Avago Technologies Fiber IP (Singapore) PTE. Ltd. v. IPtronics Inc. et al

Filing 370

ORDER granting 313 Motion to Stay; finding as moot 276 Motion to Dismiss; finding as moot 304 Motion to Strike signed by Judge Edward J. Davila on 2/15/2013. (ejdlc4, COURT STAFF) (Filed on 2/15/2013)

1
2
3
4
5
6
7
8

United States District Court
For the Northern District of California

9
10
11
12
13
14
15
16
17
18

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
AVAGO TECHNOLOGIES U.S. INC., ET AL., )
)
Plaintiffs,
)
)
v.
)
)
IPTRONICS, INC., ET AL.
)
)
)
Defendants.
)
)
)
)

Case No.: 5:10-CV-02863-EJD
ORDER GRANTING DEFENDANTS’
MOTION TO STAY; DENYING
DEFENDANTS’ MOTION TO
DISMISS AND PLAINTIFFS’
MOTION TO STRIKE AS MOOT

[Re: Docket No. 276, 313, 324]

Presently before the court are Defendants IPtronics, Inc. and IPtronics A/S’s (collectively

19

“Defendants”) Motion to Stay and Motion to Dismiss Plaintiffs’ Second Amended and

20

Supplemental Complaint, and Plaintiffs Avago Technologies U.S. Inc., Avago Technologies

21

General IP (Singapore) PTE. Ltd., Avago Technologies Trading Ltd., Avago Technologies

22

International Sales, PTE. Ltd., and Avago Technologies Fiber IP (Singapore) PTE. Ltd.’s

23

(collectively, “Plaintiffs”) Motion to Strike Defendants’ First Amended Answer and Counterclaims

24

to Second Amended and Supplemental Complaint. The court found these matters suitable for

25

decision without oral argument pursuant to Civil Local Rule 7-1(b) and previously vacated the

26

hearing. The court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331. Having fully

27

reviewed the parties’ briefing, and for the foregoing reasons, the court GRANTS Defendants’
1
Case No.: 5:10-CV-02863-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO STAY; DENYING DEFENDANTS’
MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO STRIKE AS MOOT

28

1

Motion to Stay, and DENIES Defendants’ Motion to Dismiss and Plaintiffs’ Motion to Strike as

2

Moot.

3

I.

4

BACKGROUND
Plaintiff Avago Technologies Fiber IP (Singapore) Pte. Ltd. (“Avago Fiber IP”) filed this

lawsuit on June 29, 2010, alleging infringement of two of its U.S. patents: U.S. Patent Nos.

6

5,359,447 (“the ’447 patent”) and 6,947,456 (“the ’456 patent”). Dkt. No. 1. Defendants

7

counterclaimed, seeking a declaratory judgment of invalidity and noninfringement of both patents.

8

Dkt. No. 23.

9
United States District Court
For the Northern District of California

5

through which some of its rights to the patents-in-suit were purportedly transferred to several

10

affiliated entities: Avago Technologies General IP (Singapore) Pte. Ltd., Avago Technologies

11

Trading Ltd., Avago Technologies International Sales Pte. Ltd., and Avago Technologies U.S. Inc.

12

(collectively, “the Avago Licensees.”)

13

Later, on May 26, 2011, Avago Fiber IP executed a series of license agreements

On June 17, 2011 Avago Fiber IP moved for leave to file a Second Amended Complaint

14

(“SAC”), and on October 21, 2011, it moved to file a Second Amended and Supplemental

15

Complaint (“SASC”), joining the Avago Licensees and adding five business tort claims. Dkt. No.

16

172. While this motion was pending, the court held a claim construction hearing, and issued its

17

claim construction order. Dkt. No. 218, 258. With leave of the court, Avago Fiber IP filed its

18

SASC on September 18, 2012, joining the Avago Licensees as plaintiffs, and adding five business

19

tort claims for: (1) false advertising; (2) misappropriation of trade secrets; (3) violation of

20

California Business and Professions Code 17200; (4) intentional interference with contractual

21

relations; and (5) unjust enrichment. Dkt. Nos. 259, 268.

22

Less than one week later, Avago Fiber IP, Avago General IP, and Avago U.S. filed a

23

complaint at the International Trade Commission (“ITC”) pursuant to 19 U.S.C. § 1337, alleging

24

infringement of the ’456 patent by IPTronics Inc., IPtronics A/S, and several other entities. See In

25

re Matter of Certain Optoelectronic Devices for Fiber OIptic Commc’ns, Inv. No. 337-TA-860.

26

The complaint also alleged infringement of Avago’s U.S. Patent No. 5,596,595 (“the ’595 patent)

27

against several entities, but not against IPTronics. The ITC instituted an investigation, naming
2
Case No.: 5:10-CV-02863-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO STAY; DENYING DEFENDANTS’
MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO STRIKE AS MOOT

28

1

IPtronics as a respondent. On December 6, 2012, Administrative Law Judge (“ALF”) Theodore R.

2

Essex issued an order setting a target date of sixteen months, i.e., February 28, 2014. Decl. of Ary

3

Chang (“Chang Decl.”), Ex. F.

4
5

II.

LEGAL STANDARD
When parallel actions are proceeding before a district court and the International Trade

Commission, 28 U.S.C. § 1659 requires the district court to stay “any claim that involves the same

7

issues involved in the proceeding before the Commission” until the “determination of the

8

Commission becomes final” upon request by “a party to a civil action that is also a respondent in

9
United States District Court
For the Northern District of California

6

the proceedings before the [ITC].”

10

District courts also have inherent authority to stay proceedings before them. “The power to

11

stay proceedings is incidental to the power inherent in every court to control the disposition of the

12

causes on its docket with economy of time and effort for itself, for counsel, and for litigants.”

13

Landis v. No. Am. Co., 299 U.S. 248, 254 (1936). This discretionary power can extend both to

14

patent claims and non-patent claims that are related to patent claims asserted in a parallel action.

15

See Zenith Elecs., LLC v. Sony Corp., No. 11-CV-02439, 2011 WL 2982377 *3-4 (N.D. Cal. July

16

22, 2011) (“Congress explicitly intended that district courts should consider using their

17

discretionary power to stay patent infringement litigation that is related to, but not duplicative of,

18

an action before the ITC”); Epistar Corp. v. Philips Lumileds Lighting Co., LLC, No. 07-CV-5194,

19

2008 WL 913321 *3 (N.D Cal. Apr. 2, 2008) (staying a breach of contract claim because it

20

overlapped with plaintiff’s infringement claim). In determining whether to grant a discretionary

21

stay, the district court must consider “the possible damage which may result from the granting of a

22

stay, the hardship or inequity which a party may suffer in being required to go forward, and the

23

orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and

24

questions of law which could be expected to result from a stay.” CMAX, Inc. v. Hall, 300 F.2d

25

265, 268 (9th Cir. 1962).

26
27
28

3
Case No.: 5:10-CV-02863-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO STAY; DENYING DEFENDANTS’
MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO STRIKE AS MOOT

1

III.

DISCUSSION

2

Because the ’456 patent claims are covered by the ITC Action, Defendants’ Motion to Stay

3

is GRANTED as to those claims. The court is left to consider whether to grant a discretionary stay

4

as to the ’447 patent and the business tort claims.

5
6

a. Possible Harm in Granting a Stay
Plaintiffs argue that they will suffer harm should a stay issue because such a stay could last
up to thirty-three months, because the patent-in-suit would expire during this delay, and because

8

Defendants may not be able to pay a damage award should this case be delayed. Plaintiffs further

9
United States District Court
For the Northern District of California

7

argue that they should not be required suffer such harm because the ’447 patent and the business

10
11

tort claims are not related to the ITC proceedings.
Defendants respond that they only seek a stay until the ALJ issues his initial determination,

12

and as such the stay will likely only last about twelve months. Furthermore the Defendants argue

13

that Plaintiffs’ alleged harm of the expiration of the patent-in-suit is a red herring because the

14

patent-in-suit will expire even before the present case, as scheduled, reaches trial. As to the

15

relationship between the present claims and those in the ITC investigation, Defendants admit that

16

the ’447 patent is not at issue in the ITC investigation, but points out that that investigation

17

concerns the exact same device as at issue here, that the ’447 patent and the ’595 patent (at issue in

18

the ITC investigation) share two inventors, that the patents at issue both in this case and in the ITC

19

investigation are commonly owned, which may raise standing and licensing issues, and that

20

Plaintiffs added the business tort claims to this case because information discovered in the present

21

case provided the foundation for those claims. Defendants further argue that the close timing of

22

the filing of Plaintiffs’ SASC and Plaintiffs’ filing of the ITC investigation suggests that Plaintiffs

23

added the business tort claims to this case as a hedge against the court’s staying the action in its

24

entirety. As to the Defendants’ ability to pay a damages award, Defendants suggest that Plaintiffs’

25

argument is based on stale information.

26

Though this litigation is already well underway, the harm imposed by a stay to Plaintiffs is

27

minimal and largely of their own making. Plaintiffs chose to file an ITC investigation fairly late in
4
Case No.: 5:10-CV-02863-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO STAY; DENYING DEFENDANTS’
MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO STRIKE AS MOOT

28

this litigation knowing that in so doing, they would spread Defendants’ financial resources even

2

thinner and afford Defendants an opportunity to request both a mandatory and a discretionary stay

3

from the court. That Defendants pursued this option does not constitute harm to Plaintiffs.

4

Defendants have demonstrated that the ’447 claims and the business tort claims are at least

5

somewhat related to the claims at issue in the ITC investigation. Plaintiffs have failed to identify

6

any specific continuing severe harm it may suffer should a stay issue that could not ultimately be

7

rectified by a damages award. Even if such harm did exist, Defendants have attempted to minimize

8

it by requesting a discretionary stay only until the ITC issues its initial determination, rather than

9
United States District Court
For the Northern District of California

1

demanding a stay until the final resolution of that investigation. Therefore, the court finds that this

10
11
12

factor weighs slightly in favor of a stay.
b. Possible Hardship to Defendants without a Stay
Defendants argue that they would suffer considerable hardship should this court not issue a

13

stay because of the potential for significantly duplicative discovery and because, as a small

14

company, Defendants will be overwhelmed should they be required to defend themselves both in

15

this court and in the ITC simultaneously. Defendants request a stay only until the ITC issues its

16

initial determination to allow them to focus their limited resources during “the period of the most

17

intense effort at the ITC.” Dkt. No. 334 at 3:18-19. The court notes the aggressive pace and

18

demands of an ITC investigation, and finds that under the circumstances presented here,

19

Defendants would face a hardship without a stay. Therefore, this factor weighs in favor of a stay.

20

c. Judicial Economy

21

Because the ’456 patent claims are stayed as of right, the court faces the decision of

22

allowing this litigation to proceed on two tracks, or waiting twelve months to enable this litigation

23

to go forward on one. In the event the court does not issue a stay, the present case will proceed to

24

trial on the ’447 patent and the business tort claims. Later, after the ITC investigation concludes,

25

litigation in this court may be renewed as to the ’456 patent. A dual schedule such as the one

26

presented here may require duplicative discovery, two rounds of expert reports, two rounds of

27

dispositive motions, and ultimately, two trials. Because the ITC investigation relates to the present
5
Case No.: 5:10-CV-02863-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO STAY; DENYING DEFENDANTS’
MOTION TO DISMISS AND PLAINTIFFS’ MOTION TO STRIKE AS MOOT

28