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

Filing 82

ORDER granting ECF No. 77 Motion to Stay. Signed by Judge Robert C. Jones on 6/7/2016. (Copies have been distributed pursuant to the NEF - KR)

1
2
3
UNITED STATES DISTRICT COURT

4

DISTRICT OF NEVADA

5
6
7
8
9
10
11

______________________________________
)
)
APPLICATIONS IN INTERNET TIME,
)
LLC,
)
)
Plaintiff,
)
)
vs.
)
)
SALESFORCE.COM, INC.,
)
)
Defendant.
)

3:13-cv-00628-RCJ-VPC
ORDER

12
Defendant Salesforce.com, Inc. moves the Court to stay this case until the conclusion of

13
14

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

15

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

16

Patent”) and U.S. Patent No. 8,484,111 (“the ‘111 Patent”) (ECF No. 77). For the reasons given

17

herein, the Court grants the motion.

18

I.

19

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

20

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

21

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

22

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

23
24
1
2
3

1 of 7

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

determining whether RPX should have identified Salesforce as a real party in interest.
Defendant filed a motion to stay the case pending inter partes review, which the Court

10
11

denied on December 4, 2015. The Court informed Defendant that it could submit another motion

12

to stay the case if the PTAB chose to institute RPX’s IPR petitions. On February 25, 2016, the

13

PTAB issued decisions instituting RPX’s petitions, finding a reasonable likelihood that RPX

14

would prevail on all the claims of the patents in suit asserted in this case. It also determined that

15

Salesforce was not a real party in interest. RPX Corp. v. Applications in Internet Time, LLC, Nos.

16

IPR2015-01750, IPR2015-01751, IPR2015-01752, Paper No. 51 (P.T.A.B. Feb. 25, 2016). On

17

March 30, Defendant renewed its motion to stay the case pending inter partes review.
To date, the parties have engaged in limited discovery: they have exchanged initial

18
19

disclosures, infringement and invalidity contentions, and some documents. No depositions or

20

expert discovery have taken place. Discovery must be completed within sixty days after rebuttal

21

expert disclosures are filed. The parties have completed briefing for claim construction in the

22

case, but the Court has not scheduled a Markman hearing or trial date.

23

///

24
1
2
3

2 of 7

1

II.

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

2
3

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

4

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

5

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

6

appropriate pending reexamination proceedings:
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.

7
8
9
10
11

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

12
PTAB decides whether to institute post-grant review, VirtualAgility Inc. v. Salesforce.com, Inc.,

13
14

759 F.3d 1307, 1315–16 (Fed. Cir. 2014), “no doubt the case for a stay is stronger after postgrant review has been instituted.” Id. at 1316. Since the decision in VirtualAgility, nearly every

15
court has chosen to grant motions to stay trial court proceedings once the PTAB has instituted

16
inter partes review proceedings. See NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB,

17
2015 WL 1069111, at *6 & n.1 (E.D. Tex. Mar. 11, 2015) (collecting twenty-six cases in which

18
proceedings were stayed and mentioning four cases involving unusual facts in which proceedings

19
were not stayed).

20
///

21
///

22

///

23
24
1
2
3

3 of 7

1

III.

ANALYSIS

2

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

3

1.

4

In its prior order, the Court found that this factor favored denying the stay request for two

Undue Prejudice and Tactical Disadvantage

5

reasons: (1) the Court had granted a prior motion to stay the case pending CBM review, which

6

delayed the case for nine months; and (2) it would unduly prejudice Plaintiff to stay the case if

7

the PTAB were to find that Defendant is improperly attempting to use RPX as a proxy for filing

8

IPR petitions when Defendant’s right to file such petitions is time-barred. The second reason is

9

no longer at issue because the PTAB determined that Defendant is not a real party in interest.

10

The first reason is still a concern, but, as Defendant argues, Plaintiff waited nearly six years to

11

file suit after the earliest patent in suit issued, which “weigh[s] against [its] claims that it will be

12

unduly prejudiced by a stay.” VirtualAgility Inc., 759 F.3d at 1319 (finding that a one year delay

13

following the patent’s issuance weighed against a claim of undue prejudice). Moreover,

14

“competition between parties can weigh in favor of finding undue prejudice,” id. at 1318, and no

15

evidence here shows that the parties are competitors. In addition, because Plaintiff seeks only

16

monetary damages, not injunctive relief, any delay will not diminish the value of the award and,

17

thus, will not prejudice Plaintiff. See id.

18

Plaintiff argues that “Salesforce is using PTAB procedures to derail the orderly progress

19

of this case,” (Resp., 5, ECF No. 78), by taking advantage of the parties’ agreement “to structure

20

substantial discovery in the most efficient manner, i.e. after the Markman order,” (id. at 7).

21

Plaintiff also argues that it is unfair and prejudicial to Plaintiff that Defendant is relying on the

22

RPX petitions to stay the case. Although granting a stay would further delay the case’s progress,

23

Plaintiff’s concerns are simply objections to delay caused by operating within the rules and

24
1
2
3

4 of 7

1

applicable case law. Moreover, nothing about Defendant’s alleged reliance on the RPX petitions

2

is unfair because the PTAB has determined that Defendant is not a real party in interest. Plaintiff

3

has not shown that granting a stay would be unduly prejudicial. This factor favors granting the

4

motion to stay.

5

2.

Simplification of the Issues

6

The PTAB determined to institute all the claims of the patents in suit asserted in this case

7

after finding a reasonable likelihood that RPX will prevail on them. See RPX Corp. v.

8

Applications in Internet Time, LLC, Nos. IPR2015-01750, IPR2015-01751, IPR2015-01752,

9

Paper No. 51 (P.T.A.B. Feb. 25, 2016). The resolution of RPX’s IPR petitions will more than

10

likely simplify the issues in this case; indeed, if the PTAB cancels all of the asserted claims, then

11

this case would be rendered moot. And even if the PTAB cancels only some of the asserted

12

claims, the issues would be narrowed. AIT argues that whether Salesforce is a real party in

13

interest remains a live issue because the PTAB based its decision on only evidence currently

14

available and, thus, discovery in this case might be helpful. However, the PTAB authorized

15

additional discovery for the purpose of making its determination, and based on a thorough

16

analysis of the evidence adduced, the PTAB decided that Salesforce is not a real party in interest.

17

(See id. at IPR2015-01750, 8–16). These circumstances do not justify denying a stay based on an

18

unsubstantiated hope that discovery will reveal additional facts concerning Defendant’s

19

relationship with RPX. This factor favors granting a motion to stay.

20

3.

Discovery

21

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

22

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

23

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

24
1
2
3

5 of 7

1

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

2

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

3

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

4

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

5

When the Court considered the previous motion to stay, the parties had exchanged initial

6

disclosures, infringement and invalidity contentions, and some document productions. (Resp., 5,

7

ECF No. 69). They had also completed briefing on claim construction. However, no depositions

8

or expert discovery had taken place. (Reply, 6, ECF No. 74). Since the Court’s order denying the

9

stay, “[t]here has been no movement at all in the litigation.” (Mot., 13, ECF No. 77). In Unwired

10

Planet, LLC v. Square, Inc., No. 3:13-cv-00579, 2014 WL 4966033, at *3–6 (D. Nev. Oct. 3,

11

2014), the Court denied a stay when “much of the critical discovery had already taken place” but

12

discovery would not be completed until six months following a Markman order, and the Court

13

issued its Markman order simultaneously with its order on the motion to stay. Here, in contrast,

14

the amount of discovery completed is limited, the Court has not yet scheduled a Markman

15

hearing, and discovery will not be completed until months after a Markman order. This factor

16

favors granting the motion to stay.

17

4.

Trial Date

18

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

19

All four factors favor granting the motion to stay the case. Although the case is

20

progressing slowly, the PTAB’s decision on the RPX petitions could significantly narrow the

21

issues in the case, or even moot it entirely. No unusual facts are present that would cause the

22

Court to depart from the nearly uniform pattern of staying a case once the PTAB has instituted

23

inter partes review proceedings. The Court grants the motion.

24
1
2
3

6 of 7

1

CONCLUSION

2

IT IS HEREBY ORDERED that the Motion to Stay (ECF No. 77) is GRANTED.

3

IT IS SO ORDERED.

4

Dated this 3rd7, 2016.May, 2016.
Dated: June day of

5
6
7

_____________________________________
ROBERT C. JONES
United States District Judge

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1
2
3

7 of 7