In re Koninklijke Philips Patent Litigation

          ORDER GRANTING MICROSOFT'S MOTION TO STAY '064 CLAIMS RE: DKT. NO. 656

          HAYWOOD S GILLIAM, JR. UNITED STATES DISTRICT JUDGE

         Pending before the Court is Microsoft's motion to stay all claims and counterclaims relating to U.S. Patent No. 7, 184, 064 (the “'064 Patent”), pending a decision from the Federal Circuit on the Patent Trial & Appeal Board's (“PTAB's”) invalidation of all claims of U.S. Patent No. 6, 690, 387 (the “'387 Patent”). Dkt. No. 656 (“Mot.”) After carefully considering the parties' arguments, the Court GRANTS Microsoft's motion.

         I. BACKGROUND

         Plaintiffs Koninklijke Philips N.V. and U.S. Philips Corp. (collectively, “Philips”) instituted this patent infringement action in December 2015, alleging infringement of eleven patents. In November 2016, Microsoft intervened in the actions against several of the Defendants, and Philips counterclaimed against Microsoft for infringement of nine of the patents-in-suit. Dkt. Nos. 69, 86. Two of the patents asserted against Microsoft are the '064 Patent and the '387 Patent, which are directed to techniques for scrolling content on a touch screen. Mot. at 3. The '064 Patent is a continuation of the '387 Patent. Id.

         On April 10, 2019, after an inter partes review (“IPR”), the PTAB issued a Final Written Decision finding all claims in the '387 Patent unpatentable based on obviousness over certain prior art. Dkt. No. 656-2, Ex. A. Philips then stipulated to dismiss without prejudice its infringement claims under the '387 Patent. Dkt. Nos. 649, 650. According to Microsoft, Philips has indicated that it intends to appeal the PTAB's decision invaliding the '387 Patent. Mot. at 2. Microsoft now moves to stay all claims and counterclaims for the related '064 Patent until the Federal Circuit affirms or reverses the PTAB's decision. See generally Mot. In the alternative, Microsoft seeks leave to file an early motion for summary judgment. Id.

         II. LEGAL STANDARD

         “Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of [PTO proceedings].” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citations omitted); IXI Mobile (R & D) Ltd. v. Samsung Elecs. Co., No. 15-cv-03752-HSG, 2015 WL 7015415, at *2 (N.D. Cal. Nov. 12, 2015). Courts consider three factors in determining whether to grant a stay pending PTO proceedings: “(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.” IXI Mobile (R & D) Ltd., 2015 WL 7015415, at *2 (quoting 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 stay is appropriate. DSS Tech. Mgmt., Inc. v. Apple, Inc., No. 14-cv-05330-HSG, 2015 WL 1967878, at *2 (N.D. Cal. May 1, 2015). Whether to stay is always within the court's discretion.

         III. DISCUSSION

         A. Stage of Proceedings

         When considering whether to grant a stay, courts consider whether the litigation is at an early stage. See AT&T Intellectual Property I v. Tivo, Inc., 774 F.Supp.2d 1049, 1052 (N.D. Cal. 2011). Specifically, courts consider “whether discovery is complete and whether a trial date has been set.” Evolutionary Intelligence, 2014 WL 261837, at *1.

         Philips argues that a stay is not warranted because fact discovery is complete and trial is set for February 2020. Dkt. No. 659 (“Opp.”) at 20. In addition, Philips asserts that a partial stay is inefficient because, to the extent the '064 Patent will need to be tried again later, the Court would be “burdened with a second trial.” Id. at 21. The Court does not doubt the parties have already expended significant resources on this litigation, but does not find that the case is so far advanced that a partial stay is unwarranted. The hearing on the parties' dispositive and Daubert motions is not until November 27, 2019, and the pretrial conference is approximately three months away. See Dkt. Nos. 631, 922. Given the substantial work that still must be done in this case for the other patents-in-suit, the Court finds that this factor weighs slightly in favor of a stay.

         B. Simplification of Issues

         Microsoft contends that because the claims of the '387 and '064 Patent are nearly identical, a decision by the Federal Circuit affirming the invalidity of the '387 Patent would “conclusively establish” the invalidity of the '064 Patent, simplifying the issues in this case. Mot. at 6-11. Philips appears to concede that the claims are nearly identical, but disputes the preclusive effect a decision on the '387 Patent would have on the '064 Patent. Opp. at 4, 6-20.

         The Court finds that this factor weighs in favor of a stay. At this time, the Court need not conclusively decide whether the Federal Circuit's affirmance of the invalidity of the '387 Patent would have a preclusive effect on the '064 Patent. However, the Court finds persuasive the reasoning of Judge Saris of the District of Massachusetts, who held that “PTAB decisions have a collateral-estoppel effect in district court on unadjudicated claims that do not ‘materially alter the question of invalidity.'” See Intellectual Ventures I, LLC v. Lenovo Grp. Ltd., 370 F.Supp.3d 251, 253 (D. Mass. 2019). Because there is some potential that collateral estoppel would apply, this case may well be greatly simplified after the Federal Circuit rules on the PTAB's invalidation of the '387 Patent, given its similarities to the '064 Patent. If the Federal Circuit reverses the PTAB's decision invalidating the '387 ...