay was filed one day after the IPR petitions were filed.
Plaintiffs cannot claim that the timing of the request caused
them any prejudice.
regard to the status of reexamination proceedings, plaintiffs
assert that because they have three months to file their
preliminary response, and because the PTAB has three months
from that date to decide whether to institute the IPRs, and a
further 12 months to issue a decision as to any IPRs it
accepts for review (plus a possible 6-month extension), it
could well be two years before there is any resolution, and
Dynacraft would be able to continue its alleged infringement
for the entire commercial life-cycle of the accused products.
However, as explained below, the initial term of the stay
will extend only to the date the PTAB determines whether to
institute the IPRs, which, according to plaintiffs'
calculations, should occur within approximately five months
from the date of this order.
regard to the relationship of the parties, it is true that
Dynacraft and plaintiffs are competitors, and that
competition between parties can weigh in favor of finding
undue prejudice, see VirtualAgility, Inc. v.
Salesforce.com, Inc., 759 F.3d 1307, 1318 (Fed. Cir.
2014), but plaintiffs have not provided compelling evidence
that they would suffer competitive injury as a result of a
stay. Moreover, Dynacraft has argued persuasively that any
competitive injury could be remedied by monetary relief.
Plaintiffs note that they are also seeking injunctive relief
in addition to monetary relief, but the fact that the prayer
for relief in the complaint seeks an order permanently
enjoining Dynacraft from committing further acts of
infringement of the patents-in-suit is not in itself evidence
of irreparable harm.
only one of these factors (for evaluating prejudice) that
weighs against a stay is the third one - the status of
re-examination proceedings. However, there appears to be some
tension between the first two factors (the timing of the
reexamination request and the timing of the stay request) and
the third factor (the status of the IPR proceedings). That
is, if a defendant waits until the PTAB has accepted review
before filing the request for a stay, the defendant might be
deemed to have waited too long to file the stay request,
because at that point, the litigation of the case might be
event, the court finds that a stay would be beneficial, at
least until PTAB decides whether or not to institute the
IPRs, and indeed has previously issued pre-institution stays.
See Advanced Connection Tech., Inc. v. Toshiba Am. Info.
Sys., Inc., 2013 WL 6335882 at *5 (N.D. Cal. Nov. 27,
2013); see also Polaris Innovations Ltd. v. Dell
Inc., Case No. 16-7005 (Dkt. 83, ...