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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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court
For the Northern District of California

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AFFINITY LABS OF TEXAS, LLC., a
Texas Limited Liability Company,
Plaintiff and
Counterclaim-Defendant,

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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.
__________________________________/

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Defendants Apple, Inc. and Nike, Inc. move to stay the

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present action pending inter partes reexamination of United States

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Patents No. 7,251,454 ('454 Patent) and No. 7,519,327 ('327

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Patent).1

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opposes the motion.

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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

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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.
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BACKGROUND

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Affinity filed this lawsuit on February 16, 2010 in the

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Eastern District of Texas.

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motion to transfer this action to the Northern District of

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California was granted.

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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

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proceedings in this case.

LEGAL STANDARD

United States District Court
For the Northern District of California

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Docket No. 91.

As the Federal Circuit has noted, “Courts have inherent power

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to manage their dockets and stay proceedings, including the

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authority to order a stay pending conclusion of a PTO

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reexamination.”

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Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27

(Fed. Cir. 1988) (citation omitted).

In determining whether to

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stay a case pending reexamination, a court may consider the
following factors: (1) whether discovery is complete and whether a

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trial date has been set; (2) whether a stay would simplify the

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issues in question and trial of the case; and (3) whether a stay

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would unduly prejudice or present a clear tactical disadvantage to

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the non-moving party.

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In re Cygnus Telecomm. Tech., LLC Patent

Litig., 385 F. Supp. 2d 1022, 1023 (N.D. Cal. 2005).

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DISCUSSION

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The present case does not merit a stay of the proceedings.

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The first factor for consideration--the stage of the litigation--

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weighs in favor of a stay.

The parties agree that, thus far, they
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have exchanged very little discovery.

No trial date has been set,

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and the parties have not yet appeared for a case management

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conference.

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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

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the related action, Affinity Labs of Texas, LLC v. Apple, Inc.,

United States District Court
For the Northern District of California

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C 09-04436, April 29, 2010 Order Denying Stay, patents rarely

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emerge from inter partes reexaminations unchanged.

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argues that simplification of the issues is unlikely to result

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from the reexamination proceeding because Nike did not join the

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reexamination requests.

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Affinity

However, Defendants' reply brief makes

clear that Nike is willing to be bound by the results of the

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reexamination proceedings to the same extent as a party to those
proceedings if the Court grants a stay of the proceedings.

An

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inter partes reexamination permits third-parties to participate in

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the reexamination process, and a participating defendant will be

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estopped from asserting the invalidity of any claim of the

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patents-in-suit on any ground which it raised or could have raised

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during the inter partes proceeding.

Nevertheless, even if Nike

were bound by the results of the reexamination, it is unlikely

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that the reexamination proceeding will resolve all of the issues

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regarding the two patents in question in this lawsuit.

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Court would be left to adjudicate the remaining issues.
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Thus, the
Given the

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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

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will unduly prejudice or create a clear tactical disadvantage to

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the non-moving party, Affinity.

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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,

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Inc., April 29, 2010 Order Denying Stay at 4; ESCO Corp. v

United States District Court
For the Northern District of California

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Berkeley Forge & Tool, Inc., 2009 U.S. Dist. LEXIS 94017, *9 n.3

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(N.D. Cal.).

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reexamination process "does not constitute, by itself, undue

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prejudice," Network Appliance Inc. v. Sun Microsystems, Inc., 2008

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WL 2168917, *5 (N.D. Cal.), Apple waited nine months after

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Although the delay that inherently results from the

Affinity filed the present suit before requesting the

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reexaminations.

Defendants delayed their motion for a stay until

March 22, 2011.

These delays are similar to those in Affinity

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Labs of Texas, LLC v. Apple, Inc..

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months after Affinity filed its suit before seeking reexamination

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of the patents-in-suit, and then delayed seven weeks after the

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requests were granted before moving to stay the proceeding.

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A

stay may prejudice Affinity's ability to enforce and license its
patents, and could lead to a loss of evidence.

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There Apple waited eight

this action is unwarranted.

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Thus, a stay in

CONCLUSION

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Defendants' motion for a stay of the proceedings is denied.

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Docket No. 91.

The parties shall appear for a case management

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conference on June 9, 2011 at 2 pm.

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IT IS SO ORDERED.
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Dated: May 13, 2011

CLAUDIA WILKEN
United States District Judge

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United States District Court
For the Northern District of California

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