BONUTTI RESEARCH, INC. ET AL., v. LANTZ MEDICAL, INC.

Filing 95

ORDER denying 69 Defendant's Motion to Stay. This case shall proceed as set forth in the Court's prior scheduling orders. Signed by Magistrate Judge Mark J. Dinsmore on 5/26/2015. (CBU)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

BONUTTI RESEARCH, INC.,
JOINT ACTIVE SYSTEMS, INC.,
Plaintiffs,
vs.
LANTZ MEDICAL, INC.,
Defendant.
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LANTZ MEDICAL, INC.,
LANTZ MEDICAL, INC.,
Counter Claimants,
vs.
BONUTTI RESEARCH, INC.,
JOINT ACTIVE SYSTEMS, INC.,
BONUTTI RESEARCH, INC.,
JOINT ACTIVE SYSTEMS, INC.,
Counter Defendants.

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No. 1:14-cv-00609-SEB-MJD

ORDER ON DEFENDANT’S MOTION TO STAY
This matter comes before the Court on Defendant’s Motion to Stay. [Dkt. 69.] For the
reasons set forth below, the Court DENIES Defendant’s Motion.
I.

Background

On April 18, 2014, Bonutti Research, Inc. and Joint Active Systems, Inc. (“Plaintiffs”)
sued Lantz Medical, Inc. (“Defendant”), alleging that Defendant had infringed U.S. Patents Nos.
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5,848,979 (“the ‘979 patent”), 7,955,286 (“the ‘286 patent”), 7,404,804 (“the ‘804 patent”), and
7,112,179 (“the ‘179 patent”). [Dkt. 1.] On July 22, 2014, Plaintiffs amended their complaint to
add an allegation that Defendant had also infringed U.S. Patent No. 8,784,343 (“the ‘343
patent”). [Dkt. 34.]
The Court entered a Case Management Plan (“CMP”) on June 23, 2014, [Dkt. 28], which
plan was later amended to extend various deadlines on August 15, 2014, [Dkt. 43], and on
December 12, 2014. [Dkt. 62.] Discovery commenced, [see, e.g., Dkt. 33], but on March 23,
2015, Defendant filed the currently pending motion to stay this matter pending the resolution of
certain proceedings before the U.S. Patent and Trademark Office (“PTO”). [Dkt. 69.] Defendant
stated that it planned to petition the PTO to initiate inter partes review (“IPR”) of the ‘286, ‘804,
‘179, and ‘343 patents, and Defendant asked the Court to stay this litigation until the PTO had
concluded any such review. [Id.] Plaintiff opposed Defendant’s motion, [Dkt. 82], and the matter
was fully briefed on May 11, 2015. [See Dkt. 88.]
II.

Discussion

Courts have inherent authority and broad discretion to manage their dockets and stay
proceedings. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988). This includes the
power to stay a case pending resolution of related proceedings before the PTO. See id. The
Court’s discretion, however, is not unfettered. Endotach LLC v. Cook Med. Inc., No. 1:13-CV01135-LJM, 2014 WL 852831, at *3 (S.D. Ind. Mar. 5, 2014). Thus, in considering whether to
stay litigation pending resolution of an IPR, district courts should consider the following factors:
(1) whether the litigation is at an early stage; (2) whether a stay will unduly
prejudice or tactically disadvantage the non-moving party; (3) whether a stay will
simplify the issues in question and streamline the trial; and (4) whether a stay will
reduce the burden of litigation on the parties and the court.

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Id. (quoting Ultratec, Inc. v. Sorenson Comm’ns, Inc., No. 13–cv–346–bbc, 2013 WL
6044407, at *2 (W.D.Wis. Nov.14, 2013)). These factors indicate that a stay in this case
is not warranted.
A. Stage of the Litigation
A court is more likely to grant a stay when the case at hand is at an early stage in
the litigation. See, e.g., Ho Keung Tse v. Apple Inc., No. C 06-06573 SBA, 2007 WL
2904279, at *2 (N.D. Cal. Oct. 4, 2007) (“A stay is particularly appropriate for cases in
the initial stages of litigation or in which there has been little discovery.”). Thus,
Defendant in this case argues that little discovery has been conducted and that the parties
have not taken substantial steps towards resolution of their claim construction disputes.
[See, e.g., Dkt. 69 at 4-5 (“The parties have exchanged only written discovery requests
and responses. No damages-related discovery has been conducted. No depositions have
been taken. JAS noticed two depositions only ten days ago. And the parties have not
prepared a Joint Claim Construction Statement or filed Markman briefs. Further, the
Court has not yet set a date for the Markman hearing, nor has it set dates for the close of
fact discovery or trial.”); see also Dkt. 84 at 1 (“Damages discovery will not take place
until after the Markman hearing, which has not been set.”).
Subsequent events have passed Defendant by. The parties have now submitted
their Markman briefs, [Dkts. 77 & 78], and the Court has now scheduled the Markman
hearing. [Dkt. 89.] In addition, the parties have moved beyond written discovery and
have conducted several depositions. [See Dkt. 82 at 3 (“Plaintiffs have deposed two of
Lantz’s primary fact witnesses[.]); id. (“Plaintiffs have deposed Lantz’s Markman

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expert[.]”).] Thus, even if the case was at a relatively early stage when Defendant filed its
motion, the case has now moved far beyond that point.
Further, Defendant draws on this Court’s decision to grant a stay in Cook Inc. v.
Endologix, Inc., No. 1:09-CV-01248-WTLTAB, 2010 WL 325960 (S.D. Ind. Jan. 21,
2010). [See Dkt. 69 at 4 (“Each of the three factors set forth in Cook . . . favor granting
Lantz’s Motion For Stay.”).] There, however, the Court had “not approved a Case
Management Plan” and the parties had “not initiated discovery.” 2010 WL 325960 at *2.
The Court also found it significant that the defendant had requested a stay within two
months of the filing of the complaint, such that the defendant had “submitted its request
for a stay promptly at the outset of the litigation.” Id. at *3.
Here, in contrast, the Court has already approved and then adjusted the parties’
CMP, [Dkts. 28, 43 & 62], and, as noted above, the parties have already commenced
discovery. Moreover, Defendant in this case waited almost eleven months from the filing
of Plaintiffs’ complaint before seeking a stay. [See Dkt. 1 (April 28, 2014 Complaint);
Dkt. 69 (March 23, 2015 Motion to Stay).] The facts of Cook thus have little relevance to
Plaintiff’s current motion, and the Court concludes that the stage of the litigation in this
case does not favor a stay.
B. Prejudice or Tactical Disadvantage
Defendant asserts that the stay will not prejudice or disadvantage Plaintiff. [Dkt. 69 at 9.]
With respect to prejudice, Defendant claims that any harm resulting from delay of these
proceedings will be “more than off-set by increased certainty of whether [the] patent[s] will
survive [the IPR] and whether there will be any need for litigation.” [Id. (quoting Nanometrics,
Inc. v. Nova Measuring Instruments, Ltd., No. C 06-2252SBA, 2007 WL 627920, at *3 (N.D.

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Cal. Feb. 26, 2007)).] As described below, however, Defendant’s petition for IPR may not even
be granted, and so there is little “certainty” that the (proposed) IPR will have any effect at all on
this litigation.
With respect to tactical disadvantage, Defendant claims that it “is not, for example,
seeking a stay on the eve of trial or after protracted discovery” insofar as “the parties have not
prepared a Joint Claim Construction Statement or filed Markman briefs,” “[n]o Markman
hearing has been scheduled,” and “[n]o depositions have been conducted.” [Id. at 9-10 (citation
and quotation marks omitted). Once again, however, subsequent events have diminished the
force of Defendant’s argument: the parties have now filed their Joint Claim Construction
Statement, [Dkt. 71], the parties have now filed their Markman briefs, [Dkts. 77 & 78], the Court
has now scheduled a Markman hearing, [Dkt. 89], and the parties have now deposed several
witnesses. [See Dkt. 82 at 3.] Any disadvantage resulting from delay is thus much greater than at
the time Defendant initially sought a stay.
In reply, Defendant nonetheless contends that this factor favors a stay because the Court
should consider Plaintiffs’ alleged delay in filing this lawsuit. [Dkt. 84 at 6.] Defendant charges
that Plaintiffs “consciously chose to delay filing suit against Lantz Medical,” such that any
further delay must not be especially harmful to Plaintiffs. [Id. (emphasis original); see also Dkt.
69 (“[A] stay will cause no undue prejudice to [Plaintiffs], given [their] nearly four year delay in
filing suit[.]”).]
As Plaintiffs explain, however, Defendant did not begin selling certain of the allegedly
infringing products in this case until 2012 or 2014, [Dkt. 82 at 13], such that Plaintiff obviously
did not delay “four years” in filing suit with regard to these products. In addition, Plaintiffs
explain that they “spent considerable time conducting pre-suit investigations into Lantz’s

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products.” [Id.] The Court can hardly fault Plaintiffs for doing so: despite these pre-suit
investigations, Defendant continues to assert that Plaintiffs’ claims are “either brought in
subjective bad faith or are objectively baseless,” [see Dkt. 59 ¶ 11], such that Defendant will
seek to hold Plaintiffs accountable for Defendant’s attorneys’ fees. [See id. at 4; see also Octane
Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1757 (2014) (“[A] case presenting
either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from
mine-run cases to warrant a fee award.”).] Any delay on Plaintiffs’ part was thus largely a
prudent attempt to ensure their lawsuit would not expose them to liability for Defendant’s
attorneys’ fees, and the Court will not penalize Plaintiffs for opposing additional delay after
they determined that a lawsuit was warranted. This factor thus does not favor a stay.
C. Simplification of Issues
Defendant claims that a stay “will likely simplify issues for trial” by narrowing or
eliminating the contested issues in this case. [Dkt. 69 at 6.] It notes that the IPR may
result in cancellation or alteration of numerous claims involved in this suit, such that the
Court should not waste its resources interpreting claim language that ultimately may not
be relevant to the lawsuit. [Id. at 6-7.]
Defendant’s argument is entirely speculative. Although Defendant represented to
the Court that it would file its IPR petitions “on or before March 27, 2015,” [Dkt. 69 at
1], Defendant did not actually file final petitions until April 21, 2015. [See Dkt. 82 at 3.]
As the owner of the relevant patents, Plaintiffs now have three months to respond to
Defendant’s petition. 35 U.S.C. § 313; 37 C.F.R. § 42.107(b). After any response is
submitted, the PTO will have three months to determine whether to grant the petition. 35
U.S.C. § 314(a).

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The Court is thus faced with the prospect of waiting six months—until October
21, 2015—before the Court will even know whether the PTO will grant Defendant’s
petition, let alone whether the end result of that petition—up to one year later, see 35
U.S.C. § 316(a)(11)—will affect any of the claims at issue. Given the significant delay
between the request for IPR and the PTO’s ultimate decision on whether to initiate the
IPR, it is hardly surprising that “the majority of courts that have addressed the issue have
postponed ruling on stay requests or have denied stay requests when the [PTO] has not
yet acted on the petition for review.” Trover Grp., Inc. v. Dedicated Micros USA, No.
2:13-CV-1047-WCB, 2015 WL 1069179, at *5 (E.D. Tex. Mar. 11, 2015). And indeed,
this Court has previously followed the majority rule in denying as premature a motion to
stay that was filed before the PTO acted on the request for IPR. Endotach, 2014 WL
852831, at *5 (“[T]here is no guarantee that the USPTO will grant Medtronic’s petition
for IPR, which adds to the uncertainty of how much the IPR proceedings would
[simplify] the issues in this case.”).
Further, Defendant again relies on Cook, [Dkt. 69 at 7], but Cook is again
distinguishable: There, this Court did impose a stay, but the Court expressly “[found] it
significant that the PTO ha[d] already acted upon and granted both of Endologix’s
requests for reexamination.” Cook, 2010 WL 325960, at *1 (emphasis added). Here, in
contrast, the PTO has not yet acted, and the Court thus cannot say whether the request for
IPR actually will simplify any issues before the Court.
Next, even if the PTO does grant the IPR, such a grant may not yield significant
benefits. The PTO during IPR proceedings construes patent claims according to their
“broadest reasonable interpretation.” In re Cuozzo Speed Technologies, LLC, 778 F.3d

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1271, 1281 (Fed. Cir. 2015). District courts, however, construe claims under a different
standard. See id. at 1288 (Newman, J., dissenting) (“[I]t is not disputed that the ‘broadest
reasonable interpretation’ of claims and technology can differ from the ultimately correct
decision on the standards of Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en
banc).”). Thus, even if the PTO grants review and construes certain claims at issue in this
case, this Court must still conduct its own construction of those claims. See id. (“The
panel majority thus precludes achieving review of patent validity in Inter Partes Review
comparable to that of the district courts, where validity is determined based on the correct
claim construction, not an artificially ‘broadest’ construction.”); see also Pragmatus AV,
LLC v. Yahoo! Inc., No. C-13-1176 EMC, 2014 WL 1922081, at *4 (N.D. Cal. May 13,
2014) (“[T]his Court owes no deference to the [PTO’s] claim construction done as part of
an inter partes review.”).
In addition, anticipation analysis in an IPR proceeding is limited: the petitioner in
such a proceeding may only seek to cancel a claim “on a ground that could be raised
under section 102 [novelty] or 103 [obviousness] and only on the basis of prior art
consisting of patents or printed publications.” 35 U.S.C. § 311. Thus, even if the claim at
issue survives the IPR proceeding, a defendant may still raise other invalidity grounds
before a district court. See, e.g., 35 U.S.C. § 102 (defining prior art to include public use
and prior sales, in addition to patents and printed publications); id. § 112 (setting out
additional requirements for validity); accord, e.g., Endotach, 2014 WL 852831, at *5
(“[Defendant] is relying on 35 U.S.C. § 112 invalidity claims that cannot be addressed in
an IPR[.]”). As a result, even if Defendant’s petition in this case is granted, the parties
may ultimately still be required to litigate anticipation or other validity issues before this

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Court. Staying this litigation could impede the sort of discovery necessary to fully litigate
such issues, and the Court accordingly sees little reason to impose such a stay.
D. Burden of Litigation
Defendant contends that granting the stay would ease the burden on this Court by
potentially resolving certain of Plaintiffs’ claims without the necessity of trial. [Dkt. 69 at 2.] As
described above, however, any such benefit is entirely speculative until the PTO acts on
Defendant’s petition, such that this factor does not strongly favor a stay.
Moreover, Defendant’s argument overlooks the fact that its petition includes only four of
the five patents at issue in this suit. [See id. at 2 (omitting ‘979 patent from IPR petitions).] Thus,
regardless of whether the PTO grants Defendant’s petition, and regardless of whether the PTO
cancels any portions of the patents subject to the IPR, this case must still proceed in order to
resolve Plaintiffs’ claims with respect to the ‘979 patent. The parties will thus still need to
prepare themselves for summary judgment and trial, such that staying this litigation would
simply delay work that—regardless of Defendant’s IPR petition—must still be done.
Numerous courts—including this one—have found that a stay is not warranted in such
circumstances. See, e.g., Endotach, 2014 WL 852831, at *4 (“[T]he pending IPR is focused on
the ‘417 patent, [but] there [is] another patent at issue, . . . which has no connection to the claims
of the ‘417 patent[.]”); Dane Technologies, Inc. v. Gatekeeper Sys., Inc., No. CIV. 12-2730
ADM/AJB, 2013 WL 4483355, at *2 (D. Minn. Aug. 20, 2013) (“Gatekeeper has only petitioned
for review of two of the three patents in this case. Even if the PTO decided to review the ‘836
Patent and the ‘979 Patent, Dane would still be left with its infringement claim for the ‘379
Patent languishing and unresolved.”). Conceivably, the Court could stay this litigation only with
respect to the patents involved in Defendant’s petition, but “allowing litigation to proceed solely

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with respect to [one] patent while the parties await a PTO decision on the other [four] patents-insuit would invite substantial inefficiency.” Davol, Inc. v. Atrium Med. Corp., No. CIV.A. 12958-GMS, 2013 WL 3013343, at *6 (D. Del. June 17, 2013). Granting the stay would therefore
not free the Court or the parties from the burden of litigation, and this factor thus favors denial of
Defendant’s motion.
E. Summary
Based on the foregoing, each of the above factors indicates that a stay is not
warranted. Further, by the time the PTO decides whether to grant Defendant’s IPR
petition, this case will have further proceeded and the Court will have already conducted
the parties’ Markman hearing. Additionally, even if the petition is granted and even if
Defendant is entirely successful in the ensuing IPR, this case must still proceed to
summary judgment and/or trial with respect to the ‘979 patent. In these circumstances, a
stay is inappropriate at this time, and a stay will remain inappropriate even at a later time.
The Court thus DENIES Defendant’s Motion to Stay, and does so with prejudice to the
motion’s resubmission after the PTO rules on Defendant’s petition for inter partes
review.
III.

Conclusion

For the reasons discussed above, the Court Denies Defendant’s Motion to Stay. [Dkt. 69.]
This case shall proceed as set forth in the Court’s prior scheduling orders. [See Dkts. 28, 43 &
62.]

Date: 05/26/2015

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Distribution:
Steven D. Groth
BOSE MCKINNEY & EVANS, LLP
[e-mail]
Jacque Raynard Wilson
CARSON BOXBERGER, LLP
[e-mail]
James Blake Hike
CARSON BOXBERGER, LLP
[e-mail]
Jon A. Bragalone
CARSON BOXBERGER, LLP
[e-mail]
Elizabeth E. Fabick
SENNIGER POWERS LLP
[e-mail]
Michael J. Hartley
SENNIGER POWERS LLP
[e-mail]
Robert M. Evans, Jr
SENNIGER POWERS LLP
[e-mail]

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