Andrea Electronics Corporation v. Apple Inc.

Filing 25

ORDER For the reasons stated above, Plaintiffs motion to lift the stay is DENIED and Defendants cross-motion to continue the stay is GRANTED. The case is hereby stayed pending final resolution of the IPR proceedings before the Court of Appeals for the Federal Circuit. Apple is directed to inform the Court within seven (7) days of a decision from the Federal Circuit. Ordered by Judge Joan M. Azrack on 8/6/2019. (Bollbach, Jean)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ANDREA ELECTRONICS CORP.,

For Online Publication Only

Plaintiff,
-againstAPPLE INC.,

MEMORANDUM AND ORDER
16-CV-5220 (JMA) (SIL)

Defendant.
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APPEARANCES:
Goutam Patnaik
Pepper Hamilton LLP
600 14th Street, NW
Washington, DC 20005
Attorney for Plaintiff
Ching-Lee Fukuda and Ketan Vinodkumar Patel
Sidley Austin LLP
787 Seventh Avenue
New York, NY 10019
Attorney for Defendant
AZRACK, United States District Judge:
Plaintiff, Andrea Electronics Corporation (“Andrea” or “Plaintiff”), commenced this patent
infringement action in September 2016. This case has been stayed since December 2016. Before
the Court is Andrea’s motion to lift the stay of proceedings (ECF No. 19), together with the
defendant, Apple Inc.’s (“Apple” or “Defendant”) cross-motion to extend the stay of proceedings
pending resolution of the appeal before the Court of Appeals for the Federal Circuit. (ECF No.
21.) For the reasons set forth below, Plaintiff’s motion to lift the stay is DENIED and Defendant’s
cross-motion to continue the stay is GRANTED. 1

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The Court denies the parties’ request for oral argument, (ECF No. 22), as the issues can be resolved on the papers.

In December 2016, the Court granted Apple’s unopposed motion to stay this action pending
final determination of the United States International Trade Commission (“ITC”) investigation, as
28 U.S.C. § 1659(a) provides for a stay of district court actions pending disposition of an ITC
investigation. (ECF Nos. 11–13; Electronic Order, Dec. 20, 2016.) While the ITC investigation
was pending, in January 2017, Apple filed three petitions with the Patent Trial and Appeal Board
(the “PTAB”) requesting inter partes review (“IPR”) of the patents at issue, and the PTAB
instituted reviews on each of the petitions. (Patel Decl., Ex. 2, ECF No. 21-4.) Andrea then filed
two requests for adverse judgment, cancelling all claims for two of the three patents, which left
only the claims regarding the ’345 patent. (Patel Decl., Ex. 3, ECF No. 21-5.) When the ITC’s
decision became final in May 2018, Apple informed the Court that the PTAB’s final written
decision regarding the validity of the claims of the ’345 patent was expected by July 24, 2018.
(Notice, May 30, 2018, ECF No. 14.) The parties agreed to continue the stay until the issuance of
the PTAB decision and indicated they would then submit their respective positions regarding any
further stay. (Id.)
In its final written decisions, the PTAB found that all but four of the claims of the ’345
patent were unpatentable, but determined that Apple had failed to show claims 6-9 were
unpatentable. (Patel Decl., Exs. 4, 5, ECF Nos. 21-6, 21-7.) Apple filed a timely Notice of Appeal
regarding claims 6-9, and that appeal is now fully briefed before the Federal Circuit. (Federal
Circuit Appeals Docket No. 18-2382.) Apple seeks to continue the stay pending a decision by the
Federal Circuit, while Andrea asserts that the stay should be lifted.
Pursuant to the Court’s power to control its docket, it may, in its discretion, stay
proceedings pending a final resolution of IPR proceedings appealed to the Federal Circuit. See
Straight Path IP Grp., Inc. v. Verizon Commc’ns Inc., No. 16-CV-4236, 2016 WL 6094114, at *2
(S.D.N.Y. Oct. 18, 2016) (recognizing the decision to grant a stay pending appeal of IPR
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proceedings to the Federal Circuit is within the district court’s sound discretion). In assessing the
merits of a motion to stay pending IPR proceedings, district courts generally examine three factors:
“‘(1) whether a stay will simplify the issues in question and trial of the case; (2) the stage of the
proceedings; and (3) whether a stay will prejudice the nonmoving party.’” Id. (quoting CDX
Diagnostics, Inc. v. U.S. Endoscopy Grp., Inc., No. 13-CV-5669, 2014 WL 2854656, at *2
(S.D.N.Y. Jun. 20, 2014)). In assessing such a motion to stay, the Court must consider the totality
of the circumstances. See Id. (quoting Rensselaer Polytechnic Inst. v. Apple Inc., No. 13-CV0633, 2014 WL 201965, at *3 (N.D.N.Y. Jan. 15, 2014)). Here, the totality of the circumstances
weighs in favor of continuing the stay pending final resolution of the IPR proceedings on appeal
to the Federal Circuit.
The first factor weighs in favor of the stay. As Apple points out, should the Federal Circuit
reverse the PTAB decision and invalidate claims 6-9, its ruling will be dispositive of this action.
(See ECF No. 20 at 5–6; ECF No. 21-1 at 8–10.) In response, Andrea highlights the low reversal
rate of the Federal Circuit’s review of PTAB decisions, so the potential for reversal is not
dispositive. (ECF No. 21-9 at 3–5.) Apple also contends that the Federal Circuit’s opinion, even
if it upholds the PTAB decision, will clarify the definition of the claim term “periodically,” which
appears in all four claims and is being challenged on appeal. (See ECF No. 20 at 5–6; ECF No.
21-1 at 8–10.)

The Court will not speculate about how the Federal Circuit will define

“periodically,” but acknowledges its potential to change the contours of this case. Ultimately, the
Court notes that the conservation of judicial resources weighs in favor of extending the stay—to
move towards trial on claims 6-9 and then find the construction of the claims has changed, or the
claims themselves have been invalidated, would result in unnecessarily expended judicial
resources. As Apple’s appeal is now fully briefed before the Federal Circuit, the Court is inclined
to wait for its guidance on the construction of claims 6-9 before moving forward with this action.
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The second factor also weighs slightly in favor of the continued stay. While the parties
conducted discovery in the administrative proceedings, no fact or expert discovery in this Court
has taken place. The Court recognizes that this case was stayed in its infancy which is why it
remains in such early stages, and that it will never move past the early stages unless the stay is
lifted. However, Apple merely requests to continue the status quo, rather than to halt a case that
was steadily moving towards trial, which weighs in favor of continuing the stay.
Finally, Andrea has not demonstrated that it will be unduly prejudiced by the continued
stay. Andrea does not contest Apple’s assertion that the ’345 patent was set to expire in early
2019, which seemingly disposes of any continuing enforcement or licensing harms Andrea refers
to its motion papers. While the Court recognizes that this case has been stayed for more than two
years, it is not clear that a continued stay will unduly prejudice Andrea, particularly as the relevant
evidence, at least through the close of ITC fact discovery in May 2017, was preserved by the ITC
investigation. Thus, considering the totality of the circumstances here, the Court exercises its
discretion to continue the stay.
For the reasons stated above, Plaintiff’s motion to lift the stay is DENIED and Defendant’s
cross-motion to continue the stay is GRANTED. The case is hereby stayed pending final
resolution of the IPR proceedings before the Court of Appeals for the Federal Circuit. Apple is
directed to inform the Court within seven (7) days of a decision from the Federal Circuit.
SO ORDERED.
Dated: August 6, 2019
Central Islip, New York
/s/ (JMA)
JOAN M. AZRACK
UNITED STATES DISTRICT JUDGE

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