Unisone Strategic IP, Inc. v. Tracelink, Inc.

          ORDER GRANTING DEFENDANT'S MOTION TO STAY [ECF. NO. 127]

          HON. GONZALO P. CURIEL UNITED STATES DISTRICT JUDGE.

         Defendant TraceLink, Inc. (“Defendant” or “TraceLink”) filed a motion to stay the case on November 12, 2019. Plaintiff Unisone Strategic IP, Inc. (“Plaintiff” or “Unisone”) filed an opposition on December 2, 2019. ECF No. 132. TraceLink filed a reply on December 10, 2019. ECF No. 133. The Court finds the motion suitable for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). Upon review of the moving papers, the Court GRANTS Defendant's motion to stay.

         I. Background

         On July 25, 2013, Plaintiff filed its initial Complaint asserting infringement of U.S. Pat. No. 6, 996, 538 (“the '538 patent”) against Defendant. ECF No. 1. After a period of motion practice, Plaintiff filed a first amended complaint alleging infringement of that same patent on January 6, 2014. ECF No. 26. On January 16, 2014, Defendant subsequently filed a motion to stay pending an ex parte reexamination of the '538 patent by the U.S. Patent and Trademark Office (“PTO”). ECF No. 27. The Court granted that motion and stayed this instant action on April 2, 2014, pending the reexamination of the '538 patent. ECF No. 34. On January 7, 2015, the Court lifted the stay. ECF No. 52.

         Life Technologies Corporation (“Life Tech”)^[1] filed two subsequent covered business method (“CBM”) patent reviews with the Patent Trial and Appeal Board (“PTAB”). On December 5, 2014, Life Tech filed a Petition with the PTAB seeking CBM review of '538 patent claims 52, 62, 67, 70-76, 81, 83-85, and 96 (the “first CBM”). On April 8, 2015, the Court granted a motion to stay this action, pending the final outcome the first CBM. ECF No. 59. On December 30, 2015, Life Tech filed a second petition with the PTAB requesting CBM patent review of the '538 patent claims 1, 14, 19, 22-28, 32, 34-36, and 45 (the “second CBM”). In total, Life Tech requested CBM review of claims 1, 14, 19, 22-28, 32, 34-36, 52, 62, 67, 70-76, 81, 83-85, and 96. See CBM2015-00037, Paper No. 1; CBM2016-00025, Paper No. 2. None of these challenged claims survived review and were thus declared invalid by the PTAB on June 20, 2019.

         On August 26, 2019, the Court granted Plaintiff leave to file a second amended complaint. ECF No. 119. On September 27, 2019, Plaintiff filed the currently operative second amended complaint, which asserts fifty-three dependent claims that were not at issue in the prior CBM reviews. ECF No. 120. Specifically, Plaintiff asserted infringement of claims 4, 6, 8-12, 15-18, 21, 29-31, 39-40, 42-43, 46, 49, 57-58, 60, 63, 66, 69, 77-78, 86, and 93-94. ECF No. 120 at ¶¶ 24, 53.

         On November 1, 2019, Life Tech filed two CBM petitions requesting that the PTO institute CBM review of all remaining dependent claims of the '538 patent on the ground that the claims are unpatentable under 35 U.S.C. § 101. See CBM2020-00001 (ECF 127, Ex. 1); CBM2020-00005. The PTAB will reach a decision on institution by May 8, 2020 and, if instituted, reach a final decision no later than May 3, 2021. Defendants allege that cancellation of all claims that Life Tech has raised in the current CBM petitions would resolve this instant action. ECF No. 127-1 at 8.

         II. Legal Standard

         The Leahy-Smith America Invents Act (the “AIA”) provides a “transitional program” to review CBM patents. AIA § 18. The AIA further grants district courts authority to stay proceedings, pending CBM review before the U.S. Patent and Trademark Office (the “USPTO”), upon the consideration of four factors: (A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B) whether discovery is complete and whether a trial date has been set; (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. Id. § 18(b)(1); VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1310 (Fed. Cir. 2014).

         III. Discussion

         Plaintiff argues that the four factors weigh in favor of denying the motion to stay or, alternatively, continuing this motion until the PTAB decides to undertake review of the two latest CBM's filed by Life Tech. Defendant opposes.

         A. Simplification

         The first factor considers whether a stay will simplify the issues. AIA § 18(b)(1)(A). The two latest CBM petitions filed by Life Tech challenge all remaining claims. ECF No. 127-1 at 7. Plaintiff argues that this factor does not weigh in favor a stay because Life Tech is using the CBM petition as a delay tactic. ECF No. 132 at 14-15. TraceLink counters that the current CBM reviews will substantially simplify or moot the present infringement claims, noting that not a single claim in the '538 patent that was challenged in the earlier CBM petitions remains at issue in this litigation. The Court agrees. Plaintiff's fifty-three new dependent claims asserted in its SAC were not at issue in the prior CBM reviews, and a CBM review of these remaining claims can simplify the issues. See Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, 1371-73 (Fed. Cir. 2014) vacated on other grounds by 780 F.3d 1134, 2015 WL 981523 (Fed. Cir. Feb. 27, 2015). If, any dependent claims are invalidated based on a CBM review, those claims will not need to be litigated.

         Plaintiff further argues that it would be premature to grant a stay even before PTAB has made its decision on institution and that the Court should therefore defer ruling on the motion to stay, citing Loyalty Conversion Sys. Corp., 2014 WL 3736514 (E.D. Tex. July 29, 2014) and other cases. Defendant counters that it is not premature to issue a stay at this juncture, and additionally, Life Tech's prior success in challenging similar claims (i.e., invalidity under 35 ...