Applications in Internet Time, LLC v. Salesforce.com, Inc.

Filing 76

ORDER denying 66 Motion to Stay. Signed by Judge Robert C. Jones on 12/4/15. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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______________________________________
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APPLICATIONS IN INTERNET TIME,
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LLC,
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Plaintiff,
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vs.
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SALESFORCE.COM, INC.,
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Defendant.
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3:13-cv-00628-RCJ-VPC
ORDER

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Defendant Salesforce.com, Inc. moves the Court to stay this case until the conclusion of

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the United States Patent and Trademark Office’s Patent Trial and Appeal Board’s (“PTAB”)

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inter partes review of the two patents at issue in this case: U.S. Patent No. 7,356,482 (“the ‘482

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Patent”) and U.S. Patent No. 8,484,111 (“the ‘111 Patent”) (ECF No. 66). For the reasons given

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herein, the Court denies the motion.

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I.

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FACTS AND PROCEDURAL HISTORY
On November 8, 2013, Plaintiff Applications in Internet Time, LLC (“AIT”) sued

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Defendant Salesforce.com, Inc. (“Salesforce”) alleging infringement of the ‘482 Patent and the

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‘111 Patent. On August 1, 2014, Defendant filed two petitions with the PTAB seeking covered

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business method (“CBM”) review of the patents in suit. On August 25, 2014, the Court granted

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the parties’ joint stipulation to stay the case pending CBM review. The Court lifted the stay on

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April 27, 2015 after the PTAB chose not to institute Defendant’s petitions.

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Defendant’s right to file a petition with the PTAB seeking inter partes review (“IPR”) of

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the patents in suit expired in November 2014. However, on August 17, 2015, RPX Corporation

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(“RPX”) filed IPR petitions for the patents in suit. RPX is challenging claims 13–18 of the ‘111

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patent and claims 1–59 of the ‘482 patent. The PTAB assigned proceeding number IPR2015-

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01750 to the ‘111 petition, and the numbers IPR2015-01751 and IPR2015-01752 to the ‘482

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petitions. On October 20, 2015, the PTAB granted AIT’s motion for additional discovery in

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determining whether RPX should have identified Salesforce as a real party in interest. Federal

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law requires the PTAB to issue a decision on whether to institute the petitions by February 17,

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2016.
Defendant has filed a motion to stay this case pending inter partes review. To date, the

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parties have engaged in limited discovery: they have exchanged initial disclosures, infringement

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and invalidity contentions, and some documents. No depositions or expert discovery have taken

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place. Discovery must be completed within sixty days after rebuttal expert disclosures are filed.

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The parties have completed briefing for claim construction in this case, but the Court has not

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scheduled a Markman hearing or trial date.

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II.

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LEGAL STANDARDS
The Leahy–Smith America Invents Act (“AIA”) implemented the inter partes post-grant

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review proceeding as an additional means of challenging the validity of a patent. Although no

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statute explicitly governs motions for stay pending inter partes review, Local Rule 16.1–20

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provides a four-part test for determining whether a stay of patent infringement suits is

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appropriate pending reexamination proceedings:

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The Court may order a stay of litigation pending the outcome of a reexamination
proceeding before the United States Patent and Trademark Office that concerns a
patent at issue in the federal court litigation. Whether the Court stays litigation
upon the request of a party will depend on the circumstances of each particular
case, including without limitation: (1) whether a stay will unduly prejudice or
present a clear tactical disadvantage to the nonmoving party, (2) whether a stay
will simplify the issues in question and the trial of the case, (3) whether discovery
is complete, and (4) whether a trial date has been set.

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While district courts have discretion in determining whether to grant a stay before the

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PTAB decides whether to institute post-grant review, VirtualAgility Inc. v. Salesforce.com, Inc.,

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759 F.3d 1307, 1315–16 (Fed. Cir. 2014), “no doubt the case for a stay is stronger after post-

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grant review has been instituted.” Id. at 1316; see also Trover Grp., Inc. v. Dedicated Micros

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USA, No. 2:13-cv-1047, 2015 WL 1069179, at *5 (E.D. Tex. Mar. 11, 2015) (finding a majority

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of courts have postponed or denied stay requests when the PTAB has not acted on a petition for

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review).

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III.

ANALYSIS

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The Court will consider each of the four factors identified above in turn.

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1.

Undue Prejudice and Tactical Disadvantage

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Plaintiff argues a stay would impose upon it a tactical disadvantage by drawing out the

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litigation well beyond Defendant’s deadline for filing an IPR petition, especially considering the

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PTAB is allowing additional discovery to determine whether RPX should have identified

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Defendant as a real party in interest in its IPR petitions. In rebuttal, Defendant argues the

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PTAB’s granting of Plaintiff’s motion for additional discovery as part of RPX’s petitions offers

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no indication of the PTAB’s inclination as to its forthcoming decisions on institution. Further,

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Defendant argues a stay is not prejudicial and creates no tactical disadvantage for Plaintiff

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because Plaintiff does not compete with Defendant, is not seeking a preliminary injunction, and,
if it wins, would eventually receive full compensation through an award of damages. Defendant

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also points out that Plaintiff delayed filing this suit for years after issuance of the patents in suit,

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and the PTAB must issue its institution decisions in the RPX proceedings by February 17, 2016,

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and then a final decision within one year.

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While some of Defendant’s arguments might have merit, the key factors here are the

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timing of events in the case and the PTAB’s decision to allow additional discovery in the RPX

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proceedings. First, the Court already granted a stay while the PTAB was deciding whether to

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institute Defendant’s petitions for CBM review, which delayed the case for nine months. As of

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November 2014, Defendant’s right to file a petition for IPR was time-barred. See 35 U.S.C. §

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315(b) (barring institution of an IPR petition filed more than one year after the petitioner is

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served with a complaint alleging infringement of the patent). Now, one year later, and two years

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after the case was filed, Defendant asks the Court to delay this case for up to fifteen more

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months. Any additional delays, unless highly warranted, would prejudice Plaintiff by preventing

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it from obtaining a timely resolution of its case.

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Second, the PTAB found the facts sufficiently persuasive to grant Plaintiff’s motion for

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additional discovery in the RPX proceeding to determine whether RPX should have identified

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Defendant as a real party in interest. RPX Corp. v. Applications in Internet Time, LLC, Nos.

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IPR2015-01750, IPR2015-01751, IPR2015-01725, Paper No. 11 (P.T.A.B. Oct. 20, 2015). As

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the PTAB stated, it must identify proper real parties in interest “to protect patent owners from

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harassment via successive petitions by the same or related parties, and to prevent parties from

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having a ‘second bite at the apple.’” Id. (internal quotations omitted). If the PTAB were to find

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that Defendant is improperly attempting to use RPX as a proxy for filing IPR petitions when

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Defendant’s right to file such petitions is time-barred, then any further delay resulting from

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RPX’s petitions would unduly prejudice Plaintiff and allow Defendant to use its ploy, as Plaintiff

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alleges, to gain a tactical advantage. This factor favors denying the motion to stay.

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Simplification of the Issues

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The PTAB has not yet determined whether to institute RPX’s IPR petitions. Its decision

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is due by February 17, 2016. While all stay motions are not necessarily premature before the

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PTAB determines whether to grant a petition for IPR proceedings, the simplification factor is

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indeterminable before the PTAB makes its decision because the Court would find it very difficult

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to assess whether a stay would end up simplifying the issues. See Unwired Planet, LLC v.

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Square, Inc., No. 3:13-cv-00579, 2014 WL 4966033, at *5–6 (D. Nev. Oct. 3, 2014). Thus, the

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Court will treat this factor as indeterminable and deny the motion to stay unless the other three

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factors strongly support a stay. See id. at *5.

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3.

Discovery

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Discovery in this case is not complete. The parties agreed to wait until after the Court’s

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Markman decision to complete discovery. (Disc. Plan and Scheduling Order, 2, ECF No. 42).

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The Court has not yet scheduled a Markman hearing. Following the Court’s Markman order,

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expert disclosures are due within forty-five days and rebuttals to those disclosures are due within

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forty-five days thereafter. (Id. at 4–5). Discovery must be completed sixty days after rebuttal

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expert disclosures are served. (Id.). In other words, discovery will be completed as late as 150

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days, or about five months, after a Markman order.

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To date, the parties have exchanged initial disclosures, infringement and invalidity

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contentions, and some document productions. (Resp., 5, ECF No. 69). They have also completed

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briefing on claim construction. However, no depositions or expert discovery have taken place.

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(Reply, 6, ECF No. 74). In Unwired Planet, 2014 WL 4966033 at *3–6, the Court denied a stay

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when “much of the critical discovery had already taken place” but discovery would not be

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completed until six months following a Markman order, and the Court issued its Markman order

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simultaneously with its order on the motion to stay. Here, in contrast, the amount of discovery

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completed is limited; the Court has not yet scheduled a Markman hearing; and discovery will not

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be completed until months after a Markman order. This factor favors granting the motion to stay.

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4.

Trial Date

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A trial date has not been set. This factor favors granting the motion to stay.

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Although factors three and four favor a stay, factor one tips the balance against a stay.

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Only limited discovery has taken place, and the Court has not set a Markman hearing or trial

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date; however, this case is already two years told, partially because of a nine-month stay the

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Court granted pending Defendant’s petition for CBM review—a petition the PTAB chose not to

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institute. Further, the PTAB is currently determining whether Defendant is a real party in interest

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in the RPX proceeding, having recognized that Defendant’s right to petition for IPR has expired.

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As explained above, granting Defendant’s motion to stay at this time would unduly prejudice

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Plaintiff and impose upon it a tactical disadvantage. The PTAB is required to decide whether to

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institute RPX’s IPR petitions by February 17, 2016. If the PTAB chooses to institute the

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petitions, then Defendant may submit another motion to stay the case, which the Court will

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consider based on the facts at that time. Causing further delay by staying the case now, however,

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and discovering later that RPX should have identified Defendant as a real party in interest in the

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IPR proceedings would unduly prejudice Plaintiff and impose upon it a tactical disadvantage.

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CONCLUSION

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IT IS HEREBY ORDERED that the Motion to Stay (ECF No. 66) is DENIED.

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IT IS SO ORDERED.

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Dated: this 6th day of November, 2015.
Dated This 4 day of December, 2015.

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_____________________________________
ROBERT C. JONES
United States District Judge

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