Aplix IP Holdings Corporation v. Sony Computer Entertainment, Inc. et al

Filing 42

Judge Mark L. Wolf: ORDER entered. MEMORANDUM AND ORDER. (Bartlett, Timothy)

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

APLIX IP HOLDINGS

CORPORATION,

Plaintiff,

v.

Civ. No. 14-cv-12745-MLW

SONY COMPUTER ENTERTAINMENT,

INC.

and

SONY COMPUTER ENTERTAINMENT

AMERICA LLC,

Defendants.
MEMORANDUM AND ORDER
WOLF, D.J.

September 28, 2015

On June 27,
filed

a

(" SCE")

2014,

complaint
and

Sony

Aplix IP Holdings Corporation

against
Computer

(collectively,

"Sony"),

On October 16,

2014,

Sony

Computer

Entertainment

("Aplix")

Entertainment,

America,

LLC

Inc.

(" SCEA")

alleging infringement of three patents.

SCE and SCEA answered in separate filings.

Each asserted, among other affirmative defenses, non-infringement
and

invalidity

of

the

three

patents.

Additionally,

SCEA

counterclaimed to seek declaratory judgments of non-infringement
and invalidity of those patents.

On October 30, 2014, Aplix filed

an

infringement

amended

patents.

complaint

asserting

of

two

additional

On December 31, 2014, SCE and SCEA updated their answers

and counterclaims to include the two additional patents.

On January 15, 2015, Sony moved to stay this action pending
a review by the United States Patent and Trademark Office ("PTO")
of the validity of the five patents at issue in this litigation
(" inter partes review").

Sony argued that staying the case pending

inter partes review would simplify or moot this litigation, saving
the

court

and parties

time

and

resources.

motion, arguing that it was premature.

Aplix opposed the

Aplix noted that Sony had

not yet requested review of the two patents added by the October
30, 2014 amended complaint, and that the PTO had not yet granted
inter partes review of any of the disputed patents.
31,

Sony's March

2015 reply stated that it had requested review of all five

patents.
July 29,

In a series of filings dated between May 22,
2015,

2015 and

Sony notified the court that the PTO has granted

inter partes review of each of the five disputed patents.
For the following reasons,
this

litigation

pending

the court finds that a stay of

inter

partes

review

is

appropriate.

Therefore, Sony's motion to stay is being allowed.
I.

STANDARDS
Congress

recently created the

inter partes

through the America Invents Act of 2011.

review process

35 U.S.C.

§§311-319.

The Act provides that "a person who is not the owner of a patent
may file with the

[PTO]

review of the patent."

a petition to institute an inter partes
Id. at §311(a).
2

The PTO may grant an inter

partes review only if "there is a reasonable likelihood that the
petitioner would prevail with respect to at least one of the claims
challenged

in

the

petition."

Id.

at

§314 (a) .

The

PTO must

generally reach a decision within one year of the granting of a
petition for inter partes review.

Id. at §316 (a) (11) .

Inter partes review is barred if a petitioner has filed a
civil

action

challenging

§315 (a) (1).

However,

of

of

a

claim

a

"[a]

patent

the

validity

of

a

patent.

Id.

at

counterclaim challenging the validity
does

not

constitute

a

civil

action

challenging the validity of a claim of a patent for purposes of
this subsection."

Id.

at §315 (a) (3) .

If a petitioner "files a

civil action challenging the validity of a claim of the patent" on
or after the date of the application for inter partes review, "that
civil action shall be stayed automatically" until certain motions
are filed.

Id. at §315 (a) (2).

The statute does not address the

staying of civil actions initiated by a patent owner when defendant
has sought inter partes review.
A district court has the inherent power to manage its docket
by staying proceedings.
55

(1936);

F.3d 842,

Landis v. N. Am. Co., 299

u.s.

Procter & Gamble Co. v. Kraft Foods Global,
848-49

(Fed. Cir.

2008)

discretion to manage their dockets,

Inc.,

549

(" [D] istrict courts have broad
including the power to grant

a stay of proceedings[.]"); Marquis v.

3

248, 254­

FDIC,

965 F.2d 1148, 1154

(1st Cir.

1992)

(" It is beyond cavil that,

absent a statute or

rule to the contrary, federal district courts possess the inherent
power

to

stay

pending

litigation[.]").

This

inherent

power

includes the power "to stay an action pending the resolution of a
related matter in the PTO."
Fed. App'x 909,

911

(Fed.

Patent Litigation, 330 F.

In re SOl Technologies,

Cir.

2012);

Inc.,

456

In re Columbia University

Supp. 2d 12, 15 (2004).

Al though neither the First Circuit nor the Federal Circuit
has spoken to this question in further detail, the district courts
have

consistently

considered

three

factors

to

guide
,

their

discretion in deciding a motion to stay:
(1) the stage of the litigation, including whether discovery
is complete and a trial date has been set; (2) whether a stay
will simplify the issues in question and the trial of the
case; and (3) whether a stay will unduly prejudice or present
a clear tactical disadvantage to the nonmoving party.
ACQIS, LLC v. EMC Corp., -- F. Supp. 3d --, 2015 WL 3617106, at *2
(D.

Mass.

Licensing,

June
LLC,

10,
No.

2015);

see

also

13-cv-12418-DJC,

SCVNGR,

Inc.

2014 WL 4804738,

v.

eCharge

at *8

(D.

Mass. Sept. 25, 2014); PersonalWeb Technologies, LLC v. Apple Inc.,
69 F. SUpp. 3d 1022, 1025 (N.D. Cal. 2014); Freeny v. Apple Inc.,
No. 2:13-CV-00361-WCB, 2014 WL 3611948, at *2
2014) .

4

(E.D. Tex. July 22,

II.

ANALYSIS
All three factors weigh in favor of granting a stay pending

the resolution of the inter partes review process.
This
amended

litigation is

complaint

in its early stages.

approximately

answered and counterclaimed.

eleven

Aplix filed its

months

ago.

Sony

has

However, discovery has not occurred

and the court has not set a trial date.

Courts have frequently

granted motions to stay pending inter partes review at similar or
more advanced stages of litigation.
3617106,

at *3

See,

e.g.,

ACQIS,

2015 WL

(granting stay pending inter partes review where

"discovery [wa]s not yet complete, and a trial date ha[q] not been
set"); SCVNGR, 2014 WL 4804738, at *9 (stage-of-case factor weighed
in

favor

of

stay

where

"Court

ha [d]

not

set

a

schedule

for

discovery or claim construction, never mind trial"); Evolutionary
Intelligence,
93954,
II

at

LLC v.

*2

(N.D.

Apple,
Cal.

Inc.,

Jan.

9,

No.

13-cv-04201-WHA,

2014)

(granting

2014 WL

stay

where

substantial portions of discovery on the merits of this action

hard] yet to occur"); e-Watch, Inc v. ACTi Corp., No.
2013 WL 6334372

(W.D.

Tex. Aug.

9,

2013)

SA-12-695,

(granting stay pending

inter partes review thirteen months after filing of complaint).
This case has progressed far

less than cases where courts

See SurfCast,

have declined to issue a stay.

Corp., 6 F. Supp. 3d 136, 142-43 (D. Me. 2014)
5

Inc.

v. Microsoft

(denying stay when

"case ha[d] been underway for over a year and fact discovery [wa]s
complete"); Verinata Health, Inc. v. Ariosa Diagnostics, Inc., No.
12-cv-05501-SI, 2014 WL 121640,

at *2

(N.D. Cal.

(denying stay where "trial date has been set
is

well

underway

disclosures,

with

the

infringement

parties

and

having

Jan.

13, 2014)

. and discovery
exchanged

invalidity contentions,

initial
and

some

document productions") .
A stay is likely to simplify the issues in this litigation.
The PTa has granted inter partes review on all five patents at
issue

in

this

litigation.

See ACQIS,

2015 WL

3617106,

at

*4

(granting stay even where "only 2 of the 11 patents-in-suit .
If the PTa finds all five patents invalid,

are under review").

the inter partes review would "simplify the case by rendering all
of

[Aplix]' s

Intelligence,
one patent

claims

for

infringement

2014 WL 261837,

valid,

the

issues

at *2.
in

this

moot."

Evolutionary

If the PTa finds at least
case will

be

simplified

because Sony will be "estopped from raising the same invalidity
contentions" before this court.

Crossroads Sys., Inc. v. Dot Hill

Sys. Corp., No. A-13-CA-I025-SS, 2015 WL 3773014, at *3 (W.O. Tex.
June 16, 2015); see also 35 U.S.C. §315 (e) (2).
A stay will not unduly prejudice the nonmoving party.

Aplix

argues that it has "an interest in the timely enforcement of its
patent right"

and warns that

"further delay threatens to cause
6

this litigation to drag on for
Docket No. 33, at 10-11.

years."

to Mot.

to Stay,

However, "potential for delay does not,

by itself, establish undue prejudice."
at *9;

Opp ,

2014 WL 4804738,

SCVNGR,

2015 WL 3773014, at *2

see also Crossroads Sys.,

("mere

delay in collecting damages does not constitute undue prejudice") .
While the court must be vigilant and deny dilatory motions for a
stay, Sony sought inter partes review while this litigation was in
its early stages, and the PTO found the applications sufficiently
meritorious to grant review for all five patents.

Moreover,

if

some of the patents in dispute are found to be invalid by the PTO,
the

narrowed case may proceed more

quickly.

Therefore,

inter

partes review has the potential to expedite the resolution of this
case.
Where

the

litigants

are direct

competitors,

"[ c] ourts

SCVNGR, 2014 WL 4804738, at *9.

hesitant to grant a stay."

risk of prejudice is greater,

for example,

are
The

when the parties are

competing for market share or weighing whether to bring a product
to market.
patents

or

However, Aplix has not argued that it practices these
sells

products

infringing Sony products.
Docket

No.

inj unction,
ACQ IS,

2015

36,

at

further
WL

7.

that

compete

with

the

allegedly

See Reply in Support of Mot. to Stay,
Aplix

has

not

sought

a

preliminary

"undermining its claim of undue prej udice. "

361 71 06 ,

at

*5.
7

Aplix

does

seek

a

permanent

injunction, as well as monetary damages.
seek

such

an

injunction,

prej udgment interest,

for

as

well

as

It will still be able to
monetary

any claims that

damages

with

survive inter partes

review.
III. ORDER
In view of the foregoing, it is hereby ORDERED that:
1.

Defendant's Motion to Stay

(Docket No.

30)

is ALLOWED

and this case is STAYED.
2.

Within thirty days of the PTa issuing its final decisions

regarding the five disputed patents, the parties shall confer and
file a joint status report informing the court of:
decisions; and (b)

(a) the PTa's

whether any inter partes review decision will

be appealed to the Federal Circuit.
3.

Unless otherwise ordered, the stay will continue through

the conclusion of any appellate proceedings or the expiration of
the parties' rights to appeal.

8