Cequent Performance Products, Inc. v. Hopkins Manufacturing Corporation et al

Filing 36

ORDER Granting Defendant's 30 Motion to Stay Proceedings Pending Inter Partes Reviews. Signed by District Judge Matthew F. Leitman. (Monda, H)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CEQUENT PERFORMANCE
PRODUCTS, INC.,
Plaintiff,

Case No. 13-cv-15293
Hon. Matthew F. Leitman

v.
HOPKINS MANUFACTURING
CORPORATION ET AL.,
Defendants.
_________________________________/
ORDER GRANTING DEFENDANTS’ MOTION TO STAY
PROCEEDINGS PENDING INTER PARTES REVIEWS (ECF #30)
INTRODUCTION
Defendants Hopkins Manufacturing Corporation and The Coast Distribution
System, Inc. (collectively “Hopkins”) have moved to stay all proceedings in this
matter pending resolution of Hopkins’ petitions for inter partes review of U.S.
Patent Nos. 6,068,352, 6,012,780 and 6,445,993 (collectively “the IPRs”) before
the Patent Trial and Appeal Board (the “Board”) of the United States Patent and
Trademark Office (the “PTO”). (See the “Motion to Stay,” ECF #30.) The issues
in the Motion to Stay have been adequately presented in the parties’ briefs and oral
argument is therefore unnecessary. See Local Rule 7.1(f)(2). For the reasons set

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forth below, the Court GRANTS the Motion to Stay and STAYS all proceedings
until further order of the Court.
RELEVANT FACTUAL BACKGROUND
On December 31, 2013, Plaintiff Cequent Performance Products, Inc.
(“Cequent”) filed a Complaint in this Court against Hopkins alleging infringement
of U.S. Patent Nos. 6,068,352, 6,012,780 and 6,445,993 (collectively, the “patentsin-suit”). (See the “Complaint,” ECF #1.) On March 13, 2014, Hopkins answered
the Complaint and asserted a counterclaim, alleging invalidity and noninfringement of the patents in suit, as well as several defenses tied to Cequent’s
allegations of patent infringement. (See the “Answer,” ECF #12.)
On October 1, 2014, on the stipulation of the parties, the Court ordered a
stay of all proceedings so the parties could prepare for and attend mediation. (See
ECF #26.) The mediation was held on December 3, 2014, but the parties were
unable to resolve their dispute. (See ECF #28.) The Court thereafter lifted the stay
and established a new discovery and trial schedule. (See ECF #29.)
Hopkins says that it began preparing the IPRs after the mediation. (See
Declaration of Scott Brown, ECF #30-1 at ¶ 17; see also the IPRs at ECF ## 30-4,
30-5, and 30-6.) Hopkins filed the IPRs with the Board approximately seven
weeks later on January 23, 2015, the last possible day to do so under applicable

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federal law. See 35 U.S.C. § 315(b). Hopkins then filed the instant Motion to Stay
with this Court on February 10, 2015. (See ECF #30.)
The IPRs challenged all of the claims then-identified in Cequent’s
infringement contentions, as well as some, but not all, of the remaining claims in
the patents-in-suit. (See Declaration of Matthew Cavanagh, ECF #31-1 at ¶ 25.)
On February 25, 2015, after Hopkins had filed the IPRs, Cequent served amended
infringement contentions on Hopkins identifying twenty additional allegedly
infringed claims. (See ECF #31-6.) Among these twenty additional claims are
seven that Cequent contends are not challenged in the IPRs. (See Cavanaugh Decl.
at ¶25.)
ANALYSIS
District courts “have the broad discretion to determine whether a stay is
appropriate” pending the conclusion of an inter partes review proceeding. See,
e.g., Regents of Univ. of Mich. v. St. Jude Med., Inc., 2013 WL 2393340, *2 (E.D.
Mich. May 31, 2013.) When reviewing the Motion to Stay, the Court considers
three factors: “(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 non-moving party.” Id. (citing Star Envirotech, Inc. v. Redline Detection,
LLC, 2013 WL 1716068, *1 (C.D. Cal. Apr. 3, 2013)); see also Dura Global
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Techs, LLC v. Magna Int’l Inc., 2011 WL 5039883 (E.D. Mich. Oct. 24, 2011).
All three factors favor granting the Motion to Stay.
A.

First Factor: Whether Discovery is Complete and Whether a Trial
Date Has Been Set
The first factor that the Court considers when considering the Motion to Stay

is whether discovery is complete and whether a trial date has been set. This factor
recognizes that granting a stay early in the case preserves judicial resources and
saves the parties time and money.
The Court concludes that this factor weighs in favor of staying this action
because the case is in a relatively early stage of litigation. Although fact discovery
first commenced on March 31, 2014 (see ECF #29), this case was then stayed for
nearly four months so that the parties could conduct a full mediation.
While Cequent argues that the parties have already spent meaningful time
and effort in this case, there is still a significant amount of work ahead of the
parties and the Court. Fact discovery, although commenced, will not be completed
until September 30, 2015. (See ECF #29.) It does not appear that either party has
begun expert discovery. Nor have depositions been taken or even noticed. (See
Brown Decl. at ¶ 5.) And although the parties have made initial identifications of
disputed claim terms, they have neither exchanged proposed claim interpretations
nor filed any briefing on claim construction. Indeed, the parties have not yet filed
any substantial motions, such as motions for summary judgment. Moreover, the
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Court’s first primary involvement in this matter will not take place until the
Markman hearing, which is scheduled for July 27, 2015, nearly four months from
now. Finally, the trial is set for April 12, 2016, over fourteen months from when
Hopkins filed the instant Motion to Stay. (See ECF #29.) Accordingly, the Court
finds that because this action is still in its early stages, the first factor favors
granting the Motion to Stay.
B.

Second Factor: Whether a Stay Will Simplify the Issues in Question and
Trial of This Case
The second factor that the Court considers is whether a stay will simplify the

issues in the case and/or make the case more efficient for the court and the parties.
In some cases, an IPR challenging all asserted claims can “dispose of the entire
litigation: the ultimate simplification of issues.” VirtualAgility Inc. v.
Salesforce.com, Inc., 759 F.3d 1307, 1314 (Fed. Cir. 2014). However, “an IPR
review need not dispose of a case completely to simplify the issues of a case.”
Service Solutions U.S. LLC v. Autel. US Inc., 2015 WL 401009, *3 (E.D. Mich.
Jan. 28, 2015) (granting motion to stay pending IPR process).
Cequent argues that the IPRs will not simplify the issues in this case enough
to justify a stay because there are seven asserted claims in its amended
infringement contentions that are not challenged in the IPRs, and because the IPRs
will not resolve those of Hopkins’ defenses that cannot be raised before the Board
under 35 U.S.C. § 311(b). (See Cequent Br., ECF #31.) Hopkins counters that
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once the IPRs are instituted, it intends to join the remaining seven asserted claims
under a recent Board decision establishing that petitioners may join issues to their
own instituted IPRs. (See ECF #35-3.)
The Court finds that a stay pending the IPRs could simplify the issues in this
case, and therefore this factor favors granting the requested stay. The currentlyconstructed IPRs – which may be amended – concern all three patents-in-suit, and
challenge all but seven (and potentially all, if amendment is allowed) of the
asserted claims. The IPRs could thus eliminate the need for discovery, Markman
proceedings and trial on any cancelled claims. Moreover, the Board’s expert
analysis on any surviving claims may provide guidance to the Court and could
simplify the issues in this case. See, e.g., Service Solutions, 2015 WL 401009 at
*2. “Here, a stay pending the IPR would avoid potentially wasteful discovery
while narrowing the claims and defenses in the case. For these reasons, the Court
finds that a stay will help simplify the case.” Id.
C.

Third Factor: Whether a Stay Would Unduly Prejudice or Present a
Clear Tactical Disadvantage to Cequent
The final factor the Courts considers is whether a stay will unduly prejudice

or present a clear tactical advantage to the non-moving party.
Cequent argues that since it directly competes with Hopkins, the delay of a
stay pending the IPRs could cause Cequent irreparable loss of market share and
goodwill. (See Cequent Br., ECF #31.) Cequent also argues that Hopkins sought a
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tactical advantage when it filed the IPRs on the last possible day under 35 U.S.C. §
315(b). (See id.) Hopkins responds that a stay pending the IPRs will not unduly
prejudice Cequent because a stay will not diminish Cequent’s alleged monetary
damages, and it denies that it sought any tactical advantage in connection with the
timing of the IPRs. (See Hopkins Br., ECF #30.)
The Court recognizes that courts “routinely deny requests for stays where
parties are,” as here, “direct competitors.” See Everlight Electronics Co. Ltd. v.
Nichia Corp., 2013 WL 1821512 at *8 (E.D.Mich. Apr. 30, 2013). However,
Cequent’s delay in filing this action contradicts its position that it would be unduly
prejudiced by the additional delay of a stay. The patents-in-suit issued between
2000 and 2002, and as revealed during conferences with the Court, Hopkins’
accused products had been in direct competition with Cequent’s products for years
before Cequent filed its Complaint.
The Court further concludes that a stay will not present a clear tactical
disadvantage to Cequent. Cequent’s arguments to the contrary emphasize the
supposedly suspicious timing of the IPRs.

However, Cequent has failed to

establish a sufficient dilatory motive on the part of Hopkins to justify denying the
Motion to Stay.
Finally, even if Cequent’s status as a direct competitor to Hopkins weighed
against granting a stay, it is only one fact the Court must consider in its analysis.
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For all the reasons stated above, when the Court views all of the relevant facts in
their totality, the Court concludes a stay is warranted.
CONCLUSION
After carefully considering the foregoing factors and the parties’ positions,
IT IS HEREBY ORDERED that the Hopkins’ Motion to Stay (ECF #30) is
GRANTED. This action is STAYED until further order of the Court. The parties
are further ORDERED, for each IPR, to file a joint status report with this Court
informing the Court of the Board’s determination on institution under 35 U.S.C. §
314 no later than seven (7) days after the Board’s determination.

After a

determination on institution has been made for all three IPRs, if any are not
instituted, the parties shall request a status conference with the Court or the Court’s
Special Master to discuss re-establishing a schedule for this matter.

s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: April 1, 2015

I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on April 1, 2015, by electronic means and/or
ordinary mail.
s/Holly A. Monda
Case Manager
[phone]
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