Courtesy Products LLC v. Hamilton Beach Brands Inc.

Filing 70

MEMORANDUM ORDER denying 40 MOTION to Stay Litigation Pending Inter Partes Review of U.S. Patent Nos. 7,311,037 and 7,770,512 filed by Hamilton Beach Brands Inc. Signed by Judge Sue L. Robinson on 9/1/2015. (fms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

COURTESY PRODUCTS, L.L.C.,
Plaintiff,
v.
HAMILTON BEACH BRANDS, INC.,
Defendant.

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) Civ. No. 13-2012-SLR/SRF
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MEMORANDUM ORDER
At Wilmington this 1st day of September, 2015, having reviewed the motion filed
by defendant Hamilton Beach Brands, Inc. ("Hamilton Beach") to stay litigation pending
inter partes review ("IPR") of U.S. Patent Nos. 7,311,037 ("the '037 patent") and
7,770,512 ("the '512 patent"), and the papers filed in connection therewith;
IT IS ORDERED that said motion (D.I. 40) is denied, for the reasons that follow:
1. Procedural background. Plaintiff Courtesy Products, L.L.C. ("Courtesy")
filed this patent infringement action against Hamilton Beach on December 9, 2013,
asserting infringement of three patents, the '037 patent, the '512 patent, and U.S.
Patent No. 7,258,884 ("the '884 patent"), all involving Courtesy's CV1® Program, a
beverage brewing system that includes coffee makers that brew a single serving of
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coffee directly into a coffee cup using a disposable brew basket. Although Hamilton
Beach filed its motion to stay in September 2014, the Patent Trial and Appeals Board
("PTAB") did not institute IPR proceedings of the '037 and '512 patents until February

25, 2015. The PTAB declined to instituted IPR proceedings with respect to, inter alia,
the '884 patent or to asserted claims 19 and 26 of the '037 patent. Consistent with the
scheduling order entered on February 4, 2015 (D.I. 33), the parties have pursued fact
discovery and just commenced the claim construction exercise. Trial is scheduled to
commence in March 2017.
2. Standard of review. As recognized by the Supreme Court of the United
States, "the power to stay proceedings is incidental to the power inherent in every court
to control the disposition of the causes on its docket with economy of time and effort for
itself, for counsel, and for litigants." Landis v. North American Co., 299 U.S. 248, 252
(1936). Put another way, the decision of whether to grant a stay rests within the sound
discretion of the court through the exercise of judgment, "weigh[ing] competing interests
and maintain[ing] an even balance." Id. See also Cost Bros. Inc. v. Travelers

Indemnity Co., 760 F.2d 58, 60 (3d Cir. 1985); Ethicon, Inc. v. Quigg, 849 F.2d 1422,
1426-27 (Fed. Cir. 1988). Since the enunciation of the standard by the Supreme Court
in 1936, courts have identified the ubiquitous "factors" which should be used as
guidance in determining whether a stay is appropriate, for instance:
"(i) whether a stay would unduly prejudice or present a clear tactical
disadvantage to the non-moving party; (ii) whether a stay will simplify
the issues in question and trial of the case; and (iii) whether discovery
is complete and whether a trial date has been set." Xerox Corp. v.
3Com Corp., 69 F. Supp. 2d 494, 406 (W.D.N.Y. 1999); see also
United Sweetener USA, Inc. v. Nutrasweet Co., 766 F. Supp. 212,
217 (D. Del. 1992).

Nokia Corp. v. Apple, Inc., Civ. No. 09-791-GMS, 2011 WL 2160904 at *1 (D. Del. June
1, 2011 ). Section 18 of the America Invents Act ("AIA") added a fourth factor for the

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court's consideration, that is, "whether a stay, or the denial thereof, will reduce the
burden of litigation on the parties and on the court." AIA § 18(b)(1 )(D).
3. Analysis. Unlike many of the patent cases tried in this district, the above
captioned case involves a dispute between competitors. Indeed, Courtesy previously
asserted the '037 and '884 patents in an earlier Delaware case, resulting in Hamilton
Beach licensing these patents (and the application that matured into the '512 patent)
and paying royalties to Courtesy for many years. (D.I. 65 at 1) Despite its licensing
history, Hamilton Beach stopped paying royalties in 2013, filed for IPR (thus raising
challenges to the validity of the patents-in-suit under 35 U.S.C. §§ 102 or 103), and has
included in its answer to the amended complaint counterclaims and defenses that
exceed the scope of the allowable challenges in the IPR. (D.I. 23) The PTAB has
accepted for review some, but not all of the claims asserted at bar.
4. Under the circumstances described above, I find that a stay is not warranted.
First, the IPRs instituted by the PTAB do not address all of the claims at issue, meaning
that the parties' dispute will not be fully resolved by the IPRs, regardless of the outcome
of such. Second, if the outcome of the PTAB is not favorable to Hamilton Beach,
Hamilton Beach has the option of asserting the rest of its arsenal of defenses in this
court, not only prolonging the ultimate resolution of the dispute, but expending the
resources of the parties and two public agencies. Finally, and perhaps most
significantly, Courtesy is in direct competition with, and has lost business to, Hamilton
Beach. Hamilton Beach is now using every procedural tool at its disposal 1 to attempt to

'Not only the IPRs, but a motion practice as well.
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invalidate patents that it licensed for years.
5. Conclusion. Given the fact that the IPRs will not fully resolve the dispute
between these parties, I conclude that a stay will not simplify the issues in question or
trial, will not reduce the burden of litigation, and will unduly prejudice the patent holder
at bar, Courtesy. 2

United States District Judge

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1acknowledge that the motion to stay was timely filed, and that the case has not
progressed past discovery, despite its age.
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