Yodlee Inc. v. Plaid Technologies Inc.

Filing 334

MEMORANDUM ORDER re Objections to 312 Memorandum Order are OVERRRULED; 318 Renewed Letter motion to stay is GRANTED. Signed by Judge Leonard P. Stark on 1/27/17. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
YODLEE, INC.,
Plaintiff,
Civil Action No. 14-1445-LPS-CJB

v.

PLAID TECHNOLOGIES INC.,
Defendant.
MEMORANDUM ORDER
At Wilmington this 27th day of January, 2017: ·
Pending before the Court is Defendant Plaid Technologies, Inc.'s ("Plaid") objection (D.I.
317) under Federal llule of Civil Procedure ("Rule(s)") 72(a) to United States Magistrate Judge
Christopher J. Burke's order (D.I. 312 (the "Order")) on Plaid's motion to stay this matter (D.I.
151). For the reasons given helm~', ITIS HEREBY ORDERED that Plaid's objection is
OVERRULED, and IT IS FURTHER ORDERED that its renewed motion to stay ~ee D.I.
318) is GRANTED.
1.

This is a patent infringement case. Plaintiff Y odlee, Inc. ("Yodlee") alleges that

Plaid infringes U.S.

Pat~nt Nos.

6,199,077 (the '"077 patent"), 6,317,783 (the "'783 patent"),

· 6,510,451 (the '"451 patent"), 7,263,548 (the '"548 patent"), 7,424,520 (the "'520 patent''),
7,752,535 (the '"535 patent"), and 8,266,515 (the '"515 patent").
2.

Plaid first filed a motion to stay in May 2015, seeking a halt to proceedings

·pending resolution of its motion to dismiss. (D.I. 30) Judge Burke denied the motion in July
2015. (D.I. 51) Plaid later pursued Inter Partes Review (IPR) and Covered Business Method

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(CBM) challenges at the U.S. Patent and Trademark Office (PTO) involving all seven patents· in
suit. The Patent Trial & Appeal Board (PTAB) eventually instituted IPR proceedings as to the
'783 patent (see D.I. 207-2 at 101-143of143) and CBM review as to the '451, '535, and '515
patents (see D.I. 256-1, 318-1, 318-2). The PTAB declined to institute IPR and/or CBM review
with respect to the '077, '548, and '520 patents.
4.

In the meantime, Plaid again moved for a stay of this litigation pending resolution

· ofboth its motion to dismiss and the PTO proceedings. (D.I. 151) In his detailed Order,1 Judge
Burke granted the motion as to the '451 patent but denied it as to the other six patents in suit.
(D.I. 312)
5.

Under Rule 72, "[w]hen a pretrial matter not dispositive of a party's claim or

defense is referred to a magistrate judge to hear and decide," and a party objects to the resulting
order, the district judge must "modify or set aside any part of the order that is clearly erroneous
or is contrary to law." Fed. R. Civ. P. 72(a). Plaidtimely filed its objection under Rule 72 to
Judge Burke's Order. (See D.I. 317)
6.

By separate order entered on this date, the Court has now resolved all of Plaid's

§ 101 patent eligibility challenges in this case. An updated version of the chart appearing in
Judge Burke's Order (see D.I. 312 at 4) follows:

1

As a preliminary matter, the motion to stay was properly before and resolved by Judge
Burke under the Court's referral order. (See D.I. 323 at 3 n.1 (Yodlee's correct interpretation of
the Court's referral order))

2

Asserted Patent

Number of
Asserted
Claims

PTAB Action

Current Status

'077

8

Denied IPR and CBM petitions;
denied request for rehearing.

All PTAB challenges
exhausted; Court has
also denied eligibility
challenges.

'783

7

Instituted IPR as to all claims;
denied CBM petition.

Pending IPR ruling;
Court has denied
eligibility challenges.

'451

1

Instituted CBM review.

Pending CBM ruling;
Court has granted
motion to dismiss.

'548

2

Denied CBM petition.

All PTAB challenges
exhausted; Court has
denied eligibility
challenge with
respect to one
asserted claim and_
granted m:otion to
dismiss as to the
other.

1

Denied CBM petition.

All PTAB challenges
exhausted; Court has
also denied eligibility
challenges.

'535

1

Instituted CBM review.

Pending CBM ruling;
Court has denied
eligibility challenges.

'515

1

Instituted CBM review.

Pending CBM ruling;
Court has denied
eligibility challenges.

'520

7.

~1-

Whether to stay litigation (including whether to stay pending resolution of PTO

proceedings) is a matter left to the Court's discretion. See Ethicon, Inc. v. Quigg, 849 F .2d 1422,
1426-27 (Fed. Cir.1998). "This Court has typically considered three factors when deciding a
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motion to stay: (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." FMC Corp. v. Summit Agro USA, LLC, 2014 WL
3703629, at *2 (D. Del. July 21, 2014); see also Walker Digital, LLC v. Google, Inc., 2014 WL
2880474, at *1 (D. Del. June 24, 2014) (applying similar test for whether to stay litigation
pending CBM review). A movant' s failure to articulate a clear hardship or inequity that it would
suffer in the absence of a stay also weighs against such relief. See Cooper Notification, Inc. v.
Twitter, Inc., 2010 WL 5149351, at *2 (D. Del. Dec. 13, 2010). As in Judge Burke's Order, the
Court will analyze Plaid's motion on a patent-by-patent basis.
8.

'077 patent. Judge Burke declined to order a stay as to this patent based on the

PTAB's denial of Plaid's petitions and because his Report and Recommendation on Plaid's
motion to dismiss (D.I. 185 ("R&_R")) did not find any of the '077 patent's asserted claims to be
unpatentable. Plaid contends that Judge Burke erred in referring to recommendations in the
R&R, because the R&R had not issued when Plaid filed its motion to stay. (See D.l. 317 at 3)
Judge Burke's Order is not "clearly erroneous." Fed. R. Civ. P. 72(a). See also VirtualAgility
Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1317 (Fed. Cir. 2014) ("Generally, the time of the
motion is the relevant time to measure the stage of litigation." (emphasis added)); id. at 1317 n. 6
("[T]he district court may consider evidence that develops after the date of the stay motion.");
Murata Mach. USA v. Daifuku Co., 830 F.3d 1357, 1361 (Fed. Cir. 2016) ("The ability to stay
cases is an exercise of a court's inherent power to manage its own docket."). The Court agrees
with Y odlee' s view that the Court need not "treat the record as frozen in time at the second the

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opening brief in the motion to stay is filed," nor is the Court "prohibited from considering
anything that occurred in the litigation afterwards." (D.I. 323 at 4) Moreover, the Court has now
denied Plaid's Rule 12 and Rule 56 patentability motions as to the '077 patent. The Court
therefore OVERRULES Plaid's objedions as to the '077 patent, and upholds the Order's denial
of Plaid's motion to stay with respect to that patent.

'548 and '520 patents. For similar reasons, the Court OVERRULES Plaid's

9.

objections as to the '548 and '520 patents, and upholds the Order's denial of Plaid's. motion to
stay with respect to those patents. The Court has denied Plaintiffs Rule 12(b)(6) and Rule 56
motions with respect to the patentability of one asserted claim of the '548 patent and the sole
asserted claim of the '520 patent.
10.

'451 patent. Judge Burke granted Plaid's motion to stay with regard to the '451

patent, based on the PTAB' s institution decision and his recommendation that the lone asserted
claim be dismissed as unpatentable. (See R&R at 33-44) Because the Court has now adopted the
R&R' s recommendation and granted Plaid's motion to dismiss as to the '451 patent, the Court
\

now VACATES Judge Burke's Order (D.L 312) with respect to the '451 patent and DENIES
AS MOOT Plaid's motion to stay as to that patent.
11.

'783 patent. Judge Burke conducted a detailed analysis under the familiar three-

factor test outlined above with respect to Plaid's motion as to the '783 patent. The Court will
now address these factors in tum:
(a)

Simplification ofIssues. Judge Burke reasoned that "the total overlap

between the claims at issue in this case and those at issue in the IPR ... surely favors a stay."
(D.I. 312 at 9) .The Court agrees with Judge Burke and disagrees with Plaid's contention that
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Judge Burke's qualifications in his analysis were legally erroneous. (See D.I. 317 at 5)
(b)

Status of the Litigation. Judge Burke found that this factor disfavors a

stay, based on his assessment that, "[t]hough some significant work on the case was yet to occur,
by the time the Motion was filed, the Court and the parties had already put a significant amount
of time and effort into the matter." (D.I. 312 at 10) As explained above, the Court is
unpersuaded by Plaid's assertion that it is impermissible for the Court to consider events
occurring after the filing of a motion to stay. While not dispositive, it is also not irrelevant that
the litigation has advanced substantially since Plaid filed its motion and the parties are preparing
for a pretrial conference currently set for February 10, 2017.
(c)

Undue Prejudice. The Court does not find any of Judge Burke's analysis

with regard to the uridue prejudice subfactors to be clearly erroneous or contrary to law. Judge
Burke's conclusions that the timing of request and status of review subfactors weigh slightly
against a stay (see D.I. 312 at 11-15) are well-articulated and supported by the record. The same
is true of his conclusion that the "relationship of the parties" subfactor weighs against a stay.

(See D.I. 312 at 15-18)
In sum, the Court OVERRULES Plaid's objections as to the '783 patent and upholds the
Order's denial of Plaid's motion to stay as it relates to that patent.
12.

'535 and '515 patents. At the time Judge Burke issued his Order, the PTAB had

not yet rendered an institution decision with respect to Plaid's CBM petitions as to the '535 and
'515 patents. Judge Burke properly denied without prejudice Plaid's motion to stay with respect
to these two patents. (See D.I. 312 at 6-7) When the PTAB instituted CBM review last month,
Plaid renewed its motion to stay (see D.I. 318), and the Court now assesses this renewed request.

6

As with the '783 patent, proceedings with respect to which the

C~urt

has decided not to stay, the

'535 and '515 patents are the subject of an instituted PTAB proceeding, and the Court has denied
Plaid's Rule 12 and Rule 56 subject matter eligibility challenges with respect to all three of these
patents. Plaid waited even longer to file the '535 and '515 CBM petitions than it did to file the
'783 IPR petition, and the '535 and '515 patents account for only two asserted claims, as
compared to the '783 patent's seven. But unlike with respect to the '783 patent, the Court's
analysis here is governed by § 18(b) of the Leahy-Smith America Invents Act ("AIA"), which
adds a fourth factor to the test used above: "whether a stay, or the denial thereof, will reduce the
burden oflitigation oti the parties and on the court." AIA § 18(b)(l)(D). As Judge Burke noted
in his order, a number of courts have concluded that this fourth factor was adopted "in order 'to
place a thumb on the scale in favor of granting stays."' (D.I. 312 at 5 (quoting Hewlett-Packard
Co. v. ServiceNow, Inc., 2015 WL 1737920, at *2 (N.D. Cal. Apr. 9, 2015)) See also Trading
Techs. Int'!, Inc. v. BCG Partners, Inc., 186 F. Supp. 3d 870, 873 (N.D. Ill. 2016), affd sub nom.
Trading Techs. Int'!, Inc. v. Rosenthal Collins Grp., LLC, _ F. App'x _, 2016 WL 5899197
(Fed. Cir. Oct. 11, 2016); Mkt.-Alerts Pty. Ltd. v. Bloomberg Fin. L.P., 922 F. Supp. 2d 486, 496
(D. Del. 2013) ('~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."). "Placing a thumb on the scale" in favor of granting a stay
alters the balance, and the Court therefore GRANTS Yodlee's motion to stay as to the '535 and
'515 patents.

HON. L ONARD P. ST
UNITED STATES DIST
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