IXI Mobile (R&D) Ltd. et al v. Samsung Electronics Co., Ltd. et al
Filing
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ORDER by Judge Haywood S. Gilliam, Jr. GRANTING(121 in case 3:15-cv-03754-HSG; 106 in case 3:15-cv-03755-HSG; and 119 in case 3:15-cv-03752-HSG MOTION TO STAY. (ndrS, COURT STAFF) (Filed on 11/12/2015)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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IXI MOBILE (R&D) LTD., et al.,
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Case No. 15-cv-03752-HSG
Plaintiffs,
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ORDER GRANTING MOTION TO
STAY
v.
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SAMSUNG ELECTRONICS CO LTD, et
al.,
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United States District Court
Northern District of California
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Re: Dkt. No. 119
Defendants.
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IXI MOBILE (R&D) LTD., et al.,
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Case No. 15-cv-03754-HSG
Plaintiffs,
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v.
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Re: Dkt. No. 121
BLACKBERRY LIMITED, et al.,
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Defendants.
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IXI MOBILE (R&D) LTD., et al.,
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Case No. 15-cv-03755-HSG
Plaintiffs,
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v.
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Re: Dkt. No. 106
APPLE INC,
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Defendant.
Pending before the Court is Defendants’ joint motion to stay the case pending completion
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of inter partes review (“IPR”) proceedings. Dkt. No. 119 (“Mot.”).1 For the reasons articulated
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below, the motion is GRANTED.
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All docket citations refer to the docket in IXI Mobile (R&D) Ltd. et al. v. Samsung Electronics
Co. Ltd. et al., Case No. 15-cv-03752-HSG, unless otherwise indicated.
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I.
BACKGROUND
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A.
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By enacting the Leahy-Smith America Invents Act (“AIA”), Congress sought to “establish
America Invents Act
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a more efficient and streamlined patent system that will improve patent quality and limit
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unnecessary and counterproductive litigation costs” and “to create a timely, cost-effective
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alternative to litigation.” 77 Fed. Reg. 48,680-01 (Aug. 14, 2014) (to be codified at 37 C.F.R.
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§ 42.100 et seq). To that end, AIA created the IPR procedure, by which the Patent and Trademark
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Office’s (“PTO”) Patent Trial and Appeal Board (“PTAB”) may review the patentability of one or
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more claims in a patent. See 35 U.S.C. §§ 311-319. IPR replaces the previous inter partes
reexamination procedure and converts the process from an examinational to an adjudicative one.
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United States District Court
Northern District of California
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See Abbott Labs. v. Cordis Corp., 710 F.3d 1318, 1326 (Fed. Cir. 2013).
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IPR allows any party other than the patent owner to challenge a patent’s validity under 35
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U.S.C. § 102 or § 103 “on the basis of prior art consisting of patents or printed publications.” 35
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U.S.C. § 311(a)-(b). The petitioning party must establish “a reasonable likelihood that the
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petitioner would prevail with respect to at least [one] of the claims challenged in the petition” in
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order for the PTO to institute IPR. 35 U.S.C. § 314(a). If the PTO decides to institute IPR, the
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proceeding is conducted before a panel of three technically-trained Administrative Patent Judges
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of the PTAB. See 35 U.S.C. §§ 6(a)-(c), 316. Following a final determination, the petitioning
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party is estopped from asserting invalidity during a later civil action “on any ground that the
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petitioner raised or reasonably could have raised during” the IPR. 35 U.S.C. § 315(e)(2).
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B.
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Plaintiffs IXI Mobile (R&D) Ltd. and IXI IP, LLC sued Defendants Samsung Electronics
This Litigation
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Co., Blackberry Limited, and Apple Inc. in the Southern District of New York on June 17, June
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18, and October 2, 2014, respectively. See Dkt. No. 1 (Samsung); Case No. 3:15-cv-03754-HSG,
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Dkt. No. 1 (BlackBerry); Case No. 3:15-cv-03755-HSG, Dkt. No. 1 (Apple).
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On February 3, 2015, Defendants moved to transfer the cases to the Northern District of
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California. Dkt. No. 44. On August 6, 2015, Judge Sullivan granted the motion. Dkt. No. 79.
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The cases were related and reassigned to this Court on September 9, 2015. Dkt. Nos. 90, 94. An
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initial case management conference occurred on November 5, 2015. Dkt. No. 130.
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Discovery is underway. Infringement and invalidity contentions have been served. Dkt.
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No. 124-1 ¶¶ 11-12. The parties have served and responded to written discovery and document
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requests. Id. ¶ 7. Plaintiffs have begun review of Defendants’ source code. Id. ¶ 14. The parties
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have served a series of third-party subpoenas. Id. ¶ 17. Defendants have deposed a third-party
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inventor and Plaintiffs’ claim construction expert. Id. ¶¶ 16, 22.
Claim construction has just begun. The parties filed a joint claim construction statement
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on June 8, 2015, and Plaintiffs filed an opening claim construction brief on July 8, 2015. Dkt.
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Nos. 68, 73.
On June 18 and 19, 2015, Defendants Apple and Samsung filed petitions for IPR
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United States District Court
Northern District of California
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challenging the validity of each asserted claim in all three patents at issue. Dkt. No. 119-1 ¶ 5.
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Defendant BlackBerry is not a party to the IPR petitions. An institution decision is expected from
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PTAB on or before January 2, 2016. Mot. at 3 (citing 35 U.S.C. § 316(a)(11)).
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II.
DISCUSSION
A.
Legal Standard
“Courts have inherent power to manage their dockets and stay proceedings, including the
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authority to order a stay pending conclusion of a PTO reexamination.” Ethicon, Inc. v. Quigg, 849
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F.2d 1422, 1426-27 (Fed. Cir. 1988) (citations omitted). While courts are “under no obligation to
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stay proceedings pending parallel litigation in the PTAB, . . . judicial efficiency and the desire to
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avoid inconsistent results may, after a careful consideration of the relevant factors, counsel in
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favor of a limited stay, even before the PTAB has acted on a petition for IPR.” Delphix Corp. v.
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Actifio, Inc., No. 13-cv-04613-BLF, 2014 WL 6068407, at *2 (N.D. Cal. Nov. 13, 2014). Indeed,
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some courts in this district have recognized “a liberal policy in favor of granting motions to stay
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proceedings pending the outcome of USPTO reexamination or reissuance proceedings.”
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Pragmatus AV, LLC v. Facebook, Inc., No. 11-cv-02168-EJD, 2011 WL 4802958, at *2 (N.D.
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Cal. Oct. 11, 2011).
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Courts consider three factors when determining whether to grant a stay pending IPR: “(1)
whether discovery is complete and whether a trial date has been set; (2) whether a stay will
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simplify the issues in question and trial of the case; and (3) whether a stay would unduly prejudice
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or present a clear tactical disadvantage to the non-moving party.” Evolutionary Intelligence, LLC
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v. Facebook, Inc., No. 13-cv-04202-SI, 2014 WL 261837, at *1 (N.D. Cal. Jan. 23, 2014). The
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moving party bears the burden of demonstrating that a stay is appropriate. Netlist, Inc. v. Smart
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Storage Sys., Inc., No. 13-cv-05889-YGR, 2014 WL 4145412, at *1 (N.D. Cal. Aug. 21, 2014).
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B.
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The first factor the Court considers is whether the litigation is at an early stage. See AT&T
Stage Of The Litigation
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Intellectual Property I v. Tivo, Inc., 774 F. Supp. 2d 1049, 1052 (N.D. Cal. 2011). Specifically,
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courts consider “whether discovery is complete and whether a trial date has been set.”
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United States District Court
Northern District of California
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Evolutionary Intelligence, 2014 WL 261837, at *1.
Plaintiffs argue that “[t]hese cases are sufficiently advanced that a stay is not appropriate.”
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Dkt. No. 124 (“Opp.”) at 8. The Court does not doubt that the parties have already expended
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substantial resources on this litigation, but significant work remains to be done. No discovery,
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dispositive motions, pretrial, or trial deadlines have been set. Claim construction briefing, though
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underway, is not complete, and there is no claim construction or tutorial hearing set. Moreover,
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the cases were only recently transferred to this Court. In similar circumstances, courts have found
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that this factor weighs in favor of a stay. See Cypress Semiconductor Corp. v. LG Elecs., Inc., No.
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13-cv-04034-SBA, 2014 WL 5477795, at *2 (N.D. Cal. Oct. 29, 2014) (finding that this factor
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weighs in favor of a stay where claim construction briefing was complete but “[t]here has been no
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dispositive motion practice, the claims have not been construed, and no deadlines for completing
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discovery, motion practice or trial have been set”); DSS Tech. Mgmt., Inc. v. Apple Inc., No. 14-
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cv-05330-HSG, 2015 WL 1967878, at *2-3 (N.D. Cal. May 1, 2015) (finding that this factor
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weighs in favor of a stay where claim construction briefing was complete, substantial discovery
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had been produced, and depositions had begun but fact discovery was not scheduled to close for
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another six months, expert discovery had not begun, and no trial date had been set).
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The Court finds that this factor weighs in favor of a stay.
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C.
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The second factor that the Court considers is whether granting a stay could simplify the
Simplification of the Case
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litigation. “The standard is simplification of the district court case, not complete elimination of it
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by the PTAB.” LELO, Inc. v. Standard Innovation (US) Corp., No. 13-cv-01393-JD, 2014 WL
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2879851, at *3 (N.D. Cal. June 24, 2014). Granting a stay pending IPR is “particularly” likely to
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simplify the case “when a party has obtained PTO review of each of the asserted claims in the
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patents-in-suit.” Evolutionary Intelligence, 2014 WL 261837, at *2.
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Staying the case pending the outcome of IPR could simplify the case by rendering some or
all of Plaintiffs’ infringement claims moot, estopping Defendants from asserting any arguments
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they raised or reasonably could have raised in the IPR, and providing the Court with PTAB’s
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expert opinion on the claims at issue. See Evolutionary Intelligence, 2014 WL 261837, at *2.
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Indeed, even if the PTAB decides to institute review and affirms the validity of every asserted
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United States District Court
Northern District of California
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claim, the case would still be simplified because “such a strong showing would assist in
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streamlining the presentation of evidence and benefit the trier of fact by providing the expert
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opinion of the PTO.” PersonalWeb Techs., LLC v. Facebook, Inc., No. 13-cv-01356-EJD, 2014
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WL 116340, at *4 (N.D. Cal. Jan. 13, 2014).
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Because Defendant BlackBerry is not a party to the IPR petitions, it is not bound by the
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estoppel rules set out in the statute. However, “[t]he court may alleviate any estoppel concern as
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to [BlackBerry] by using its inherent power to condition a stay on [BlackBerry’s] agreement to be
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bound as if [it] had filed the relevant IPR petition.” Id. at *6. At the November 5, 2015 hearing,
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BlackBerry agreed on the record to accept this condition.
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Plaintiffs argue that “[t]here is a growing consensus to deny stay requests” where, as here,
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the PTO has not yet decided whether to institute the requested IPR proceedings. Opp. at 6. The
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Court disagrees. See DSS Tech. Mgmt., Inc., 2015 WL 1967878, at *3 (finding this factor weighed
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in favor of a stay even though institution decision not expected for another two months); Sec.
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People, Inc. v. Ojmar US, LLC, No. 14-cv-04968-HSG, 2015 WL 3453780 (N.D. Cal. May 29,
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2015) (finding this factor weighed in favor of a stay even though institution decision not expected
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for another two months); OpenTV, Inc. v. Apple Inc., Case No. 3:14-cv-01622-HSG, Dkt. No. 217
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(N.D. Cal. Oct. 21, 2015) (granting stay even though institution decision not expected for another
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month); Pragmatus AV, 2011 WL 4802958, at *3 (“[I]t is not uncommon for [courts] to grant
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stays pending reexamination prior to the PTO deciding to reexamine the patent.”). Furthermore,
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either party may file a motion to lift the stay if any part of the petitions for IPR are denied by the
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PTO—so “any concern that the motion[] [is] premature is alleviated by the short time frame of the
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initial stay and the Court’s willingness to reevaluate the stay if inter partes review is not instituted
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for all of the asserted claims.” Evolutionary Intelligence, 2014 WL 261837, at *3. Here, the case
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would be stayed for less than two months until the PTO is expected to decide whether to institute
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IPR proceedings.
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The Court finds that this factor weighs in favor of granting a stay conditioned on
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Blackberry’s agreement to be bound as if it were a party to the IPR petitions. If instituted, IPR is
likely to simplify the case. Moreover, a six-week delay before the PTO’s decision whether to
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United States District Court
Northern District of California
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institute IPR on all of the asserted patents is minimal. See PersonalWeb Techs., 2014 WL 116340,
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at *4 (finding that four-month delay before PTO’s institution decision would issue was “relatively
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short” and did not outweigh anticipated simplification of issues); Delphix, 2014 WL 6068407, at
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*2 (“At a minimum, instituting a brief, limited stay of approximately five months to see whether
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and how the PTAB will act on Defendant’s IPR petitions will conserve judicial resources and
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avoid inconsistent results.”).
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D.
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The third factor for the Court to consider is whether Plaintiffs will be unduly prejudiced by
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a stay. Plaintiffs argue that they will be unduly prejudiced because “the timing [of the filing of the
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IPR petitions] suggests a dilatory motive.” Opp. at 10.
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Undue Prejudice
The Court declines to read a dilatory motive into Defendants’ timely exercise of their
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statutory rights, standing alone. See Software Rights Archive, LLC v. Facebook, Inc., No. 12-cv-
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03970-RMW, 2013 WL 5225522, at *6 (N.D. Cal. Sept. 17, 2013) (“Although defendants did wait
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nearly a year to file the IPR petitions, they properly filed the petitions within the statutory time
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frame, and the delay was not unreasonable under the facts here.”); Cypress Semiconductor, 2014
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WL 5477795, at *3 (finding that the fact that defendant filed its IPR petitions close to the end of
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the statutory deadline “does not demonstrate undue delay”); Evolutionary Intelligence, LLC v.
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Sprint Nextel Corp., No. 13-cv-04513-RMW, 2014 WL 819277, at *4 (N.D. Cal. Feb. 28, 2014)
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(“[T]he IPR petitioners filed the petitions properly within the statutory time frame. Under these
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facts, this delay was not unreasonable, and [plaintiff] does not point to any tangible undue
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prejudice resulting from the IPR petitioners exercising their statutory rights.”); Delphix, 2014 WL
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6068407, at *3 (“[W]hile the Court does not condone gamesmanship, it will not require a patent
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infringement defendant to file a petition for inter partes review significantly earlier than the time
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allowed by statute.”).
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Furthermore, courts have consistently found that where, as here, the parties are not direct
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competitors, Plaintiffs “do[] not risk irreparable harm by [Defendant’s] continued use of the
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accused technology and can be fully restored to the status quo ante with monetary relief.”
Software Rights Archive, 2013 WL 5225522, at *6; see also Adaptix v. HTC Corp., No. 14-cv-
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United States District Court
Northern District of California
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02359-PSG, slip op. at 6 (N.D. Cal. Aug. 5, 2015) (“[C]ourts decline to find undue prejudice
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where the parties are not direct competitors and where any resulting prejudice can be addressed
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through a final damages award.”).
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Finally, Plaintiffs argue that a stay would “risk undermining [the] preparation of [their]
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case.” Opp. at 11. But the only example Plaintiffs give of such interference is the general
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statement that they have “preservation concerns” regarding documents subpoenaed from third
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parties. Id. Plaintiffs do not give any specific reason to worry about document preservation
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issues, nor do they explain how a stay would prejudice any other aspect of their case preparation.
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As a result, the Court finds that no risk of undue prejudice exists.
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Because a stay will not cause undue prejudice to Plaintiffs, the Court finds that this factor
weighs in favor of granting the stay.
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After weighing the three factors outlined above, the Court finds that a stay is warranted
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here and will “effectuate[] the intent of the AIA by allowing the agency with expertise to have the
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first crack at cancelling any claims that should not have issued in the patents-in-suit before costly
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litigation continues.” Software Rights Archive, 2013 WL 5225522, at *6.
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III.
CONCLUSION
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For the foregoing reasons, the Court GRANTS Defendants’ motion to stay the case
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pending decision by the PTO whether to institute IPR of the claims asserted in all of Defendants’
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petitions. Per its agreement on the record at the November 5 hearing, Defendant BlackBerry is
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subject to the same scope of estoppel that applies to IPR practitioners under 35 U.S.C. § 315(e).
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The parties shall file a joint status report within five days of the issuance of the PTO’s decision(s)
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on whether to institute IPR challenging the patents-in-suit, informing the Court of the PTO’s
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decision. After the PTO has made a decision on all of Defendants’ petitions, the Court will issue
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an order addressing further proceedings in the case.
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United States District Court
Northern District of California
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IT IS SO ORDERED.
Dated: November 12, 2015
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge
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