Macronix International Co., LTD. v. Spansion Inc. et al

Filing 123

ORDER GRANTING IN PART 104 DEFENDANTS' MOTION FOR STAY; VACATING CASE MANAGEMENT CONFERENCE; AND TERMINATING WITHOUT PREJUDICE 95 PLAINTIFF'S MOTION FOR LEAVE TO AMEND. Status Report due by 10/30/2015. Signed by Judge Beth Labson Freeman on 12/12/2014. (blflc1, COURT STAFF) (Filed on 12/12/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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MACRONIX INTERNATIONAL CO.,
LTD.,

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United States District Court
Northern District of California

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Plaintiff,
v.

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SPANSION INC. and SPANSION LLC,

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Defendants.

Case No. 5:14-cv-01890-BLF
ORDER GRANTING IN PART
DEFENDANTS’ MOTION FOR STAY;
VACATING CASE MANAGEMENT
CONFERENCE; AND TERMINATING
WITHOUT PREJUDICE PLAINTIFF’S
MOTION FOR LEAVE TO AMEND
[Re: ECF No. 104]

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In this patent infringement action, Defendants move for a stay of litigation pending

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resolution of an investigation by the United States International Trade Commission (“ITC”),

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which was initiated by Plaintiff and addresses four of the seven patents-in-suit here. The Court

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has considered the parties’ briefing as well as the oral argument presented at the hearing on

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December 11, 2014. For the reasons stated on the record and herein, the motion is GRANTED IN

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PART.

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With respect to the four patents-in-suit that are the subject of the ITC proceeding

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(“overlapping patents”), both sides agree that a stay is mandatory. When a civil action involves

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parties that also are parties to a proceeding before the ITC, the district court must grant a timely

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request for stay of the civil action “with respect to any claim that involves the same issues

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involved in the proceeding before the Commission.” 28 U.S.C. § 1659(a). “The purpose of

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§ 1659 is to prevent separate proceedings on the same issues occurring at the same time.” In re

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Princo Corp., 478 F.3d 1345, 1355 (Fed. Cir. 2007). The stay remains in place until the ITC

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determination “becomes final,” meaning until all appeals are exhausted. Id.

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With respect to the remaining three patents-in-suit (“non-overlapping patents”), the Court

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has discretion to stay litigation that is related to, but not duplicative of, ITC proceedings. Zenith

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Electronics LLC v. Sony Corp., No. C 11-02439 WHA, 2011 WL 2982377, at *2 (N.D. Cal. July

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22, 2011). “When ruling on a motion for a discretionary stay in a patent case, a district court

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applies the law of its court of appeals.” Id. at *2 n.*. In the Ninth Circuit, a court considering

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whether a discretionary stay is warranted should balance the following three nonexclusive factors:

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(1) “the possible damage which may result from the granting of a stay”; (2) “the hardship or
inequity which a party may suffer in being required to go forward”; and (3) “the orderly course of

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United States District Court
Northern District of California

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justice measured in terms of the simplifying or complicating of issues, proof, and questions of law

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which could be expected to result from a stay.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1110

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(9th Cir. 2005) (quoting CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962)).

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As to Factor 1, the parties agree that ITC proceedings likely will be completed in

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Defendant 2015, meaning that any stay would last at least one year and potentially double or triple

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that depending upon appellate proceedings. Plaintiff understandably is quite concerned that

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evidence may be lost during such a lengthy period, that witnesses may become unavailable, and

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that memories may fade. Plaintiff also points out that while two of the non-overlapping patents

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have expired, the third does not expire until 2021. A stay would preclude Plaintiff from seeking

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injunctive relief as to that patent. While any sense of urgency with respect to injunctive relief is

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undercut somewhat by Plaintiff’s failure to seek a preliminary injunction, the Court must consider

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the effect of an order that would preclude Plaintiff from pursuing permanent injunctive relief for

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up to several years. Plaintiff additionally contends that in light of other litigation in which

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Defendants are involved, a lengthy delay would increase the chance that Defendants might

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become insolvent and thus unable to satisfy a judgment. While that argument is not persuasive

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given Defendants’ evidence of total assets exceeding $1 billion, the Court concludes that the

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potential loss of evidence and, to a lesser extent, the delay in the opportunity to obtain permanent

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injunctive relief, weigh against issuance of a discretionary stay.
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Factor 2 weighs in favor of a stay, as Defendants otherwise will be required to litigate on

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two fronts simultaneously. However, Defendants are sophisticated entities with able attorneys and

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significant resources. Thus the Court does not accord this factor substantial weight.

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Finally, with respect to Factor 3, it is possible that the ITC’s determinations might narrow

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or simplify the issues in this action, but then again they might not. Moreover, ITC findings are not

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binding upon this Court. See Zenith, 2011 WL 2982377, at *3. However, it does appear that

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litigating the non-overlapping patents now and the overlapping patents later would result in at

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least some duplication of effort and evidence. Accordingly, this factor weighs in favor of a stay.
Having considered the evidence and arguments before it, and reviewed the approaches

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taken by other courts in this district, this Court concludes that practicality and fairness best are

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United States District Court
Northern District of California

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served by permitting discovery to go forward as to the three non-overlapping patents while staying

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motion practice and compliance with the local patent rule disclosure requirements as to those

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patents. See Zenith, 2011 WL 2982377, at *3-4. Plaintiff’s counsel indicated at the hearing that

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this approach would address Plaintiff’s most significant concerns. The Court will direct the

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parties to file a joint status update in October 2015. At that time, if any party believes that the

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issue of the stay should be revisited, that party may raise the issue in the status update. As a

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discovery plan is developed, it may become apparent that certain avenues of inquiry constitute

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wasted effort or are inefficient. The Court presumes that the parties will make every effort to

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resolve such issues, but if that is not possible then any party may seek relief with respect to

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particular discovery requests.
ORDER

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Accordingly, for good cause shown:

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(1)

Defendants’ motion for stay is GRANTED IN PART. The Court hereby STAYS

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the litigation entirely as to the four overlapping patents and STAYS motion

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practice and compliance with the local patent rule disclosure requirements as to the

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three non-overlapping patents. However, discovery may go forward as to the non-

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overlapping patents.

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(2)

The January 13, 2015 Case Management Conference is VACATED.
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(3)

Plaintiff’s motion for leave to amend is administratively TERMINATED without

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prejudice to its renewal upon the lifting of the stay. The February 12, 2015 hearing

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on that motion is VACATED.

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(4)

The parties shall submit a joint status update on or before October 30, 2015.

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IT IS SO ORDERED.

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Dated: December 12, 2014
______________________________________
BETH LABSON FREEMAN
United States District Judge

United States District Court
Northern District of California

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