Markets-Alert Pty Ltd. v. Bloomberg Finance LP et al

Filing 25

MEMORANDUM OPINION re Motion to Stay - See Order granting Motion to Stay to follow. Signed by Chief Judge Gregory M. Sleet on 2/5/2013. Associated Cases: 1:12-cv-00780-GMS et al.(asw)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

MARKET-ALERTS PTY. LTD.,
Plaintiff,

v.
BLOOMBERG FINANCE L.P., et al,
Defendants.

MARKET-ALERTS PTY. LTD.,
Plaintiff,
v.
THE CHARLES SCHWAB CORP., et al,
Defendants.

MARKET-ALERTS PTY. LTD.,
Plaintiff,

v.
E*TRADE CLEARING LLC, et al,
Defendants.

MARKET-ALERTS PTY. LTD.,
Plaintiff,

v.
TD AMERITRADE HOLDING CORP., et al,

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Civil Action No. 12-780-GMS

Civil Action No. 12-781-GMS

Civil Action No. 12-782-GMS

Civil Action No. 12-783-GMS

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Defendants.

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MARKET-ALERTS PTY. LTD.,

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Plaintiff,

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v.

OM SECURITIES, LLC d/b/a
TRADE MONSTER, et al,
Defendants.

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MARKET-ALERTS PTY. LTD.,
Plaintiff,

v.
ESIGNAL.COM, INC., et al,
Defendants.

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Civil Action No. 12-784-GMS

Civil Action No. 12-785-GMS

Adam W. Poff, Esquire and Pilar G. Kraman, Esquire ofYOUNG, CONAWAY, STARGATT &
TAYLOR, LLP, Wilmington, Delaware, and Adrian M. Pruetz, Esquire, Andrew Y. Choung,
Esquire, Erica Van Loon, Esquire, and Jessica Wood, Esquire of GLASER, WElL, FINK,
JACOBS, HOWARD, AVCHEN & SHAPIRO LLP, Los Angeles, California. Attorneys for
Plaintiff.
David E. Moore, Esquire, Richard L. Horwitz, Esquire, and Bindu A. Palapura, Esquire of
POTTER, ANDERSON & CORROON LLP, Wilmington, Delaware, and Michael Levin,
Esquire, and Maneesh Gupta, Esquire of WILSON, SONSINI, GOODRICH & ROSATI PC,
Palo Alto, California, and Larry L. Shatzer, Esquire of WILSON, SONSINI, GOODRICH &
ROSATI PC, Washington, DC, and Brian D. Range, Esquire of WILSON, SONSINI,
GOODRICH & ROSATI PC, Austin, Texas, and Robert P. Lord, Esquire, Tammy J. Terry,
Esquire, and Aly Z. Dossa, Esquire of OSHA LIANG LLP, Houston, Texas. Attorneys for
Moving Defendants.
OPINION

February ..5___, 2013
Wilmington, Delaware
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,..

I.

INTRODUCTION

On June 20, 2012, the plaintiff, Market-Alerts Pty. Ltd. ("Market-Alerts"), brought the
above-captioned six lawsuits against multiple defendants, 1 alleging infringement of U.S. Patent
No. 7,941,357 (the '"357 Patent").

On October 15, 2012, several of the defendants (the

"petitioning defendants") filed a Petition for Post-Grant Review of the '357 Patent under 35
U.S.C. § 321 and§ 18 ofthe America Invents Act (the "AlA"). (D.I. 16, Ex.

Bi

On November

9, 2012, the Bloomberg defendants, the E*TRADE defendants, the TD Ameritrade defendants,
and Thinkorswim Group, Inc. 3 moved to stay this litigation pending post-grant review pursuant
to § 18(b) of the AlA. (D.I. 14.) The Schwab defendants and optionsXpress defendants then
1

The 12-780 action names the following defendants: Bloomberg Finance LP, Bloomberg LP, and
Bloomberg Inc. (collectively, the "Bloomberg defendants").
The 12-781 action names: (1) The Charles Schwab Corporation, Charles Schwab & Co., Inc., and Schwab
Holdings, Inc. (collectively, the "Schwab defendants"); (2) optionsXpress Holdings Inc. and optionsXpress, Inc.
(collectively, the "optionsXpress defendants"); (3) Tradeking Group Inc., Tradeking Holdings LLC, Tradeking LLC
(collectively the "Tradeking defendants"); (4) Recognia Inc. and Recognia US Inc. (collectively, the "Recognia
defendants"); and (5) Lightspeed Financial Inc. and Lightspeed Trading LLC (collectively, the "Lightspeed
defendants").
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The 12-782 action names: E*TRADE Clearing LLC, E*TRADE Financial Corporation, and E*TRADE
Securities LLC (collectively, the "E*TRADE defendants").
The 12-783 action names: (1) TD Ameritrade Holding Corp., TD Ameritrade IP Company, Inc., and TD
Ameritrade, Inc. (collectively, the "TD Ameritrade defendants"); and (2) Thinkorswim Group, Inc.
The 12-784 action names: OM Securities LLC and optionMonster Holdings Inc.
The 12-785 action names: eSignal.com Inc., IBG LLC, Interactive Brokers Corporation, Interactive Data
LLC, and Interactive Data Corporation.
2

Unless otherwise noted, all docket item citations are to Market-Alerts Pty. Ltd. v. Bloomberg Fin. L.P., et
a/., No. 12-780-GMS.
3

The court refers to those defendants who filed or joined in the original motion to stay (D.I. 14) as the
"moving defendants." To summarize, those parties are: (1) the Bloomberg defendants; (2) the Schwab defendants;
(3) the optionsXpress defendants; (4) the E*TRADE defendants; (5) the TD Ameritrade defendants; and (6)
Thinkorswim Group, Inc. This represents all the defendants in the 12-780, 12-782, and 12-783 actions. None of the
defendants in the 12-784 and 12-785 actions have joined in the motion to stay. In the 12-781 action, the following
defendants also have failed to join in the motion: (1) the Tradeking defendants; (2) the Recognia defendants; and (3)
the Lightspeed defendants. All defendants, however, agree that a stay is appropriate in this case, and none opposes
entry of a stay. (D.I. 24 at 5.)

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filed a separate motion to stay on December 21, 2012. (No. 12-781, D.I. 38.) On January 4,
2013, they withdrew that request and joined in the pending, November 9, 2012 motion to stay.
(No. 12-781, D.I. 42.) That motion is presently before the court, and, for the reasons that follow,
the court will order that all six actions be stayed pending post-grant review.

II.

BACKGROUND
Market-Alerts claims to be the exclusive owner of all rights to the '357 Patent, which is

entitled "Trading System." (D.I. 1 at ,-r 8.) Claim 1 of the '357 Patent recites:
A method of informing users of stock market events, comprising the steps of: (a)
receiving real-time stock market data on a network of computers; (b) receiving on
the network of computers instructions from a user to specify watch data defining
an event, the watch data including a stock market technical analysis request
specifying technical analysis formulae to be applied to the real-time stock market
data; (c) using the network of computers to periodically apply the user-spe"cified
watch data including the stock market technical analysis formulae to the real-time
stock market data in real-time to ascertain whether a valid response to the watch
data has occurred based on the real-time stock market data, thereby determining
an occurrence of the event defined by the user-specific watch data; and (d)
causing a real-time notification by the network of computers to be provided to the
user via a remote communications device upon the occurrence of the event
defined by the user-specified watch data, the real-time notification directed to a
remote communications device of the user so that the user can then provide
instructions for share market transaction on an instantaneous basis.

(Id., Ex. A at 9.) Market-Alerts alleges that each of the defendants infringes the'357 Patent by
"provid[ing] or operat[ing] real-time stock trading products and/or services, which fall within the
scope of the '357 Patent claims." (D.I. 24 at 3.)

III.

STANDARD OF REVIEW
Section 18 of the AlA provides for the establishment of transitional post-grant review

proceedings to reexamine the validity of covered business method patents ("CBM review").
Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284,329-31 (2011). The
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AlA also considers the effect of these proceedings on related patent infringement actions and
authorizes the district courts to stay such parallel litigation under certain circumstances.
Specifically§ 18(b)(l) provides:
If a party seeks a stay of a civil action alleging infringement of a patent under
section 281 of title 35, United States Code, relating to a transitional proceeding
for that patent, the court shall decide whether to enter a stay based on(A) whether a stay, or the denial thereof, will simplify the issues in
question and streamline the trial;
(B) whether discovery is complete and whether a trial date has been set;
(C) whether a stay, or the denial thereof, would unduly prejudice the
nonmoving party or present a clear tactical advantage for the moving
party; and
(D) whether a stay, or the denial thereof, will reduce the burden of
litigation on the parties and on the court.
!d. § 18(b)(1).
This statutory test closely resembles the stay analysis courts have applied in assessing a
motion to stay pending inter partes or ex parte reexamination by the Patent and Trademark
Office (the "PTO"). See, e.g., SenoRx, Inc. v. Hologic_, Inc., No. 12-173-LPS-CJB, 2013 WL
144255, at *2 (D. Del. Jan. 11, 2013) (applying

three~factor

stay test that asks "(1) whether

granting the stay will simplify the issues for trial; (2) the status of the litigation, particularly
whether discovery is complete and a trial date has been set; and (3) whether a stay would cause
the non-movant to suffer undue prejudice from any delay, or allow the movant to gain a clear
tactical advantage"); Ever Win Int'l Corp. v. Radioshack Corp., No. 11-1104-GMS-CJB, 2012
WL 4801890, at *2 (D. Del. Oct. 9, 2012) (same). The substantial difference between the test set
forth in § 18(b)(1) and that employed by courts in the ordinary patent reexamination context is
the inclusion of a fourth factor, which requires the court to consider "whether a stay, or the
denial thereof, will reduce the burden of litigation on the parties and on the court."
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18(b)(1)(D). This additional consideration was included, in part, to ease the movant's task of
demonstrating the need for a stay. 4
The AlA was signed into law on September 16, 2011, and CBM review came into effect
one year later, in September 2012.
IV.

DISCUSSION
The petitioning defendants have sought post-grant review of the '357 Patent as a covered

business method patent under 35 U.S.C. § 321 and§ 18 ofthe AlA. The moving defendants now
request a stay of this litigation pending the resolution of those CBM review proceedings. 5 The
court will discuss each of the statutory stay factors outlined in § 18(b) below, addressing the

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Section 18 of the AlA was added through an amendment proposed by Senator Charles Schumer, which
was included in the larger managers' amendment advanced by Senators Leahy and Grassley. See 157 Cong. Rec.
S1030-32 (daily ed. Mar. 1, 2011) (statement of Sen. Patrick Leahy). During Congressional debate on the AlA,
Senator Schumer himselfl_'rovided a thorough discussion of this section. 157 Cong. Rec. S1363-65 (daily ed. Mar.
8, 2011) (statement of Sen. Charles Schumer).
Senator Schumer first made clear that the intent of the fourth stay factor was to "place[]a very heavy thumb
on the scale in favor of a stay being granted." !d. at S 1363. He then explained the need for express inclusion of this
factor:
Due to low grant rates for stays [pending PTO ex parte reexamination] in several jurisdictions, this
amendment instructs courts to apply the four-factor test first announced in Broadcast Innovation,
L.L.C. v. Charter Communications [No. 03-2223-ABJ-BNB, 2006 WL 1897165 (D. Colo. July 11,
2006)] when evaluating stay motions. The amendment employs the Broadcast Innovation test,
rather than other multifactor tests employed by other district courts, because this test properly
emphasizes a fourth factor that is often ignored by the courts: "whether a stay will reduce the
burden oflitigation on the parties and on the court." Too many district courts have been content to
allow litigation to grind on while a reexamination is being conducted, forcing the parties to fight in
two fora at the same time. This is unacceptable, and would be contrary to the fundamental purpose
of the Schumer-Kyl amendment to provide a cost-efficient alternative to litigation.
!d. at S1364.
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One preliminary issue is whether the statutory stay analysis set forth in § 18(b) is triggered upon a party's
petition for post-grant review or only upon the Patent Trial and Appeal Board's ("PTAB's") institution of such
review. (D.I. 19 at 8; D.l. 22 at 6.) The AlA states that "the court shall decide whether to enter a stay based on [the
four enumerated factors]" whenever "a party seeks a stay of a civil action alleging infringement of a patent . . .
relating to a transitional proceeding for that patent." § 18(b)(l) (emphasis added). Since the PTO has recognized
that "the proceedings begin with the filing of a petition," the court fmds that the relevant stay provisions apply when
the petition is first filed. Office Patent Trial Practice Guide, 77 Fed. Reg. 48757 (Aug. 14, 2012) (emphasis added).

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parties' specific arguments where applicable. 6
A.

Issue Simplification

Section 18(b)(1 )(A) instructs the court to consider "whether a stay, or the denial thereof,
will simplify the issues in question and streamline the trial." Id. As the court has previously
recognized, staying an infringement case pending administrative review of the patent-in-suit's
validity can simplify litigation in several ways:
(1) all prior art presented to the court at trial will have been first considered by the
PTO with its particular expertise, (2) many discovery problems relating to the
prior art can be alleviated, (3) if patent is declared invalid, the suit will likely be
dismissed, (4) the outcome of the [administrative review] may encourage a
settlement without further involvement of the court, (5) the record of the
[administrative review] would probably be entered at trial, reducing the
complexity and the length of the litigation, (6) issues, defenses, and evidence will
be more easily limited in pre-trial conferences and (7) the cost will likely be
reduced both for the parties and the court.

Gioello Enters. Ltd. v. Mattei, Inc., No. 99-375-GMS, 2001 WL 125340, at *1 (D. Del. Jan. 29,
2001).
The moving defendants reference the high rates of claim amendment and cancellation in
the inter partes reexamination context to suggest that granting a stay here will narrow the issues
. before the court. 7 (D.I. 15 at 7.) Market-Alerts responds that a stay will not achieve the goal of
issue simplification because (1) the limited scope of CBM review proceedings ensures that
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As Market-Alerts acknowledges, judicial decisions considering a motion to stay pursuant to§ 18(b) of the
AlA "are virtually nonexistent." (D.I. 19 at 7.) The court thus draws from its experience in the ordinary PTO
reexamination context in considering the three common stay factors. This is consistent with the legislative history
of the AlA, which suggests that the additional "burden of litigation" factor represents the sole statutory modification
to the analysis-the court fmds no indication that Congress intended to alter the way in which district courts assess
the first three factors. See 157 Cong. Rec. Sl363-64 (daily ed. Mar. 8, 2011) (statement of Sen. Charles Schumer).
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Statistics published by the PTO indicate that 3 77 reexamination certificates were issued between
November 29, 1999, the beginning of inter partes reexamination, and June 30, 2012. Of those, only 11% confirmed
all claims. On the other hand, all claims were canceled or disclaimed in 42% of cases, and at least some claims were
amended in the remaining 47%. (D.I. 16, Ex. Gat 1.)

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certain issues will remain in litigation even after the administrative process is complete and (2)
the CBM review is unlikely to result in claim cancellation or amendment (D.I. 19 at 16-17.)
Of course, these two worries collapse into each other to some degree. In raising its
"scope" concern, Market-Alerts claims that "at least the issues of infringement, other invalidity
defenses, damages and other equitable defenses will still have to be litigated even if the PTO
grants CBM Review." (!d.) Implicit in this argument is an assumption that CBM review will
not result in the cancelation of all claims of the '357 Patent-if that were to occur, it would
effectively end these cases and extinguish any concerns about the scope of the review process.
The merit of Market-Alerts' scope argument thus depends, in part, on the strength of the
petitioning defendant's administrative challenge itself, 8 and, on that broader point, Market-Alerts
contends that the petition for CBM review is unlikely to be granted or to succeed. (!d. at 8-15.)
1. Likelihood ofPetition Being Granted
Market-Alerts first suggests that the petition for review will not even be granted because
the claims of the '357 Patent fall within a statutory exception for "technological inventions."
The AlA permits CBM review only for "covered business method patents," which it defines as
"patent[ s] that claim[] a method or corresponding apparatus for performing data processing or
other operations used in the practice, administration, or management of a financial product or
service, except that the term does not include patents for technological inventions." § 18(d)(l)
(emphasis added). Pursuant to rulemaking authority delegated by § 18(d)(2) of the AlA, the
PTO has further clarified that,
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The court recognizes that any assessment of the likelihood of patent claims being cancelled during a
future administrative proceeding is inherently speculative. See Texas MP3 Techs., Ltd. v. Samsung Elecs. Co., No.
2:07-CV-52, 2007 WL 2319372, at *2 n.2 (E.D. Tex. Oct. 3, 2007) (noting that "final disposition of any
reexamination proceeding is unknown"). Such preliminary evaluations, however, are often demanded by the "issue
simplification" factor.
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[i]n determining whether a patent is for a technological invention solely for
purposes of the Transitional Program for Covered Business Methods . . . the
following will be considered on a case-by-case basis: whether the claimed subject
matter as a whole recites a technological feature that is novel and unobvious over
the prior art; and solves a technical problem using a technical solution.
37 C.P.R. § 42.301(b) (2012). As the PTO has noted, this definition is consistent with the
legislative history of the AlA. Transitional Program for Covered Business Method PatentsDefinitions of Covered Business Method Patent and Technological Invention, 77 Fed. Reg.
48735 (Aug. 14, 2012) (quoting, inter alia, 157 Cong. Rec. S1364 (daily ed. Mar. 8, 2011)
(statement of Sen. Charles Schumer) ("The 'patents for technological inventions' exception only
excludes those patents whose novelty turns on a technological innovation over the prior art and
are concerned with a technical problem which is solved with a technical solution and which
requires the claims to state the technical features which the inventor desires to protect.")).
Market-Alerts contends that the '357 Patent falls within this technological invention
exception because "the 357 Patent claims, as a whole, a set of technological features th;:tt are
novel and unobvious over the prior art. Moreover, the widespread adoption of the patented
invention within the industry, particularly by the big brokerages, directly evidences the value of
the patented invention as a technical solution." (D.I. 19 at 11.) The court, however, believes that
the '357 Patent likely does not meet the requirements of the statutory exception. The plain
language of the PTO definition makes clear that when a party seeks to invoke the "technological
invention" exception, it must do more than demonstrate that the method being claimed is novelit must show that the "technological feature" itself is novel and unobvious. Here, the court
presumes that the claimed "technological features" of the '357 Patent are the "network of
computers" and the "remote communications device." As such, and despite Market-Alerts'
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generalized protests to the contrary, neither a "network of computers" nor a "remote
communications device" strikes the court as particularly novel. 9 Put simply, it seems likely that
the petition for CBM review will be granted. 10
2. Likelihood of Administrative Challenge Succeeding
Market-Alerts next contends that, even if the petition is granted, the defendants' validity
challenge will fail before the PTAB. (D.I. 19 at 13-15.) Its principal argument on this point
relates to the petitioning defendants' submission of material obtained through the Internet
Archive's "Wayback Machine" as prior art. 11 (!d. at 13.) The court, however, is unimpressed by

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The court's assessment is consistent with the PTO's explanation that a patent neither conveys a
"technological invention" through "[m]ere recitation of known technologies, such as computer hardware,
communication or computer networks, software, memory, computer-readable storage medium, scanners, display
devices or databases, or specialized machines, such as an ATM or point of sale device" nor simply by "reciting the
use of known prior art technology to accomplish a process or method, even if that process or method is novel and
non-obvious." Office Patent Trial Practice Guide, 77 Fed. Reg. 48764 (Aug. 14, 2012).
It also comports with the PTO's statement that "patents subject to covered business method patent review
are anticipated to be typically classifiable in Class 705. It is anticipated that the number of patents in Class 705 that
do not qualify as covered business method patents would approximate the number of patents classified in other
classes that do qualify." Transitional Program for Covered Business Method Patents-Definitions of Covered
Business Method Patent and Technological Invention, 77 Fed. Reg. 48735 (Aug. 14, 2012). Tellingly, the '357
Patent falls within Class 705. (D.I. 1, Ex. A at 2.)
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Market-Alerts also points to statements made during Congressional debates that indicate a heightened
standard for granting a petition and instituting CBM review. Specifically, Senator Schumer observed that "to
initiate a post issuance review under the new post grant or transitional prQceedings, it is not enough that the request
show a substantial new question of patentability but must establish that 'it is more likely than not that at least [one]
of the claims challenged in the petition is unpatentable."' 157 Cong. Rec. S5428 (daily ed. Sept. 8, 2011) (statement
of Sen. Charles Schumer). Indeed, this test is now codified at 37 C.F.R. § 42.208(c) (2012) and 35 U.S.C. § 324(a).
The heightened standard, however, does not alter the court's conclusion-for substantially the same reasons
discussed in Section IV.A(2) below, the court believes the petitioning defendants will likely be able to make this
threshold showing.
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Judge Kelly of the U.S. District Court for the Eastern District of Pennsylvania describes the Wayback
Machine and its operation as follows:
[T]he Internet Archive is a nonprofit organization that has created an online library of digital
media in an effort to preserve digital content for future reference. Its digital database is equivalent
to a paper library, but is filled with digital media like websites instead of books ... Internet
Archive's database provides users with the ability to study websites that may have been changed or
no longer exist. The chronological records are compiled by routinely taking screenshots of
websites as they exist on various days. Internet Archive collects images through a process called
crawling. A crawler or robot is an automated program that scours the Internet and takes pictures of

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this line of attack. While the admissibility of Wayback-generated webpages remains somewhat
uncertain,

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Market-Alerts makes no attempt to discredit the additional printed publications

presented by the defendants as prior art. (D.I. 22 at 8.) The court believes there is at least a
reasonable chance that the PT AB will ultimately invalidate or cause Market-Alerts to amend
some or all ofthe claims of the '357 Patent, and such a result would have simplifying effects on
this litigation regardless of the scope limitations of CBM review. As such, this factor weighs
lightly in favor of granting the motion to stay.
B.

Stage of Litigation

The second factor, which has the court consider how far litigation has already progressed,
likewise favors a stay. America Invents Act§ 18(b)(1)(B). Staying a case at an early juncture
"can be said to advance judicial efficiency and maximize the likelihood that neither the [c]ourt
nor the parties expend their assets addressing invalid claims." SenoRx, Inc., 2013 WL 144255, at

every web page that it is instructed to visit ... Any person with a web browser can search Internet
Archive's database of archived images. Searching the database is accomplished via the Wayback
Machine, which Internet Archive provides on its website. The Wayback Machine is an
information retrieval system that allows the user to request archived screenshots of web pages that
may be contained on the database ... The image appears in the user's web browser just like a live
website would appear, however, the user is not viewing a live website. Instead, the user sees the
static version of the website that is stored in Internet Archive's database. The Wayback Machine
only provides a window into the past where users can see what a website looked like on a specific
date.
Healthcare Advocates, Inc. v. Harding, Earley, Follmer, & Frailey, 497 F. Supp. 2d 627, 631 (E.D. Pa. 2007).
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The courts and agencies that have considered the reliability of documents generated by the Wayback
Machine have reached varying conclusions. It appears that, while these documents have been deemed inadmissible
for certain purposes, see Novak v. Tucows, Inc., No. 06-1909-JFB-ARL, 2007 WL 922306, at *5 (E.D.N.Y. Mar. 26,
2007) (striking webpages from evidence because they represented hearsay and were not properly authenticated
pursuant to Rule 901 of the Federal Rules ofEvidence), they have generally been accepted as evidence of prior art in
the patent context, see, e.g., Keystone Retaining Wall Sys., Inc. v. Basalite Concrete Prods., LLC, No. 10-4085-PJSJJK, 2011 WL 6436210, at *9 n.9 (D. Minn. Dec. 19, 201 I); Ex parte Rowse, No. 2010-5057, 2011 WL 3876553, at
*2 (B.P.A.I. Aug. 30, 2011); Ex parte Krivulka & Mazur, No. 2010-003098, 2010 WL 3820666, at *4 (B.P.A.I.
Sept. 28, 2010); Ex parte Shaouy & Trevathan, No. 2007-0987, 2007 WL 1591662, at *3 (B.P.A.I. May 24, 2007) .
Regardless, given the additional printed prior art offered by the moving defendants (and ignored by Market-Alerts),
the court need not resolve this issue here.

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*5 (internal quotation omitted). On the other hand, when confronted with a motion to stay in the
later stages of a case, "the [c ]ourt and the parties have already expended significant resources on
the litigation, and the principle of maximizing the use of judicial and litigant resources is best
served by seeing the case through to its conclusion." Id.
As the moving defendants accurately point out, these actions are "still at the earliest
possible stage. No conferences with the [c]ourt have occurred; no schedules have been set; no
substantive motions have been filed; and the [c ]ourt has issued no substantive rulings." This
factor thus weighs strongly in favor of a stay. 13 See Abbott Diabetes Care, Inc. v. Dexcom, Inc.,
No. 06-514-GMS, 2007 WL 2892707, at *5 (Sept. 30, 2007) (finding that a stay pending PTO
reexamination was warranted "where the court has not yet conducted a Rule 16(2)(b) scheduling
conference, no scheduling Order is in place, no discovery has taken place, and little time has yet
to be invested in the litigation").
C.

Undue Prejudice

·The court is next instructed to consider the potential for a stay to unduly prejudice the
plaintiff or place it at a clear tactical disadvantage. America Invents Act § 18(b)(1 )(C). In the
context of a motion to stay pending reexamination, the court has previously noted that waiting
for the administrative process to run its course risks prolonging the final resolution of the dispute
and thus may result in some inherent prejudice to the plaintiff. See Textron Innovations, Inc. v.

Taro Co., No. 05-486-GMS, 2007 U.S. Dist. LEXIS 100102, at *8 (D. Del. Apr. 25, 2007). The
court also recognizes, however, that the potential for delay does not, by itself, establish undue
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Apparently attempting to contest this "stage of litigation" factor, Market-Alerts notes that the PTO may
not grant the petition and actually institute post-grant review until April22, 2013. (D.I. 19 at 17.) It then points out
that at least another year will pass before the PTO issues a decision. (Id.) Though the court appreciates this
argument, it is a point more appropriately addressed under the "undue prejudice" stay factor below.

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prejudice. See Enhanced Sec. Research, LLC v. Cisco Sys., Inc., No. 09-571-JJF, 2010 WL
2573925, at *3 (D. Del. June 25, 2010); Wall Corp. v. BondDesk Grp., LLC, No. 07-844-GMS,
2009 WL 528564, at *2 (D. Del. Feb. 24, 2009). Rather, in determining whether a plaintiff
might be unacceptably prejudiced by a stay, the court turns to additional considerations including
the timing of the stay request, the timing of the administrative review request, the status of the
review proceedings, and the relationship between the parties. See, e.g., Boston Scientific Corp. v.

Cordis Corp., 777 F. Supp. 2d 783, 789 (D. Del. 2011); Vehicle IP, LLC v. Wal-Mart Stores,
Inc., No. 10-503-SLR, 2010 WL 4823393, at *2 (D. Del. Nov. 22, 2010).
In these actions, neither the timing of the CBM review petition nor the timing of the stay
request suggest any inappropriate dilatory motive on the defendants' part. The petition was filed
on October 15, 2012, less than one month after the review program went into effect, and the
motion to stay was filed on November 9, 2012. (D.I. 15 at 4.)
The relationship between the parties is also considered, as "[ c]ourts are generally
reluctant to stay proceedings where the parties are direct competitors." Boston Scientific Corp.,
777 F.2d at 789; see also ImageVision.Net, Inc. v. Internet Payment Exch., Inc., No. 12-054GMS-MPT, 2012 WL 5599338, at

*~5

(D. Del. Nov. 15, 2012); Vehicle IP, LLC v. Wal-Mart

Stores, Inc., No. 10-503-SLR, 2010 WL 4823393, at *2 (D. Del. Nov. 22, 2010). In such cases,
"there is a reasonable chance that delay in adjudicating the alleged infringement will have
outsized consequences to the party asserting infringement has occurred, including the potential
for loss of market share and an erosion of goodwill." SenoRx, Inc. v. Hologic, Inc., No. 12-173LPS-CJB, 2013 WL 144255, at *5 (D. Del. Jan. 11, 2013). There is no evidence, however, that
Market-Alerts directly competes with any of the defendants' accused products, (D.I. 15 at 10
14

n.5), and its own responsive brief indicates that, at this point, patent infringement litigation
represents its primary business, (D.I. 19 at 6). As such, this consideration does not suggest that a
stay would cause Market-Alerts undue prejudice.
Finally, the court examines the status of the administrative review. In order to make that
assessment here, however, it first is necessary to understand the expected timeline for CBM
review proceedings. The PTO provides the following summary:
Generally, the proceedings begin with the filing of a petition that identifies all of
the claims challenged and the grounds and supporting evidence on a claim-byclaim basis. Within three months of notification of a filing date, the patent owner
in a[] . . . CBM proceeding may file a preliminary response to the petition,
including a simple statement that the patent owner elects not to respond to the
petition. The Board acting on behalf of the Director will determine whether to
institute a trial within three months of the date the patent owner's preliminary
response was due or was filed, whichever is first . . . The Board will enter a
Scheduling Order . . . concurrent with the decision to institute a trial. The
Scheduling Order will set due dates for the trial taking into account the
complexity of the proceeding but ensuring that the trial is completed within one
year of institution.
Office Patent Trial Practice Guide, 77 Fed. Reg. 48757 (Aug. 14, 2012) (including a
graphic detailing the timeline for CBM review proceedings). The court notes that the
PTO may extend the proceeding by up to six months upon a showing of good cause. 37
C.F.R. § 42.200(c) (2012).
Here, the petitioning defendants filed their request for CBM review on October 15,
2012, and Market-Alerts was notified of the petition on October 22, 2012. (D.I. 16, Ex. C.) As
such, Market-Alerts' preliminary response was due and presumably filed on January 22, 2012.
(Id.) It is possible that the PTO may not decide to grant the petition for CBM review of the '357

Patent until April 2013, and, if review is granted, a decision may not be issued until April 2014.

15

(D.I. 19 at 6.) With this timeline in mind, the court has little difficulty concluding that the CBM
review is in its early stages and that this particular consideration weighs against granting a stay.
Nevertheless, viewing the "undue prejudice" factor as a whole, the court finds that it
favors a stay of litigation. The potential for excessive prejudice is reduced by the fact that the
parties do not directly compete with each other, and there is no evidence of dilatory motive on
the part of the defendants. While the CBM review proceedings are admittedly in their early
stages, the delay that can be expected from that process neither outweighs the above
considerations nor controls the court's analysis.
D.

Burden of Litigation

Section 18 of the AlA adds a fourth factor to the traditional stay analysis, instructing the
court to consider "whether a stay, or the denial thereof, will reduce the burden of litigation on the
parties and on the court." § 18(b)(1)(D). It appears the intent of this provision was to ensure that
district courts would grant stays pending CBM review proceedings_ at a higher rate than they
have allowed stays pending ex parte reexaminations. 14
Market-Alerts argues that, if a stay were granted in this litigation, the issue simplification

14

See, e.g., 157 Cong. Rec. S1379 (daily ed. Mar. 8, 2011) (statement of Sen. Jon Kyl) ("In pursuit of this
congressional policy strongly favoring stays when proceedings are instituted under [§ 18], subsection [(b)]
incorporates the four-factor test for stays of litigation that was flrst announced in Broadcast Innovation, LLC v.
Charter Communications ...."); 157 Cong. Rec. S1363-64 (daily ed. Mar. 8, 2011) (statement of Sen. Charles
Schumer) (suggesting that the fourth factor effectively "places a very heavy thumb on the scale in favor of a stay
being granted" and noting his expectation that "if a proceeding against a business method patent is instituted, the
district court would institute a stay of litigation unless there were an extraordinary and extremely rare set of
circumstances not contemplated in any of the existing case law related to stays pending reexamination"); 157 Cong.
Rec. S1053 (daily ed. Mar. 1, 2011) (statement of Sen. Charles Schumer) ("One of the most critical elements of [the
Schumer-Kyl] amendment has to do with the stay of litigation while review of the patent is pending at the PTO. The
amendment includes a four-factor test for the granting of a stay that places a very heavy thumb on the scale in favor
of the stay. Indeed, the test requires the court to ask whether a stay would reduce the burden of the litigation on the
parties and the court. Since the entire purpose of the transitional program at the PTO is to reduce the burden of
litigation, it is nearly impossible to imagine a scenario in which a district court would not issue a stay.").

16

goal would be frustrated by the fact that related lawsuits would proceed normally during the
course of the stay. (D.I. 19 at 17.) As noted above, while the defendants in the 12-784 and 12785 actions agree that a stay is appropriate here and do not oppose the moving defendants'
request, they have not actually moved to stay their own cases. Market-Alerts warns that granting
a stay in the moving defendants' actions would compel it "to litigate essentially identical cases in
multiple forums, wasting the time and resources of both this Court and the PTO. In fact, a stay
may actually result in an increased burden on the parties or the Court, which would normally be
avoided through consolidation and coordination of related cases." (!d.)
While the court appreciates Market-Alerts' argument on this point and might even be
inclined to agree with it under different circumstances, it is inapplicable here, as the court will
order that the nonmoving defendants' actions also be stayed. Of course, the complicating issue
here is that § 18(b) of the AlA does not authorize a district court to stay a case unless a party
affirmatively seeks such relief. Since nqne of the defendants in the 12-784 and 12-785 actions
have requested a stay, the court cannot stay these cases under the statutory authority conferred by
the AlA. Rather, the court will order a stay as an exercise of its discretion and in the interests of
judicial and litigant economy. 15 The .rationale underlying this order is captured in Sections
IV.A-C above, and the court's decision is further grounded in the fact that all parties involved
have expressed willingness to stay each ofthe related actions. (D.I. 19 at 19; D.l. 22 at 10.)

15

A court's broad authority to stay proceedings "is incidental to the power inherent in every court to
control the disposition of causes on its docket with economy of time and effort for itself, for counsel and for
litigants." See Bechtel Corp. v. Laborers' lnt '1 Union, 544 F.2d 1207 (3d Cir. 1976) (quoting Landis v. North Amer.
Co., 299 U.S. 248, 254-55 (1936)). Moreover, courts have recognized that this power may be exercised sua sponte.
See, e.g., Tatum v. Chrysler Grp., LLC, No. 10-4269, 2011 WL 6303290, at *3 (D.N.J. Dec. 16, 2011); First
Nonprofit Ins. Co. v. Alexander, No. 09-465-RFK, 2009 WL 2256473, at *4 (E.D. Pa. July 27, 2009); Rogers v.
Ameriprise Fin. Servs., Inc., No. 07-6876-WRA, 2008 WL 4826262, at *2 (N.D. Ill. Nov. 4, 2008); Maurer v. UAW,
487 F. Supp. 731, 740 (M.D. Pa. 1979).

17

Given the court's decision to stay the 12-784 and 12-785 actions, it is clear that granting
the present motion will reduce the burden of litigation on both the parties and the court. This
conclusion is only reinforced by the legislative intent underlying this fourth stay factor.
V.

CONCLUSION
For the foregoing reasons, the court will grant the motion to stay the 12-780, 12-781, 12-

782, and 12-783 actions pursuant to § 18(b) of the AlA. Each of the four statutory factors
weighs in favor of granting a stay pending resolution of the CBM review proceedings.
Additionally, the court will stay the 12-784 and 12-785 actions as an exercise of its discretion
and in the interests of judicial and litigant economy.

18