IN RE: PAPST LICENSING DIGITAL CAMERA PATENT LITIGATION - MDL 1880

Filing 690

MEMORANDUM OPINION AND ORDER: It is hereby ORDERED that the Camera Manufacturers' request for a stay, 686 , is GRANTED. The Court will STAY these proceedings with respect to all four patents-in-suit pending the completion of the Federal Circuit appeals of the '399, '746, and '144 patents or further order of the Court. See document for details. Signed by Judge Randolph D. Moss on 8/15/2018. (lcrdm1, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

IN RE PAPST LICENSING GMBH & CO.

Misc. Action No. 07-493 (RDM)

KG PATENT LITIGATION

MDL No. 1880

MEMORANDUM OPINION AND ORDER
This matter is before the Court on the Camera Manufacturers’ request for a stay of
proceedings. Dkt. 686 at 2. The U.S. Patent and Trademark Office (“PTO”) has found
unpatentable all asserted claims of three of the four patents-in-suit—the ’399, ’746, and ’144
patents (hereinafter “the IPR patents”). 1 Those decisions are now on appeal to the Court of
Appeals for the Federal Circuit. Although the PTO also instituted inter partes review (“IPR”)
proceedings regarding the asserted claims of the fourth patent-in-suit—the ’449 patent—it
terminated those proceedings because Papst Licensing GMBH & Co. (“Papst”) settled with each
of the IPR petitioners. 2 In light of the PTO’s decisions concerning the ’399, ’746, and ’144
patents, and the substantial overlap between the claims that the PTO found unpatentable in those
patents and the asserted claims of the ’449 patent, the Camera Manufacturers contend that a stay
of proceedings until completion of the Federal Circuit appeals will “conserve judicial resources
and lead to the most efficient conclusion of this matter.” Dkt. 686 at 2. Papst does not oppose

1

See U.S. Patent No. 6,470,399 (“the ’399 patent”); U.S. Patent No. 8,504,746 (“the ’746
patent”); and U.S. Patent No. 8,966,144 (“the ’144 patent”).

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See U.S. Patent No. 6,895,449 (“the ’449 patent”). As explained below, several of the
defendants in this action have now filed a request for reexamination of the ’449 patent with the
PTO, which has yet to act on that request. See 35 U.S.C. §§ 302–307. The PTO must decide
whether to reexamine the patentability of the ’449 patent within three months of that filing. See
35 U.S.C. § 303.

staying this action with respect to the IPR patents. Dkt. 684 at 1. It does, however, oppose a
stay of proceedings concerning the ’449 patent. Dkt. 685 at 5. In its view, “there is little to no
commonality between the issues on appeal concerning the IPR patents and the specific claim
construction issues before the Court regarding the ’449 patent,” and a stay will substantially
prejudice Papst, which has waited over a decade for a final resolution of its infringement claims.
Dkt. 685 at 5.
For the reasons explained below, the Court will GRANT the Camera Manufacturers’
request for a stay, Dkt. 686, and will STAY these proceedings pending the completion of the
Federal Circuit appeals of the IPR decisions or until further order of the Court.
I. BACKGROUND
A.

Inter Partes Review
Congress created the inter partes review procedure as a “timely, cost-effective alternative

to litigation” and to establish “a more efficient and streamlined patent system that will improve
patent quality and limit unnecessary and counterproductive litigation costs.” Changes to
Implement Inter Partes Review Proceedings, 77 Fed. Reg. 48,680 (Aug. 14, 2012) (codified at 37
C.F.R. § 42.100 et seq.). Inter partes review allows a party other than the patentee to bring an
adversarial proceeding before the PTO seeking “to cancel as unpatentable 1 or more claims of a
patent . . . on a ground that could be raised under” 35 U.S.C. § 102 (novelty) or § 103 (nonobviousness) “on the basis of prior art consisting of patents or printed publications.” 35 U.S.C.
§ 311. The PTO may institute review proceedings if there is a “reasonable likelihood that the
petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” 35
U.S.C. § 314(a). If the PTO grants review, a final determination must generally be issued “not
later than 1 year” after the petition for review is granted. 35 U.S.C. § 316(a)(11). The
patentability determination is made by a panel of the Patent Trial and Appeal Board (“PTAB”)
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consisting of Administrative Patent Judges, 35 U.S.C. § 318, who must have relevant “legal
knowledge and scientific ability,” 35 U.S.C. § 6(a). PTAB decisions are appealable directly to
the Federal Circuit. 35 U.S.C. § 141(c).
If the PTAB finds that a claim is unpatentable, and the patent holder fails to file a timely
appeal or the appeal is unsuccessful, then the PTO is required to issue a certificate cancelling the
claim, and the patent holder may no longer assert that claim in litigation or otherwise. 35 U.S.C.
§ 318(b). But, because the PTO has adopted its own rules and standards for claim construction,
see Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2146 (2016), a claim construction
adopted by the PTO in an IPR proceeding is not binding on the federal district courts, see
SkyHawke Techs., LLC v. Deca Int’l Corp., 828 F.3d 1373, 1376 (Fed. Cir. 2016).
B.

Factual Background
Papst initiated this multidistrict litigation over a decade ago. Its current iteration,

however, dates back to only 2015. After years of litigation, this Court granted summary
judgment in favor of the “First Wave Camera Manufacturers” and entered final judgment with
respect to those defendants pursuant to Federal Rule of Civil Procedure 54(b). Dkt. 560. On
appeal, the Federal Circuit disagreed with the Court’s claims construction and, accordingly, set
aside the judgment in favor of the Camera Manufacturers. In re Papst Licensing Dig. Camera
Patent Litig., 778 F.3d 1255 (Fed. Cir. 2015). After the case was remanded, Papst filed new
lawsuits against the Camera Manufacturers asserting two additional patents—the ’746 and ’144
patents—which were subsequently transferred to this Court pursuant to 28 U.S.C. § 1407. Dkt.
598; Dkt. 606.
In November and December 2016, the Court held a four-day claims construction hearing.
Shortly thereafter, the Camera Manufacturers notified the Court that the PTO has instituted eight
IPR proceedings regarding the ’144 and ’746 patents. Dkt. 663. In response, the Court directed
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that the parties inform the Court of the status of those proceedings and indicate whether the
Court should await a decision from the PTO before issuing a claims construction decision with
respect to those patents. Minute Order (June 20, 2017). At that point, the Camera Manufacturers
(but not Papst) notified that Court that the PTO had subsequently initiated IPR proceedings
regarding the two other patents-in-suit, the ’399 and ’449 patents. Dkt. 672. In response to the
Court’s question, the Camera Manufacturers declined to take a position, noting that they had “not
reached a consensus” among themselves. Id. at 4. Papst, for its part, urged the Court to press
forward with the claims construction as to all four of the patents-in-suit. Dkt. 671.
In December 2017, the Camera Manufacturers notified the Court that the PTO had found
all of the asserted claims of the ’144 and ’746 patents to be unpatentable, Dkt. 679, and, a few
days later, Papst notified the Court that it had settled with the IPR petitioners who had
challenged the ’449 patent and that, as a result, the IPR proceedings regarding that patent were
“likely to be terminated,” Dkt. 680. Finally, in March 2018, the Camera Manufacturers notified
the Court that the PTO had found all of the asserted claims in the remaining patent-in-suit, the
’399 patent, to be unpatentable. Dkt. 682. In light of these developments, the Court again raised
the question of whether and how the IPR proceedings might affect this proceeding, and, in
particular, asked for the parties’ views on whether the Court should stay proceedings with
respect to each of the patents-in-suit pending the Federal Circuit’s review of the IPR
dispositions. Minute Order (Apr. 5, 2018). In response, the Camera Manufacturers took the
position that the Court should stay the case with respect to all four patents-in-suit. Dkt. 683.
Papst did not oppose a stay of the action with respect to the IPR patents, but opposed staying
proceedings relating to the ’449 patent. Dkt. 684. Although the Court had already requested the
parties’ views on whether to stay proceedings, Papst requested the opportunity to brief the issue,
“if the Court [was] inclined to stay the case.” Id. at 3.
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The Court granted that request and provided the parties with an opportunity to submit
supplemental briefs addressing whether the Court should stay the case. Minute Order (Apr. 17,
2018). As they had already done, the Camera Manufacturers responded that the Court should
stay the case with respect to all four patents-in-suit, Dkt. 686, while Papst argued that a stay was
only warranted with respect to the IPR patents, Dkt. 685. In the view of the Camera
Manufacturers, a stay of the entire case is warranted because the Federal Circuit’s decisions
respecting the patentability of the asserted claims in the IPR patents are likely to shed substantial
light on the construction and patentability of the asserted claims in the ’449 patent. Dkt. 686.
Papst disagrees with that premise and adds that, in its view, a stay would cause it undue
prejudice. Dkt. 685.
The parties have brought two final developments to the Court’s attention. First, in
another case brought by Papst involving the ’399, ’449, ’746, and ’144 patents, the United States
District Court for the Eastern District of Texas stayed proceedings regarding the IPR patents but
not the ’449 patent. Dkt. 688-1 at 2; Papst Licensing GmbH & Co. KG v. Apple Inc., No. 6:15cv-1095, slip op. at 1 (E.D. Tex. Aug. 9, 2018). Second, on August 1, 2018, several of the
Camera Manufacturers filed a request with the PTO for reexamination of the ’449 patent. Dkt.
689.
II. ANALYSIS
“Courts have inherent power to manage their dockets and stay proceedings, including the
authority to order a stay pending conclusion of a PTO reexamination.” Ethicon, Inc. v. Quigg,
849 F.2d 1422, 1426–27 (Fed. Cir. 1988) (citation omitted). When deciding whether to grant a
stay pending inter partes review, courts apply the same framework applicable to motions to stay
proceedings pending reexamination. See Universal Elecs., Inc. v. Universal Remove Control,
Inc., 943 F. Supp. 2d 1028, 1030 (C.D. Cal. 2013). Under that approach, courts typically
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consider three factors: (1) the stage of the proceeding and, in particular, whether discovery is
complete and whether a trial date has been set; (2) whether a stay will simplify the case; and (3)
whether a stay would unduly prejudice the nonmoving party. Id. at 1030–31; In re Cygnus
Telecomms. Tech., LLC, Patent Litig., 385 F. Supp. 2d 1022, 1023 (N.D. Cal. 2005); Xerox
Corp. v. 3Com Corp., 69 F. Supp. 2d 404, 406 (W.D.N.Y. 1999). Although these factors provide
helpful guidance, the Court must ultimately base its decision on “the totality of the
circumstances.” Universal Elecs., 943 F. Supp. 2d at 1031 (quoting Allergan Inc. v. Cayman
Chem. Co., No. SACV 07–01316–JVS (RNBx), 2009 WL 8591844, at *2 (C.D. Cal. Apr. 9,
2009)). The same general approach, moreover, applies to a court’s determination whether to stay
a case pending review by the Federal Circuit of the PTO’s findings in a related IPR proceeding.
See Dkt. 688-1 at 4–5; Papst, slip op. at 3–4 (E.D. Tex.).
A.

Stay of Proceedings Regarding the IPR Patents
The Camera Manufacturers request that the Court stay proceedings relating to the IPR

patents pending completion of the Federal Circuit appeals, and Papst does not oppose that
request. The Court agrees that a stay of proceedings with respect to those patents is warranted.
Among other things, if the Federal Circuit sustains the decisions of the PTO, the PTO will cancel
the asserted claims in those patents, resolving that portion of the present litigation. If the Federal
Circuit reverses the PTO is whole or in part, moreover, it is likely to provide useful guidance for
this Court.
B.

Stay of Proceedings Regarding the ’449 Patent
Although less clear cut, the Court also concludes that a stay is warranted with respect to

the ’449 patent. Each of the three factors relevant to the stay determination either weighs in
favor of granting a stay or is, at best, neutral.

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1.

Stage of the Proceeding

The parties take very different views with respect to how the first factor—the stage of the
proceeding—applies in this case. Papst correctly observes that this litigation has been pending
for over a decade, and it argues that this fact—standing alone—counsels against staying the
action. Dkt. 685 at 6–8. The Camera Manufacturers, in turn, correctly observe that “the ’449
patent litigation remains at an early stage, with discovery and claim construction not complete,
revised infringement or invalidity contentions possible[,] . . . dispositive motions still to be filed,
expert discovery still remaining, and the rest of the pre-trial activities not yet scheduled.” Dkt.
686 at 3. In their view, moreover, the age of the litigation tells only a part of the story because
“[t]he current instantiation of the case”—that is, the case post-remand from the Federal Circuit—
“has been pending only since 2015,” and because “Papst itself bears much of the responsibility
for protracting the litigation prior to the [Federal Circuit] appeal.” Id. at 3 n.2.
Without deciding who, if anyone, was to blame for earlier delays in the proceeding, the
Court concludes that the Camera Manufacturers have the better of the arguments with respect to
the first factor. Although Papst is understandably frustrated by the long duration of this
litigation, it conflates this factor—which focuses on the stage of the proceeding—with the third
factor—which considers any undue prejudice to the non-moving party. In 2015, the Federal
Circuit reversed this Court’s claims construction decision and vacated its decision granting
summary judgment in favor of the First Wave Camera Manufacturers. In re Papst, 778 F.3d at
1271. In light of that decision, much of the case began anew on remand. It was not long after
the Court held the renewed Markman hearing, however, that the Camera Manufacturers notified
the Court that the PTO had instituted the first set of IPR proceedings. Dkt. 663. The Court, as a
result, has yet to issue its claims construction decision, and it has yet to set a schedule for the
completion of discovery, dispositive motions, and, if appropriate, trial.
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In this respect, this case differs from the litigation pending in the Eastern District of
Texas involving the same patents-in-suit. Unlike the present litigation, that “case has progressed
through claim construction, fact and expert discovery and exchange of pretrial disclosures,” and
the court has indicated that it intends to set the case for trial in October 2018. Dkt. 688-1 at 8;
Papst, slip op. at 7 (E.D. Tex.). Because that trial date is only “three months away,” the court
held that “the stage of litigation [weighs] against a stay.” Dkt. 688-1 at 8; Papst, slip op. at 7
(E.D. Tex.). Applying that same analysis, the opposite conclusion follows here. The case has
not progressed through claims construction, discovery and pretrial disclosures are not complete,
the parties have not filed dispositive motions, and the case has not been set for trial.
The Court, accordingly, finds that the first factor weighs in favor of granting the Camera
Manufacturers’ request for a stay.
2.

Simplification of the Case

“[T]he most important factor bearing on whether to grant a stay . . . is the prospect that
the inter partes review”—or, as here, the Federal Circuit’s review of the PTO’s IPR decisions—
“will result in simplification of the issues before the Court.” NFC Tech. LLC v. HTC Am., Inc.,
2015 WL 1069111, at *4 (E.D. Tex. Mar. 11, 2015) (Bryson, J.). The parties agree, as they
must, that resolution of the pending Federal Circuit appeals will simplify at least portions of this
case. The PTO found that all of the asserted claims in the IPR patents are unpatentable. To the
extent those decisions are upheld, the PTO will cancel the claims, thus precluding Papst from
relying on any such claim in this litigation. And, to the extent the Federal Circuit reverses, its
decision—even if the court applies a different standard from the one applicable in this case—will
likely provide the Court will significant guidance. None of the pending appeals or IPR
proceedings, however, involve the ’449 patent, and the parties disagree about whether the

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Federal Circuit’s decisions regarding the other patents are likely to simplify proceedings before
this Court as they relate to the ’449 patent.
The Camera Manufacturers argue that “the Federal Circuit’s opinions likely will provide
helpful guidance on numerous issues relevant to the ’449 patent.” Dkt. 683 at 11. Most notably,
in their view, those opinions will likely address the same prior art references—Aytac,
Kawaguchi, NcNeill, and Yamamoto—that the Camera Manufacturers contend invalidate the
’449 patent. Id. In addition, according to the Camera Manufacturers, “the Federal Circuit’s
analysis of claim construction issues applicable to the ’449 patent likely will simplify and inform
this Court’s . . . adjudication of summary judgment motions for the ’449 patent.” Id. Papst
disagrees on both counts. With respect to the prior art references, it asserts that the IPR
procedure applies a preponderance of the evidence standard, while the clear and convincing
standard of proof will apply to any prior art challenge the Camera Manufacturers may assert in
this proceeding. Dkt. 685 at 11. They also stress, moreover, that this Court can issue a claims
construction decision without the benefit of the Federal Circuit’s views regarding any prior art.
Id. at 11–12. And, with respect to the claims construction issues, Papst simply disagrees with the
Camera Manufacturers that any of the issues raised in the pending appeals are likely to bear on
any disputed terms in the ’449 patent. Id. at 9–11.
The Court, once again, concludes that the Camera Manufacturers have the better of the
arguments. Papst is, of course, correct that different standards of proof apply in IPR and district
court proceedings. But that takes too narrow a view of the simplification of issues that will
likely result from the Federal Circuit opinions. Regardless of what standard the Federal Circuit
applies, its understanding of the scope, content, and application of the asserted prior art is likely
to assist the Court in this proceeding. Papst also takes too narrow a view of the possibility that
the Federal Circuit’s decisions will address the meaning of terms that appear in both the IPR
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patents and the ’449 patent. Papst focuses on the terms that are currently in dispute between the
parties in this case and argues that none of those same terms are at issue in the Federal Circuit
cases. But, as long as “terms found in the ’449 patent are at issue in the pending IPR appeals,”
as the Camera Manufacturers represent, Dkt. 686 at 5, the Federal Circuit decision will likely
clarify future proceedings before this Court.
The Court, accordingly, finds that the second factor also weighs in favor of granting the
Camera Manufacturers’ request for a stay.
3.

Undue Prejudice

This leaves the final factor—undue prejudice. Papst identifies three forms of prejudice
that it says it will suffer if the Court grants a stay. First, Papst asserts that it will be prejudiced
due to “the extraordinary amount of time and resources spent on this litigation.” Dkt. 685 at 12.
It is undoubtedly true that all of the parties have devoted enormous time and resources to this
case. But Papst’s contention that these expenditures establish undue prejudice has it backwards.
The limited delay that will be occasioned by waiting for the Federal Circuit to render its
decisions will likely save the parties from incurring unnecessary expenses resulting from
piecemeal litigation (since all agree that a stay is warranted as to the IPR patents) and from the
need to repeat various tasks (once the parties and the Court receive valuable input from the
Federal Circuit). With the benefit of guidance from the Federal Circuit, the parties will be able
to focus their efforts on the issues that will, in the end, matter most.
Second, Papst asserts that it will be prejudiced because a stay will result in “the loss of
damages that [it] may be able to recover” and will diminish its “ability to license [the ’449]
patent.” Dkt. 685 at 12. It is far from clear, however, that the stay will materially delay the
entry of final judgment in this case; rather, waiting for the Federal Circuit decisions may well
streamline the litigation. Moreover, even if the Court were to assume that a stay might delay
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entry of final judgment, assume that the ’449 patent is valid, and assume that Papst will prevail
on its claims that the Camera Manufacturers have infringed the patent, Papst has not shown that
it would suffer any undue prejudice. There is no claim for injunctive relief in this case, and, if
Papst prevails, it will be entitled to damages and will be able to apply for an award of
prejudgment interest. See Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 654 (1983). And,
although Papst contends that it may lose licensing opportunities in the interim, it has failed to
offer any evidence that that is so.
Finally, Papst argues that it will be prejudiced by the loss of evidence due to the
additional passage of time. Dkt. 685 at 13. It asserts, in particular, that “it is likely that many of
the business units and/or employees associated with the accused products have disappeared” and
that, even if those employees still work for defendants, “it is foreseeable that memories and
evidence have faded over the passage of time.” Id. Papst fails to explain, however, why waiting
less than a year (or so) for decisions from the Federal Circuit, see Dkt. 686 at 4 & n.3 (estimating
time required for IPR appeals), would add in any material respect to this concern. To be sure,
memories may dim with every passing year, but more is required to tip the scale against issuance
of a stay of limited duration that is likely to simplify and streamline a case. As Judge Bryson
observed in response to a similar contention, a “generalized claim” that “memories will fade and
discovery may likely be lost” carries “little weight” in the absence of “any showing as to
particular evidence or discovery that is at risk of being lost.” NFC Tech., 2015 WL 1069111, at
*3.
*

*

*

The Court understands Papst’s desire to move this case forward. It has been pending for
many years, and it still has a long way to go. But that consideration, standing alone, does not
provide sufficient justification for pressing forward with respect to one of four patents-in-suit,
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where that patent overlaps in significant respects with the remaining patents, which are the
subject of pending Federal Circuit appeals. Those appeals are likely to resolve a number of
significant issues regarding the IPR patents, and, by implication, with respect to the ’449 patent.
The Court, accordingly, finds that the relevant factors tip in favor a granting a stay. Finally,
because the pending Federal Circuit appeals provide sufficient basis to grant the Camera
Manufacturers’ request for a stay, the Court need not—and does not—consider whether the
pending request for reexamination of the ’449 patent provides further grounds for a stay.
CONCLUSION
For the foregoing reasons, the Court will GRANT the Camera Manufacturers’ request for
a stay, Dkt. 686, and will STAY these proceedings with respect to all four patents-in-suit
pending the completion of the Federal Circuit appeals of the IPR patents or further order of the
Court. The Court further ORDERS that the parties promptly notify the Court of any material
developments in those appeals, including the issuance of any decisions by the Federal Circuit,
and of any material developments relating to pending request for reexamination of the ’449
patent.
SO ORDERED.
/s/ Randolph D. Moss
RANDOLPH D. MOSS
United States District Judge

Date: August 15, 2018

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