Digital Ally, Inc. v. Taser International, Inc.

Filing 115

MEMORANDUM AND ORDER granting in part 108 Defendant's Motion to Stay Litigation Pending Inter Partes Review of the Asserted Patents. This case and all deadlines set forth in 73 Second Patent Scheduling Order, including the 3/28/2017 M arkman claim construction hearing before District Judge Murguia, are temporarily stayed until the PTAB issues its initial decision(s) whether to institute an inter partes review of the '292 and '452 patents. It is further ordered tha t the parties shall file a joint report advising the Court of the PTAB's decision(s) on Defendant's petitions, as well as the parties' respective positions as to further proceedings in this case, within fourteen (14) days of the PTAB's initial decision on each of Defendant's pending petitions for inter partes review. Signed by Magistrate Judge Teresa J. James on 3/20/2017. (byk)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
DIGITAL ALLY, INC.,
Plaintiff,
v.
TASER INTERNATIONAL, INC.,
Defendant.

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Case No. 16-cv-2032-CM-TJJ

MEMORANDUM AND ORDER
This matter is before the Court on Defendant’s Motion to Stay Litigation Pending Inter
Partes Review of the Asserted Patents (ECF No. 108). Defendant requests an order staying this
litigation pending final resolution of its four petitions for inter partes review before the Patent
Trial and Appeal Board (“PTAB”) related to the two patents at issue in this case. Plaintiff
opposes a stay of this litigation, arguing that one of the patents has already survived prior
reexamination proceedings initiated by Defendant, Plaintiff will be prejudiced by further delay of
this case by Defendant’s continuing patent infringement as a rival competitor, and both parties
have expended significant resources in this case reviewing discovery and source code and
completing the claim construction briefing process. As explained below, the Court grants
Defendant’s motion in part and temporarily stays this case until the PTAB issues its initial
decisions with respect to Defendant’s petitions for inter partes review.
I.

RELEVANT BACKGROUND FACTS
Plaintiff Digital Ally, Inc. filed this patent infringement case on January 14, 2016,

alleging that body-worn camera products sold by Defendant TASER International, Inc. infringe
Plaintiff’s patent, U.S. Patent Nos. 8,781,292 (“the ‘292 patent”). Plaintiff later amended its

complaint on February 2, 2016 and March 18, 2016, to add another claim for patent infringement
with respect to U.S. Patent Nos. 9,253,452 (“the ‘452 patent”) and claims alleging Defendant
violated federal and state antitrust and unfair competition laws.1
On May 9, 2016, the Court entered the Initial Patent Scheduling Order (ECF No. 40),
which set May through August 2016 deadlines for the parties to serve infringement and
invalidity contentions, claim terms requiring construction, preliminary claim construction, and
their joint claim construction statement. A Second Patent Scheduling Order (ECF No. 73) was
entered on September 16, 2016, moving the claim construction briefing deadlines to October and
November 2016, and continuing the Markman claim construction hearing to March 28, 2017.
The claim construction proposals were fully briefed, including the filing of Defendant’s Surreply Brief on Claim Construction (ECF No. 97), as of November 23, 2016.
Beginning on December 1, 2016, Defendant filed four petitions with the PTAB for inter
partes review to address the validity of the claims of the two patents at issue in this case. Two
petitions directed at the ‘292 patent were filed December 1, 2016, and two petitions directed at
the ‘452 patent were filed, respectively, on December 20, 2016 and January 25, 2017.
On January 13, 2017, District Judge Murguia granted Defendant’s motion to dismiss all
Plaintiff’s antitrust and unfair competition claims, leaving Plaintiff’s patent infringement claims
as the only remaining claims in this case. Defendant filed the instant motion to stay this case on
January 26, 2017.

1

Second Amended Complaint, ECF No. 19.

2

II.

FACTORS CONSIDERED WHEN RULING ON A MOTION TO STAY CASE
PENDING PETITIONS FOR INTER PARTES REVIEW
Courts consider the following three factors significant in deciding whether to stay

judicial proceedings pending either a ruling on a petition for inter partes review or the review
itself: (1) whether discovery is complete and whether a trial date has been set; (2) whether a stay
will simplify the issues in question and trial of the case; and (3) whether a stay would unduly
prejudice or present a clear tactical disadvantage to the nonmoving party.2 Based on these
factors, courts determine whether the benefits of a stay outweigh the inherent costs of postponing
resolution of the litigation.3 Courts in the District of Kansas have previously recognized a
“liberal policy in favor of granting motions to stay proceedings pending the outcome of [the
Patent and Trademark Office’s] reexamination or reissuance proceedings.”4 The moving party
bears the burden of showing that a stay is appropriate, and such showing must be based on more
than the mere fact that a petition for inter partes review was filed.5
A.

Stage of the Litigation

The first factor the Court considers in determining whether to stay the case is the stage of
the proceedings, including whether discovery is complete and whether a trial date has been set.
One consideration relevant to this factor is whether the parties have fully briefed the issue of
2

Norred v. Medtronic, Inc., No. 13-cv-2061-EFM/TJJ, 2014 WL 554685, at *1 (D. Kan. Feb. 12,
2014). See also Cellular Commc'ns Equip., LLC v. Samsung Elecs. Co., No. 6:14-CV-759, 2015 WL
11143485, at *2 (E.D. Tex. Dec. 16, 2015); CANVS Corp. v. United States, 118 Fed. Cl. 587, 592 (2014).
3

NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at *2 (E.D.
Tex. Mar. 11, 2015).
4

Norred, 2014 WL 554685, at *1 (granting stay pending inter partes review); Scriptpro LLC v.
Wal-Mart Stores, Inc., No. 05-2244-CM, 2006 WL 2294859, at *1 (D. Kan. Aug. 8, 2006) (granting stay
pending reexamination of patent in suit); Braintree Labs., Inc. v. Nephro-Tech, Inc., No. 96-2459-JWL,
1997 WL 94237, at *9 (D. Kan. Feb. 26, 1997) (granting motion to stay proceedings for reexamination of
the plaintiff’s patent).
5

CANVS Corp., 118 Fed. Cl. at 591–92.

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claim construction, attended a Markman hearing, and received a claim construction order.6 The
expenditure of judicial resources can also be an important consideration in evaluating the stage
of the proceedings.7
The parties have been vigorously litigating this case for well over a year. They have
conducted significant discovery, exchanged infringement and invalidity contentions, and all
claim construction statements. However, the fact discovery deadline on the infringement claims
is not set to expire until 60 days after the claim construction ruling. The parties have fully briefed
the issues for claim construction with the Markman hearing scheduled for March 28, 2017, but
the hearing has not been held and a claim construction order has not been entered. The Court has
not yet invested significant resources in those activities. At the suggestion of the parties, the
Court deferred setting the Pretrial Conference, a deadline for submission of the Pretrial Order,
and the trial date for the patent claims until after the Court’s claim construction ruling.8 Thus, no
trial date has been set. Given this case history and posture, this factor weighs in favor of a stay.
B.

Simplification or Elimination of the Issues

The second factor the Court considers is whether a stay of this litigation pending the inter
partes review proceedings of the asserted patents will result in the simplification or elimination
of issues for the Court to consider in this case. “While the PTAB’s decision to institute inter
partes review ordinarily means that there is a substantial likelihood of simplification of the

6

Norred, 2014 WL 554685, at *1 (citing Interwoven. Inc. v. Vertical Comput. Sys., Inc., No. C
10-04645 RS, 2012 WL 761692, at *4 (N.D. Cal. Mar. 8, 2012)).
7

Id. (citing Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d 1028, 1031
(C.D. Cal. 2013)).
8

See Minute Entry and Order, ECF No. 104.

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district court litigation, that likelihood is far more speculative before the PTAB decides whether
to institute inter partes review.”9
Defendant argues this factor weighs in favor of staying this litigation now that Plaintiff’s
antitrust claims have been dismissed, noting it has challenged all asserted claims of the ’292 and
‘452 patents in its inter partes review petitions. Defendant argues the claims in this case will be
simplified because if the PTAB upholds the claims, Defendant will be estopped under 35 U.S.C.
§ 315(e)(2) from raising those arguments which were raised, or reasonably could have been
raised, in the inter partes review petitions. If the claims are cancelled, then Plaintiff’s
infringement allegations will be moot. Even if only some of the claims are cancelled, this will
still simplify issues and warrant a stay. Thus, Defendant contends a stay would have a significant
and realistic chance of potentially eliminating asserted claims and/or possible invalidity defenses
in this case, thus conserving both the Court’s and the parties’ time and resources.
Plaintiff argues that, as things currently stand, the PTAB has not decided whether to
institute inter partes review proceedings, and therefore no issues will be simplified by a stay.
Absent an instituted inter partes review, there is no chance of patent claims being cancelled or
confirmed. Finally, Plaintiff argues that it is unlikely the PTAB will grant Defendant’s inter
partes review petitions because the claims of the asserted ‘292 patent have already received
extensive scrutiny during Defendant’s ex parte reexamination.
Plaintiff’s argument presumes that inter partes review will not be granted, and ignores
what might happen if inter partes review is granted. The Court finds that there are issues and/or
claims in this case which would likely be simplified or eliminated altogether if the PTAB grants
Defendant’s petition(s) for an inter partes review. It therefore makes sense to temporarily stay

9

NFC Tech., 2015 WL 1069111, at *4.

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these proceedings until the PTAB issues its decision whether to institute an inter partes review.
This factor weighs in favor of a stay.
C.

Prejudice or Clear Tactical Disadvantage

The third factor to be considered in determining whether to stay this case is undue
prejudice or a clear tactical disadvantage to the nonmoving party. In evaluating this factor,
“courts have taken a practical approach to determining whether the non-movant will suffer undue
prejudice from a stay. A court may deny a request for a stay where the movant has unjustifiably
delayed seeking reexamination, or where the stay will do nothing but delay the proceedings.”10
Mere delay in the litigation, however, does not establish undue prejudice.11
Defendant argues that a stay pending the inter partes review would not cause Plaintiff
undue prejudice. The shortened timeline of the inter partes review process, as compared to the
previous reexamination processes, would reduce the likelihood of undue prejudice to Plaintiff.
Defendant asserts that it did not improperly delay in filing its four petitions for inter partes
review and filed them within the statutorily-required timeframe. It also claims it expeditiously
moved to stay as soon as the Court dismissed Plaintiff’s antitrust claims and immediately after
filing its final inter partes review petition. Since the onset of litigation, Defendant states it has
searched for and marshaled a substantial volume of prior art, analyzed it, and served invalidity
contentions by the deadline set forth in the Scheduling Order. The parties then engaged in the
initial claim construction process whereby, Defendant contends, Plaintiff disclosed the claim
construction it seeks and altered its related positions, up through and including the reply claim
construction brief it filed on November 4, 2016.
10

Dane Techs., Inc. v. Gatekeeper Sys., Inc., No. 12-2730 ADM/AJB, 2013 WL 4483355, at *2
(D. Minn. Aug. 20, 2013).
11

Universal Elecs., 943 F. Supp. 2d at 1033.

6

Plaintiff argues it will be severely prejudiced by a stay of this case. According to
Plaintiff, Defendant is a direct competitor and recognized as a rival in the body camera market, a
rapidly developing, niche market with a finite number of potential consumers, most of whom are
police forces and security firms. The risk of undue prejudice is especially severe in this case,
where Defendant holds the vast majority of the market share in the police body camera industry.
Plaintiff also argues Defendant significantly delayed in filing its inter partes review petitions as
Defendant has been aware of Plaintiff’s patents since before April 2015, when it filed for ex
parte reexamination on the ’292 patent. Despite having previously performed a prior art search
incident to this reexamination proceeding, Defendant waited nearly a year after Plaintiff filed this
patent infringement case before requesting inter partes reviews of the asserted patents.
Considering all the arguments presented, the Court finds Defendant has provided a
reasonable explanation for the timing of the filing of its inter partes review petitions nearly a
year after this case was initiated. Although the Court agrees with Plaintiff that the parties appear
to be competitors in a relatively small market and therefore any prejudice to Plaintiff from a stay
should be examined closely, the Court finds that Plaintiff will not be unduly prejudiced by a
temporary stay of this action until the PTAB makes its initial decisions on Defendant’s petitions
for inter partes review. As pointed out by Defendant, the PTAB has a relatively short deadline
under 35 U.S.C. § 314(b)12 in which to determine whether to institute an inter partes review.
Defendant filed the first two of its four petitions on December 1, 2016, and the last petition on
January 25, 2017. Thus a decision by the PTAB should be forthcoming in mid-June for the first
12

See 35 U.S.C. § 314(b) (“The Director shall determine whether to institute an inter partes
review under this chapter pursuant to a petition filed under section 311 within 3 months after-(1) receiving a preliminary response to the petition under section 313; or
(2) if no such preliminary response is filed, the last date on which such response may be filed.”)

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two petitions, mid-Ju for the th petition, and early A
uly
hird
August for its fourth and final petition
s
ns.
The Cour therefore finds that thi factor wei
rt
f
is
ighs in favor of a stay.
r
IT IS THER
T
REFORE OR
RDERED THAT becau each of th three fact
T
use
he
tors, set out i
in
Norred weigh in favo of a stay, Defendant’s Motion to S
w
or
s
Stay Litigati Pending Inter Partes
ion
s
Review of the Assert Patents (ECF No. 10 is granted in part. Th case and a deadlines set
o
ted
08)
d
his
all
s
forth in th Septembe 16, 2016 Second Pate Schedulin Order (EC No. 73), including th
he
er
S
ent
ng
CF
he
March, 28, 2017 Mar
2
rkman claim constructio hearing be
m
on
efore Distric Judge Mur
ct
rguia, are
temporar stayed un the PTA issues its initial decisi
rily
ntil
AB
ion(s) wheth to institu an inter p
her
ute
partes
review of the ‘292 an ‘452 paten
f
nd
nts.
IT IS FURTH
T
HER ORDE
ERED THA the partie shall file a joint report advising th
AT
es
t
he
Court of the PTAB’s decision(s) on Defenda
s
ant’s petition as well as the parties’ respective
ns,
s
’
s
er
gs
se,
ourteen (14) days of the PTAB’s ini
)
e
itial
positions as to furthe proceeding in this cas within fo
decision on each of Defendant’s pending petitions for int partes re
D
ter
eview.
T
DERED.
IT IS SO ORD
Dated this 20th day of Ma
D
arch, 2017, at Kansas Ci Kansas.
a
ity,

Teresa J. James
agistrate Judg
ge
U. S. Ma

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