Affinity Labs of Texas, LLC v. Nike, Inc. et al

Filing 125

ORDER by Judge Claudia Wilken denying 91 Motion to Stay (cwlc3, COURT STAFF) (Filed on 5/13/2011)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 United States District Court For the Northern District of California 10 AFFINITY LABS OF TEXAS, LLC., a Texas Limited Liability Company, Plaintiff and Counterclaim-Defendant, 11 12 13 14 15 16 v. No. C 10-5543 CW ORDER DENYING DEFENDANTS' MOTION TO STAY ACTION (Docket No. 91) NIKE, INC., an Oregon Corporation, and APPLE INC., a California Corporation, Defendants and Counterclaim-Plaintiffs. __________________________________/ 17 18 Defendants Apple, Inc. and Nike, Inc. move to stay the 19 present action pending inter partes reexamination of United States 20 Patents No. 7,251,454 ('454 Patent) and No. 7,519,327 ('327 21 Patent).1 22 opposes the motion. 23 Docket No. 91. Plaintiff Affinity Labs of Texas, LLC. The motion was taken on the papers. Having considered all of the parties' submissions, the Court DENIES 24 25 26 27 28 Defendants' motion. Defendants' motion for a stay initially encompassed proceedings based on Patent No. 7,062,225 ('225 Patent). However, Affinity has since amended its complaint to remove claims based on the '225 Patent. Docket No. 124. 1 BACKGROUND 1 2 Affinity filed this lawsuit on February 16, 2010 in the 3 Eastern District of Texas. 4 motion to transfer this action to the Northern District of 5 California was granted. 6 7 On November 4, 2010, Defendants' Docket No. 68. On November 15, 2010, Apple filed three requests for reexamination of the Patents-inSuit. On March 22, 2011, Defendants jointly moved stay the 8 9 proceedings in this case. LEGAL STANDARD United States District Court For the Northern District of California 10 11 Docket No. 91. As the Federal Circuit has noted, “Courts have inherent power 12 to manage their dockets and stay proceedings, including the 13 authority to order a stay pending conclusion of a PTO 14 reexamination.” 15 Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citation omitted). In determining whether to 16 17 18 stay a case pending reexamination, a court may consider the following factors: (1) whether discovery is complete and whether a 19 trial date has been set; (2) whether a stay would simplify the 20 issues in question and trial of the case; and (3) whether a stay 21 would unduly prejudice or present a clear tactical disadvantage to 22 the non-moving party. 23 In re Cygnus Telecomm. Tech., LLC Patent Litig., 385 F. Supp. 2d 1022, 1023 (N.D. Cal. 2005). 24 DISCUSSION 25 26 The present case does not merit a stay of the proceedings. 27 The first factor for consideration--the stage of the litigation-- 28 weighs in favor of a stay. The parties agree that, thus far, they 2 1 have exchanged very little discovery. No trial date has been set, 2 and the parties have not yet appeared for a case management 3 conference. 4 5 6 7 The second factor--whether a stay would simplify the issues presented in this action--is neutral. On one hand, staying the case may narrow the issues in question and simplify the trial. As noted in this Court's order denying Apple's motion for a stay in 8 9 the related action, Affinity Labs of Texas, LLC v. Apple, Inc., United States District Court For the Northern District of California 10 C 09-04436, April 29, 2010 Order Denying Stay, patents rarely 11 emerge from inter partes reexaminations unchanged. 12 argues that simplification of the issues is unlikely to result 13 from the reexamination proceeding because Nike did not join the 14 reexamination requests. 15 Affinity However, Defendants' reply brief makes clear that Nike is willing to be bound by the results of the 16 17 18 reexamination proceedings to the same extent as a party to those proceedings if the Court grants a stay of the proceedings. An 19 inter partes reexamination permits third-parties to participate in 20 the reexamination process, and a participating defendant will be 21 estopped from asserting the invalidity of any claim of the 22 patents-in-suit on any ground which it raised or could have raised 23 24 during the inter partes proceeding. Nevertheless, even if Nike were bound by the results of the reexamination, it is unlikely 25 26 that the reexamination proceeding will resolve all of the issues 27 regarding the two patents in question in this lawsuit. 28 Court would be left to adjudicate the remaining issues. 3 Thus, the Given the 1 2 3 uncertainty about whether the reexamination will actually simplify the issues in this case, this factor is neutral. Lastly, the Court considers whether a stay in this action 4 will unduly prejudice or create a clear tactical disadvantage to 5 the non-moving party, Affinity. 6 7 This Court and others have recognized that the average inter partes reexamination takes over three years to complete. Affinity Labs of Texas, LLC v. Apple, 8 9 Inc., April 29, 2010 Order Denying Stay at 4; ESCO Corp. v United States District Court For the Northern District of California 10 Berkeley Forge & Tool, Inc., 2009 U.S. Dist. LEXIS 94017, *9 n.3 11 (N.D. Cal.). 12 reexamination process "does not constitute, by itself, undue 13 prejudice," Network Appliance Inc. v. Sun Microsystems, Inc., 2008 14 WL 2168917, *5 (N.D. Cal.), Apple waited nine months after 15 Although the delay that inherently results from the Affinity filed the present suit before requesting the 16 17 18 reexaminations. Defendants delayed their motion for a stay until March 22, 2011. These delays are similar to those in Affinity 19 Labs of Texas, LLC v. Apple, Inc.. 20 months after Affinity filed its suit before seeking reexamination 21 of the patents-in-suit, and then delayed seven weeks after the 22 requests were granted before moving to stay the proceeding. 23 24 A stay may prejudice Affinity's ability to enforce and license its patents, and could lead to a loss of evidence. 25 26 There Apple waited eight this action is unwarranted. 27 28 4 Thus, a stay in CONCLUSION 1 2 Defendants' motion for a stay of the proceedings is denied. 3 Docket No. 91. The parties shall appear for a case management 4 conference on June 9, 2011 at 2 pm. 5 IT IS SO ORDERED. 6 7 8 Dated: May 13, 2011 CLAUDIA WILKEN United States District Judge 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5

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