CANVS Corporation v. FLIR Systems, Inc.

Filing 36

ORDER granting 33 (1)Defendant FLIR Systems, Inc.'s Renewed Motion to Stay Patent Litigation Proceedings Pending (1) Inter Partes Review of Only Patent-In-Suit; and (2) Final Judgment in Parallel Court of Federal Claims Action. The Clerk of the Court is directed to STAY this case pending the United States Patent and Trade Office's final decision in the inter partes review of the '652 Patent, including any appeals. The Clerk is specifically directed to place a stay flag on the docket sheet. The parties shall file a status report with respect to the inter partes review process on or before March 4, 2015, and every ninety (90) days thereafter until the PTO proceedings have concluded. The parties shall file a joint report within fourteen (14) days after the conclusion of the inter partes review, informing the Court of the PTO's decision and, if applicable, requesting the Court to lift the stay. Signed by Judge Sheri Polster Chappell on 12/5/2014. (LMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
CANVS CORPORATION,
Plaintiff,
v.

Case No: 2:14-cv-180-FtM-38CM

FLIR SYSTEMS, INC.,
Defendant.
/
ORDER1
This matter is before the Court on Defendant FLIR Systems, Inc.'s Renewed
Motion to Stay Patent Litigation Proceedings Pending (1) Inter Partes Review of Only
Patent-In-Suit; and (2) Final Judgment in Parallel Court of Federal Claims Action (Doc.
#33) filed on October 28, 2014. Plaintiff CANVS Corporation filed its opposition (Doc.
#35) on November 12, 2014. This matter is now ripe for review.
BACKGROUND
On March 28, 2014, Plaintiff commenced this patent infringement action against
Defendant.

(Doc. #1).

Plaintiff is the sole owner of United States Letters Patent

6,911,652 (the "'652 Patent"). The '652 Patent, titled Low Light Imaging Device, has
seven claims that purport to describe advancements in night vision technology. (Doc. #1

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at ¶¶ 6, 8). Defendant manufactures and sells thermal imaging products that allegedly
infringe on one or more of the '652 Patent's claims. (Doc. #1 at ¶¶ 8-9).
On May 16, 2014, Defendant petitioned the U.S. Patent and Trade Office ("PTO")
for inter partes review of the '652 Patent. (Doc. #33 at 2; Doc. #34-5). Defendant asserted
the '652 Patent's seven claims were "obvious" under 35 U.S.C. § 103 and thus invalid.2
(Doc. #34-7 at 5).

Before the PTO decided whether to grant inter partes review,

Defendant moved to stay this case pending resolution of its petition. (Doc. #12). The
Court denied the motion (Doc. #21), but advised Defendant that if the PTO granted an
inter partes review, it may file a new motion to stay (Doc. #21 at 4). On October 23, 2014,
the PTO granted Defendant's petition and initiated inter partes review of all seven claims
in the '652 Patent. (Doc. #34-7). Five days later, Defendant renewed its motion to stay
this case. (Doc. #33).
Pertinent here, since August 11, 2010, Plaintiff has also been litigating a patent
infringement action against the federal government (the "Government") in the United
States Court of Federal Claims ("COFC") in which the '652 Patent is at issue. (Doc. #341). The Government moved for summary judgment on its affirmative defense of invalidity,
contending the '652 Patent's claims were anticipated by an earlier-issued patent. (Doc.
#34-2).3 The COFC concluded claims 1-3 and 6-7 of the '652 Patent were anticipated by
the earlier-issued patent and thus invalid. (Doc. #34-2; Doc. #34-3). That case is still
pending before the COFC. (Doc. #34-1).

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Under 35 U.S.C. § 103, a patent is invalid "if the differences between the claimed invention and the prior
art are such that the claimed invention as a whole would have been obvious before the effective filing date
of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains."
3 Under 35 U.S.C. § 102, a patent is invalid if it is anticipated by the prior art, that is, if "the invention was
described in . . . a patent granted on an application for patent by another filed in the United States before
the invention by the applicant for patent." 35 U.S.C. § 102(e).

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With this background in mind, the Court turns to Defendant's Renewed Motion to
Stay. (Doc. #33).
LEGAL STANDARD
"Courts have broad discretion to manage their dockets, including the power to
grant a stay pending the conclusion of PTO administrative proceedings." Automatic Mfg.
Sys., Inc. v. Primera Tech., Inc., No. 6:12-cv-1727, 2013 WL 6133763, at * 1 (M.D. Fla.
Nov. 21, 2013) (citation omitted). The party moving for a stay bears the burden of
demonstrating that such relief is warranted. See id. (citing Landis v. N. Am. Co., 229 U.S.
248, 254-55 (1936)). As this Court has previously acknowledged,
[i]n patent cases, a number of courts have reasoned that such stays should
be liberally granted when there is a pending administrative proceeding
before the PTO. . . . These courts posit that the time and effort expended in
prosecuting the action would be wasted if the PTO's decision in the
administrative proceeding drastically alters the nature of the case[.]
Id. (citations omitted).
When deciding a motion to stay, courts consider the following non-exhaustive
factors: (1) whether discovery is complete and whether a trial date has been set; (2)
whether the stay would unduly prejudice or present a clear tactical disadvantage to the
non-moving party; and (3) whether a stay will simplify the issues in question for trial of the
case. See id.; Andersons, Inc. v. Enviro Granulation, LLC, No. 8:13-cv-3004, 2014 WL
4059886, at *2 (M.D. Fla. Aug. 14, 2014) (citations omitted). "The court's inquiry is not
limited to these three factors – the totality of the circumstances governs." Automatic Mfg.,
2013 WL 6133763, at *1 (citing Universal Elecs., Inc. v. Universal Remote Control, Inc.,
943 F. Supp. 2d 1028, 1030-31 (C.D. Cal. 2013)).

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DISCUSSION
Defendant seeks to stay this patent infringement action until the later of the COFC
case or inter partes proceedings becoming final. (Doc. #33 at 3). Plaintiff argues that
granting a stay would unduly prejudice it, be indefinite and immoderate, do little to simplify
this litigation, and be inappropriate at this stage of the litigation. (Doc. #35). The Court
will discuss the PTO inter partes review and the parallel COFC case individually below.
A. Inter partes review
1. Overview
An inter partes review begins by a non-patent owner petitioning the PTO to review
the patentability of a patent. See 35 U.S.C. § 311(b). The non-patent owner challenges
one or more claims of a patent as invalided under 35 U.S.C. §§ 102 (prior art) and/or 103
(obviousness). The patent owner may file a response to argue against the PTO instituting
an inter partes review. See 37 C.F.R. § 42.107(a)-(b). From there, the PTO may institute
inter partes review if it determines "there is a reasonable likelihood that the petitioner
would prevail with respect to at least one of the claims challenged in the petition." 35
U.S.C. § 314(a). That decision must be made within three months of the patent owner's
response, or three months from the last day the patent owner could respond to the
petition. See 35 U.S.C. § 314(b).
If the PTO institutes a inter partes review, a panel of three administrative patent
judges, who have "legal knowledge and scientific ability," conduct the proceedings. See
35 U.S.C. §§ 6(a)-(c), 311. The parties engage in limited discovery and respond to
arguments, and have the right to an oral hearing. See 35 U.S.C. § 316(a)(10). The PTO
must complete the inter partes review within one year, with the possibility that the

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proceeding may be extended for an additional six months for good cause. See 35 U.S.C.
§ 316(a)(11). Any party may appeal the PTO's decision to the United States Court of
Appeals for the Federal Circuit. See 35 U.S.C. §§ 141-44.
Against this backdrop, the Court will weigh the factors discussed above in order to
decide whether to stay this case pending the final exhaustion of the PTO's inter partes
review.
2. Analysis of applicable factors
a. Stage of litigation
The Court first examines the stage of the litigation, considering whether discovery
is complete and whether a trial date has been set. See Andersons, 2014 WL 1969247,
at *2. The early stage of litigation in this case weighs in favor of granting the stay. See
Capriola Corp. v. LaRose Indus., LLC, No. 8:12-cv-2346, 2013 WL 1868344, at *3 (M.D.
Fla. Mar. 11, 2013) (ordering a stay where litigation was "in the incipient stage"); SurfCast,
Inc. v. Microsoft Corp., No. 2:12-CV-333, 2014 WL 6388489, at *2 (D. Me. Nov. 14, 2014)
("The earlier the stage of proceedings, the greater the reason to grant a stay." (citation
omitted)). The parties have more than nine months to complete fact discovery and ten
months to complete expert discovery, and the trial is set for the May 2016 term. (Doc.
#32 at 7); see also Norred v. Medtronic, Inc., No. 13-2061-EFM/TJJ, 2014 WL 554685,
at *2 (D. Kan. Feb.12, 2014) (ordering a stay "a few months" after entry of scheduling
order and after only "[l]ittle discovery" had been exchanged); Ho Keung Tse v. Apple Inc.,
No. C-06-06573, 2007 WL 2904279, at *2-3 (N.D. Cal. Oct. 4, 2007) (finding the stage of
litigation factor to weigh in favor of a stay where discovery had opened but not proceeded
in any material way). The Court also has not held a Markman hearing, and the parties

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have not filed summary judgment. See Automatic Mfg., 2013 WL 6133763, at *4 (finding
the litigation stage factor to weigh in favor of stay where discovery remained open for
eight months, the Markman proceedings had not occurred, and the trial was set for
roughly sixteen months later). Accordingly, the lack of material progress in this case
favors a stay.
b. Undue prejudice
The Court next considers whether a stay will cause Plaintiff to suffer undue
prejudice or create a tactical advantage for Defendant. Plaintiff appears to contend that
granting the stay would prejudicially prolong this litigation indefinitely. (Doc. #35 at 2-3).
Although the PTO will issue a decision on or before October 23, 2015, Plaintiff argues the
inter partes review may not become final for years if there are appeals and remands.
(Doc. #35 at 2). This argument is a nonstarter. It is well settled that "[m]ere delay in the
litigation does not establish undue prejudice." Universal Elecs., 943 F. Supp. 2d at 1033
(citations omitted); Internet Patents Corp. v. eBags, Inc., No. 12-cv-3385, 2013 WL
4609533, at *4 (N.D. Cal. Aug. 28, 2013) ("[C]ourts have refused to find undue prejudice
based solely on delay caused by the reexamination process." (citation omitted)). Plaintiff
has done little more than assert that a stay would cause it prejudice, which is insufficient.
See Checkfree Corp. v. Metavante Corp., No.3:12-cv-15, 2014 WL 466023, at * (M.D.
Fla. Jan. 17, 2014) ("[T]he delay inherent in the re-examination process may cause some
prejudice to the non-petitioning party, but such delay does not, by itself, constitute 'undue
prejudice.'" (citations omitted)). Plaintiff makes no argument apart from its conclusory
position above, and the Court will not devise any on its behalf.

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Moreover, Defendant acted diligently in petitioning for inter partes review and
requesting the stay. Defendant petitioned the PTO for inter partes review one day after
filing its answer to these claims (Doc. #9). Five days later, Defendant moved to stay this
case. (Doc. #12). The Court denied that motion as premature, but specifically allowed
Defendant to renew its motion on these facts. (Doc. #21 at 4). Defendant then filed the
instant Renewed Motion to Stay within five days of the PTO initiating the inter partes
review. (Doc. #33; Doc. #34-7). Defendant delayed in neither petitioning the PTO nor
moving for a motion to stay. Accordingly, the Court finds that a stay pending resolution
of the inter partes review poses little risk of undue prejudice or tactical disadvantage to
Plaintiff.
c. Simplification of the issues
Finally, the Court considers whether a stay will simplify the litigation. Plaintiff
argues the PTO is unlikely to cancel the '652 Patent's claims because Defendant is
asserting identical arguments as the COFC heard (and partially rejected) in the parallel
patent infringement case with the Government. (Doc. #35 at 3). Plaintiff also avers that
a PTO decision that conflicts with the COFC would further complicate this matter. (Doc.
#35 at 3).
The Court is unconvinced. In arguing against the PTO instituting an inter partes
review, Plaintiff raised the very same issue above, i.e., the COFC already rejected
Defendant's invalidity arguments on claims 4 and 5 of the '652 Patent's claim. (Doc. #347 at 7). The PTO, however, found no credible evidence in the record to support Plaintiff's
arguments:
The [COFC] addressed only whether [the earlier-issued patent] anticipates
claims 1-7 of the '652 patent. . . . The Court did not address whether those

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claims were obvious. Although the Court found that there was a genuine
issue of material fact as to whether [the earlier-issued patent] teaches all
the limitations of claims 4 and 5, it did not find that [the earlier-issued patent]
teaches away from any of the limitations of those claims or the other claims
challenged here.
(Doc. #34-7 at 7). In the end, the PTO granted review of all seven claims of the '652
Patent, finding a reasonable likelihood that Defendant would prevail in showing the
unpatentability of the claims. (Doc. #34-7 at 2).
Additionally, as several cases have noted, staying this case pending the inter
partes review is likely simplify the issues and streamline the trial. "[W]aiting for the
outcome of the [inter partes review] could eliminate the need for trial if the claims are
cancelled or, if the claims survive, facilitate trial by providing the court with expert opinion
of the PTO and clarifying the scope of the claims." Target Therapeutics, Inc. v. SciMed
Life Sys., Inc., No. C–94–20775, 1995 WL 20470, at *2 (N.D. Cal. Jan. 13, 1995). It is
also advantageous for the PTO, with its recognized legal and technical expertise, to
address the unpatentability arguments first. See SurfCast, 2014 WL 6388489, at *3
("'[E]ven if certain (or all) of the claims are ultimately confirmed, the Court will likely benefit
. . . from the PTO's analysis of prior art that is later presented to the Court.'" (citation
omitted)). And, if Plaintiff is successful, Defendant will be estopped from challenging the
validity of the '652 Patent in this action based on obviousness or any other ground it could
have reasonably raised during the inter partes review. See 35 U.S.C. § 315(e)(2);
Automatic Mfg., 2013 WL 6133763, at *3 ("Even if the PTO does not invalidate the #884
Patent in its entirety, the potential for partial invalidation, the review's collateral estoppel
effects, and the PTO's interpretation of the claims will likely narrow the issues and aid the

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Court as this action progresses."). The PTO's decision on inter partes review could also
cause the parties to revamp their positions and litigation strategy considerably.
Staying litigation pending the inter partes review "has several other well
established benefits, including encouraging settlement without further Court assistance
and reducing the costs and efforts associated with needlessly duplicative discovery."
Automatic Mfg., 2013 WL 6133763, at *4 (citing Interface, Inc. v. Tandus Flooring, Inc.,
No. 4:13-cv-46-WSD, 2013 WL 5945177, at *4 (N.D. Ga. Nov. 5, 2013)). Absent a stay,
the litigants and Court will invariably expend significant time and resources engaging in
claim construction, filing dispositive motions, and preparing for trial. This time and effort
would be wasted if the PTO's decision on the inter partes review drastically alters the
nature of the case. The simplification of issues factor, therefore, weighs in strong favor
of staying this case.
For the foregoing reasons, the Court stays this action pending the PTO's final
decision in the inter partes review of the '652 Patent, including any appeals.
B. Parallel COFC case
As previously noted, Defendant seeks to stay this case until the later of the parallel
COFC case against the Government or the conclusion of the inter partes review. In
denying Defendant's first motion to stay, the Court concluded that the COFC case did not
provide guidance to this instant action because the COFC denied the Government's
request to assert additional invalidity defenses on claims 4 and 5 of the '652 Patent. (Doc.
#21 at 3). Nothing substantively has changed in the posture of the COFC case since the
Court's Order dated June 11, 2014. Additionally, the Court only invited Defendant to file
a new motion to stay if the PTO granted an inter parties review. (Doc. #21 at 4). Since

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there is no persuasive basis for Defendant's Renewed Motion to Stay as it relates to the
COFC case, the Court declines to stay this case until the conclusion of that matter.
Accordingly, it is now
ORDERED:
(1) Defendant FLIR Systems, Inc.'s Renewed Motion to Stay Patent Litigation
Proceedings Pending (1) Inter Partes Review of Only Patent-In-Suit; and (2)
Final Judgment in Parallel Court of Federal Claims Action (Doc. #33) is
GRANTED.
(2) The Clerk of the Court is directed to STAY this case pending the United States
Patent and Trade Office's final decision in the inter partes review of the '652
Patent, including any appeals. The Clerk is specifically directed to place a stay
flag on the docket sheet.
(3) The parties shall file a status report with respect to the inter partes review
process on or before March 4, 2015, and every ninety (90) days thereafter until
the PTO proceedings have concluded.
(4) The parties shall file a joint report within fourteen (14) days after the
conclusion of the inter partes review, informing the Court of the PTO's decision
and, if applicable, requesting the Court to lift the stay.
DONE and ORDERED in Fort Myers, Florida this 5th day of December, 2014.

Copies: All Parties of Record

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