Signal IP, Inc. v. Fiat U.S.A., Inc. et al

Filing 26

OPINION AND ORDER Denying Defendants Ford Motor Company's and FCA US LLC's Joint Motion to Stay All Proceedings Pending Reexamination and Inter Partes Review 20 . Signed by District Judge Mark A. Goldsmith. (CHad)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
SIGNAL IP, INC.,
Plaintiff,
Case No. 14-cv-13864
v.
HON. MARK A. GOLDSMITH
FIAT U.S.A., INC., et al,
Defendants.
_________________________________/
OPINION AND ORDER
DENYING DEFENDANTS FORD MOTOR COMPANY’S AND FCA US LLC’S JOINT
MOTION TO STAY ALL PROCEEDINGS PENDING REEXAMINATION AND INTER
PARTES REVIEW (Dkt. 20)
I. INTRODUCTION
In this patent infringement case, Plaintiff Signal IP, Inc. (“Signal”) alleges that
Defendants Ford Motor Company (“Ford”) and Fiat Chrysler US LLC (“FCA”) (collectively
“Defendants” or “Ford and FCA”) have infringed upon six of its patents. This matter is before
the Court on Defendants’ joint motion to stay all proceedings pending reexamination and inter
parties review (Dkt. 20).1 Because oral argument will not aid the Court, the motion will be
decided based on the parties’ briefing. See E.D. Mich. L.R. 7.1(f)(2).
For the reasons stated below, the Court denies Defendants’ joint motion to stay this case.
The parties shall contact the Court’s Special Master Christopher G. Darrow to discuss a proposed
schedule for this case. The parties shall use the Court’s Model Rule 26(f) Report and Proposed
Scheduling Order as a guide in negotiating a schedule that is appropriate for this case.
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In the related case of Signal IP, Inc. v. Ford Motor Company, No. 14-13729 (Goldsmith, J.),
Defendant Ford filed a substantially similar motion to stay (Dkt. 13). To avoid duplicative
citations when citing to the record in this joint motion, the Court in this opinion and order will
cite to briefs and exhibits in Signal IP, Inc. v. Ford Motor Company, No. 14-13729.
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II. BACKGROUND
In early 2014, Signal filed a series of patent-infringement cases in the United States
District Court for the Central District of California against various automobile manufacturers,
including the present cases against Ford and FCA. In the cases against Ford and FCA, Signal
asserted six patents against Ford2 and five patents against FCA.3 The patents relate to several
different technologies.
After an initial scheduling conference, on September 25, 2014, the California district
court issued an order granting Ford’s motion to transfer the case against Ford to the United States
District Court for the Eastern District of Michigan (Dkt. 13-4). Shortly thereafter, on October 6,
2014, the California district court granted FCA’s motion to transfer the case against Chrysler to
the United States District Court for this Eastern District of Michigan (Dkt. 13-5). The cases were
initially assigned to Judges O’Meara and Tarnow, but they were reassigned to this Court in
January 2015. At the time the cases were transferred, the cases were in their infancy with only
Rule 26(a)(1) initial disclosures having been exchanged.
After the cases against Ford and FCA were transferred to the Eastern District of Michigan,
several automobile manufacturers filed proceedings at the United States Patent and Trademark
Office (“USPTO”) to invalidate the asserted claims of the patents. Currently, all of the asserted
patents and claims are subject to a patentability review by the USPTO.

The below table

summarizes the proceedings filed at the USPTO.

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Those patents include: (1) U.S. Patent No. 6,012,007; (2) U.S. Patent No. 5,732,375; (3) U.S.
Patent No. 5,714,927; (4) U.S. Patent No. 6,434,486; (5) U.S. Patent No. 6,775,601; and (6) U.S.
Patent No. 5,463,374. See Joint Discovery Plan at 6 (Dkt. 12).
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The same patents, other than the ‘601 Patent, are asserted against FCA.
2

Asserted Patent
No.

6,775,601

6,434,486

5,714,927
5,732,375

6,012,007
5,463,374

Challenged
Claims
1-17
1-4, 6-11, 13-17
8-11, 13, 15, 17
1-17
8-11, 13, 15, 17

Proceeding No.
IPR2015-00860
IPR2015-00861
IPR2015-00941
IPR2015-01002
Reexamination
Control
No.
90/013,385
21, 23, 26, 27- IPR2015-00890
28, 30, 34-35
1, 6-8, 13-14, 21, IPR2015-01005
26-28, 33-34
21, 26, 28
Reexamination
Control
No.
90/013,384
21, 26-28, 34
IPR2015-01110
1-2, 6
IPR2015-00968
1, 7
IPR2015-01003
1, 7
Reexamination
Control
No.
90/013,386
1-3, 5, 9, 17-21
IPR2015-01004
1-3
IPR2015-01118

Filer
Ford
Ford
MBUSA
Honda
Volkswagen and
Bentley

Filing Date
March 13, 2015
March 13, 2015
March 25, 2015
April 3, 2015
October 27, 2014

MBUSA

March 16, 2015

Honda

April 3, 2015

Volkswagen and October 27, 2014
Bentley
Porsche
Volkswagen
Honda
Volkswagen and
Bentley

April 24, 2015
March 30, 2015
April 3, 2015
October 7, 2014

Honda
FCA

April 4, 2015
April 29, 2015

On April 29, 2015, Defendants filed the present motion to stay these cases in light of the
fact that eleven inter partes review proceedings and three reexamination proceedings had been
filed challenging the validity of the asserted patents. Defendants argue that it would be more
efficient for the USPTO to decide the validity of the asserted claims of the patents before this
Court proceeds with this case.
On May 11, 2015, the Court held a telephonic scheduling conference with the parties. At
the conference, the Court inquired about the issues raised in Defendants’ motion to stay because
the motion had not been fully briefed.
III. ANALYSIS
Defendants Ford and FCA move to stay these cases in light of the fact that eleven inter
partes review proceedings and three reexamination proceedings have been filed challenging the

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validity of all the claims asserted in the patents-in-suit. Ford and FCA argue that it would be
more efficient for the USPTO to decide the validity of the asserted claims in the patents before
this Court proceeds with this case.
“Courts have inherent power to manage their dockets and stay proceedings, including the
authority to order a stay pending conclusion of a PTO reexamination.” Ethicon, Inc. v. Quigg,
849 F.2d 1422, 1426-1427 (Fed. Cir. 1988); see also Landis v. North Am. Co., 299 U.S. 248,
254-255 (1936). Likewise, courts have broad discretion in deciding whether a stay is appropriate
pending the conclusion of an inter partes review proceeding. Regents of Univ. of Mich. v. St.
Jude Med., Inc., No. 12-12908, 2013 WL 2393340, *2 (E.D. Mich. May 31, 2013).
The decision of whether or not to stay a case until the conclusion of a reexamination or
inter partes review proceeding is within the sound discretion of the district court. Patlex Corp. v.
Mossinghoff, 758 F.2d 594, 602-603 (Fed. Cir. 1985); Regents of Univ. of Mich., 2013 WL
2393340, *2. The decision of whether or not to stay a case is highly fact specific.
In considering whether or not to stay a case, courts routinely consider at least the
following three factors: (1) whether a stay will simplify the issues in the case or conserve judicial
resources; (2) whether a stay will unduly prejudice or present a clear tactical disadvantage to the
non-moving party; and (3) whether discovery is complete and when (or whether) a trial date has
been set. Dura Global Techs., LLC v. Magna Int’l Inc., No. 11-cv-10551, 2011 WL 5039883, at
*6 (E.D. Mich. Oct. 24, 2011); Regents of Univ. of Mich., 2013 WL 2393340, *2 (“To
determine whether a stay pending inter partes review is appropriate, courts apply the same
factors as determining whether to stay a case pending reexamination.”).
As explained fully below, the Court finds that the above factors weigh in favor of
denying Defendants’ motion to stay this case.

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A. First Factor: Whether a Stay Will Simplify the Issues in Question and Trial of
This Case
The first factor that the Court considers when considering whether or not to grant a stay is
whether a stay will simplify the issues in the case and/or make the case significantly more
efficient for the court and the parties. In some cases, an inter partes review or reexamination
proceeding 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 inter partes review or reexamination “need not dispose of a case
completely to simplify the issues in a case.” Cequent Performance Prods., Inc. v. Hopkins Mfg.
Corp., No. 13-cv-15293, 2015 WL 1510671, *2 (E.D. Mich. Apr. 1, 2015).
Defendants argue that this factor favors staying this case because the inter partes review
and reexamination proceedings before the USPTO will likely simplify the issues in this federal
court litigation. Defendants point out that all the asserted claims of the patents in the federal
court litigation are the subject of an inter partes review proceeding and/or ex parte reexamination
proceeding challenging the validity of the asserted claims. Given the substantial number of inter
partes review and reexamination proceedings, Defendants argue there is a substantial likelihood
that some, if not all, of the asserted claims will be cancelled or amended in the inter partes
review and reexamination proceedings.

Defendants argue that the Court should be fully

informed of the validity and scope of the asserted claims before embarking on a costly litigation.
Plaintiff argues that the reexamination and inter partes review proceedings “offer little
hope of simplifying this litigation significantly.” Pl. Resp. at 6 (Dkt. 18). Plaintiff makes three
arguments. First, Plaintiff argues that it has recently “agreed to dismiss all of the claims asserted
in this litigation that are at issue before the Patent Office for U.S. Patent No. 5,732,375 and U.S.
Patent No. 6,775,601.” Id. Plaintiff states that in it “currently intends to amend its complaint to

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assert other claims of the ‘375 Patent, but those claims are not at issue in the IPR proceedings.”
Id. at 6 n.1.
Second, Plaintiff argues that “because only a single IPR proceeding was instituted by
Ford or FCA, the IPR proceedings will not resolve all, or even most, of the likely validity
arguments.” Id. at 8. Plaintiff’s argument is based on 35 U.S.C. § 315(e)(2), which estops a
person who files an inter partes review from making the same invalidity arguments it raised, or
could have raised, in the inter partes review proceeding in a federal court patent infringement
lawsuit. Specifically, 35 U.S.C. § 315(e)(2) states:
The petitioner in an inter partes review . . . or real party in interest
or privy of the petitioner, may not assert . . . in a civil action . . .
that the claim is invalid on any ground that the petitioner raised or
reasonably could have raised during that inter partes review.
Because almost all of the USPTO proceedings were filed by automobile manufacturers other
than Ford and FCA, Plaintiff points out that the estoppel provision of 35 U.S.C. § 315(e)(2) will
not apply to Ford and FCA in this case and, therefore, Ford and FCA will be free to make the
same arguments in this case as were made before the USPTO. Plaintiff argues that staying this
case would be unfair because it would give Ford and FCA the benefit of seeing if the other
automobile manufacturers invalidate the asserted claims in the patents. If other manufacturers
successfully invalidate the asserted claim in the patents, then the patents would be invalid against
Ford and FCA. On the other hand, because there would not be estoppel against Ford and FCA, if
the other manufacturers were unsuccessful in invalidating the asserted patents at the USPTO,
then Ford and FCA could still make the same arguments in this federal court case.
Third, Plaintiff points out that any ruling by the USPTO will not resolve all the defenses
raised by the Defendants. Plaintiff points out that the USPTO proceedings will not resolve the
defenses of laches, waiver, estoppel, other equitable defenses, and lack of statutory subject

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matter under 35 U.S.C. § 101. See 35 U.S.C. § 311(b) (limiting the grounds on which an inter
partes review proceeding can be requested to “a ground that could be raised under section 102 or
103”).
The Court finds that this factor weighs in favor of not staying this case because the issues
in this case would not likely be significantly simplified by a stay. First, the Court notes that the
Plaintiff has agreed to dismiss the asserted claims of the ‘601 and ‘375 Patents that are at issue in
the inter partes review proceedings and will seek to add different claims that are not at issue in
the inter partes review proceedings. As to the ‘601 and ‘375 Patent, the subject inter partes
review proceedings will no longer have the potential to further simplify the issues in this case.
Second, the Court finds that it will likely be able to minimize any negative effects on
efficiency and judicial economy by working with the parties to carefully draft an appropriate
scheduling order. Decisions on the inter partes reviews, even if instituted by the USPTO, will be
completed by the time dispositive motions are filed in this case and before trial. The USPTO
must render its decision within 18 months of the filing of an inter partes review petition. See 35
U.S.C. §§ 316(a)(11), 314(b) (providing that normally an inter partes review proceeding will be
completed within 18 months). Because the last of the inter partes review proceedings was filed
in April 2015, that means all inter partes review proceedings will be completed by November
2016. Moreover, by the time that Defendants file their claim construction briefs in this case,
Defendants will likely be able to see any narrowing amendments and arguments being made to
the claims in the inter partes review proceedings.
Third, even if the Court granted a stay, because there is no estoppel provision under 35
U.S.C. § 315(e)(2), it is likely that a stay will not simplify the issues in this case. Neither the
estoppel provision of 35 U.S.C. 315(e)(2) nor res judicata principles would prevent Defendants

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from making the same or similar arguments in this case as being made by other automobile
manufacturers in the inter partes review proceedings. Moreover, the Court would still have to
address other defenses not litigated in the inter partes review proceedings, including equitable
defenses. See Norgren Automation Solution, LLC v. PHD, Inc., No. 14-cv-13400, 2015 WL
1245942, at *2 (E.D. Mich. Mar. 18, 2015) (denying a motion stay, in part, because a stay would
“have no impact on [Defendant’s] asserted affirmative defenses, including estoppel, inequitable
conduct and validity under 35 U.S.C. § 101.”).
After considering all the facts, the Court finds that staying this case would not likely
significantly simplify the issues in this case. Moreover, through careful drafting of the schedule
in this case, efficiencies both for the Court and the parties can be achieved.
B. Second Factor: Whether Discovery is Complete and Whether a Trial Date Has
Been Set
The second factor that the Court considers when deciding whether or not to grant a stay is
whether discovery is complete and a trial date has been set. This factor recognizes that granting
a stay early in the case conserves judicial resources and saves the parties time and money by
waiting to do costly discovery, claim construction, dispositive motions, and trial until after the
USPTO determines the validity and scope of the asserted claims of the patents.

Cequent

Performance Prods., Inc., 2015 WL 1510671, *2.
Defendants argue that although this case was filed well over a year ago, the case is in its
infancy because the case has been delayed due to its transfer from the Central District of
California.
Plaintiff argues, among other things, that this case should proceed until it is known for
sure that the USPTO will even institute the inter partes reviews. Plaintiff also points out that
decisions on the inter partes reviews will occur before dispositive motions are filed and before

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trial. Thus, Plaintiff argues that that the Court and the parties will not need to spend time and
resources on dispositive motions and a trial, if the patents are invalidated in the inter partes
review proceedings.
The Court finds that this factor weighs only slightly in favor granting a stay. Although
this case has been pending well over a year, this case is in its infancy and a stay would generally
save the parties time and money, if a decision in an inter partes review completely invalidates all
the claims being asserted in a patent. However, as discussed above, the Court finds that a
carefully drafted scheduling order will allow decisions in the inter partes review proceedings to
occur before dispositive motions are filed in this case. Thus, the parties and the Court will
conserve resources in preparing and deciding dispositive motions and having a trial for any
patent claims that are invalidated in the inter partes review proceedings. In addition, Defendants
will likely have the benefit of Plaintiff’s patent owner’s response brief and any claim
amendments from the inter partes review proceeding when drafting its claim construction
response brief. Thus, there is less chance of the Court having to readdress claim construction
issues in light of any claim narrowing arguments and amendments that could occur in the inter
partes review proceedings.
The Court also finds that it is likely that discovery costs and claim construction costs will
be lower in this case than the typical patent infringement case, because the parties should have
the benefit of discovery and claim construction briefing that has already taken place in the
related cases filed by Plaintiff against other automobile manufacturers in the Central District of
California. Plaintiff will have already gathered and produced most of the relevant documents in
the California case, which Defendants will likely have access to in this case. Defendants will
also likely have the benefit of depositions, interrogatory responses, invalidity contentions, and

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claim construction arguments from the California case. In fact, both parties agree that “the Court
and the parties may streamline claim construction in this case with the benefit of Judge
Kronstadt’s claim construction order in the Central District.” Joint Discovery Plan & Proposed
Scheduling Order at 7 (Dkt. 12). Thus, the parties’ discovery costs should be lower in this case
than they otherwise would be.
C. Third Factor: Whether a Stay Would Unduly Prejudice or Present a Clear
Tactical Disadvantage to Signal
The final factor that the Court considers is whether a stay will unduly prejudice or present
a clear tactical disadvantage to the non-moving party.
Defendants argue that a stay would not prejudice Plaintiff, because Plaintiff is not selling
competing products and, therefore, money damages will fully compensate Plaintiff. Everlight
Elecs. Co. v. Nichia Corp., No. 12-cv-11758, 2013 WL1821512, at *8 (E.D. Mich. Apr. 30,
2013).
Plaintiff argues that it would be prejudiced by a stay because this case is already over a
year old. If a stay is granted, Plaintiff argues that “months or even years could elapse before this
litigation leaves the starting gate.” Pl. Resp. at 13.
The Court finds that this factor weighs slightly in favor of denying a stay. The Plaintiff
will be prejudiced by a stay, because a plaintiff has a legitimate interest in having its case timely
resolved. Significant delay is a consideration here, because many of the inter partes review
proceedings were not filed until almost a full year after Plaintiff filed its complaint in this case.
Almost all of the USPTO proceedings were filed in March and April of 2015. In fact, FCA filed
its inter partes review proceeding one year after Plaintiff was served with the complaint,
specifically on April 29, 2015. See 5/1/2014 Proof of Service (Dkt. 21), Signal IP, Inc. v. Fiat
U.S.A., Inc., Case No. 14-cv-03105 (C.D. Cal.).

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If a defendant desires a stay, it should endeavor to minimize prejudice to a plaintiff, by
diligently conducting a prior art search, and then drafting and filing an inter partes review
petition if it desires to do so. While the Court recognizes that searching for prior art and drafting
an inter partes review petition does take a significant amount of time, a petitioner should try to
file an inter partes review proceeding fairly quickly to reduce any prejudice to the Plaintiff.4
The Court notes that 35 U.S.C. § 315(b) sets an absolute one-year deadline from the
service of the complaint in federal court to file an inter partes review proceeding. The Court
notes that FCA filed its inter partes review petition on the one-year statutory deadline. Staying
this case until completion of the inter partes review proceedings would mean that this case would
likely not get started for at least two-and-a-half years after the filing of the complaint. See 35
U.S.C. §§ 316(a)(11), 314(b) (providing that normally an inter partes review proceeding will be
completed within 18 months). Such a pace would not be appropriate for the prompt dispatch of
judicial business.
While the absence of competition between the parties weighs against a finding of
prejudice, that aspect is outweighed by possible harm from the slow pace to resolution that a stay
would produce.
IV. CONCLUSION
After carefully weighing the foregoing factors and the parties’ arguments, the Court
denies Defendants’ joint motion to stay (Dkt. 20). The parties shall contact the Court’s Special
Master Christopher G. Darrow to discuss a proposed schedule for this case. The parties shall use
the Court’s Model Rule 26(f) Report and Proposed Scheduling Order as a guide in discussing a
schedule that is appropriate for this case.
4

Of course, there can be good reasons for delay in filing an inter partes review proceeding. One
reason would be if the parties are having good faith settlement discussions.
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SO ORDERED.
Date: September 30, 2015
Detroit, Michigan

s/Mark A. Goldsmith
MARK A. GOLDSMITH
United States District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record and
any unrepresented parties via the Court's ECF System to their respective email or First Class U.S.
mail addresses disclosed on the Notice of Electronic Filing on September 30, 2015.
s/Carrie Haddon
Case Manager

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