Intellectual Ventures II LLC v. FedEx Corporation et al

Filing 141

MEMORANDUM OPINION AND ORDER re #104 MOTION to Stay Pending Inter Partes Review filed by FedEx Custom Critical, Inc., FedEx Freight, Inc., Federal Express Corporation, FedEx Ground Package System, Inc., FedEx Office and Print Services, Inc., FedEx Corporation, GENCO Distribution System, Inc... Signed by District Judge Rodney Gilstrap on 10/24/2017. (nkl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
INTELLECTUAL VENTURES II LLC,
Plaintiff,
v.
FEDEX CORPORATION,
FEDERAL
EXPRESS CORPORATION,
FEDEX
GROUND PACKAGE SYSTEM, INC.,
FEDEX FREIGHT, INC., FEDEX CUSTOM
CRITICAL, INC., FEDEX OFFICE AND
PRINT SERVICES, INC.,
GENCO
DISTRIBUTION SYSTEM, INC.,
Defendants.

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CIVIL ACTION NO. 2:16-CV-00980-JRG

MEMORANDUM OPINION AND ORDER
Before the Court is Defendants’ Motion to Stay Pending Inter Partes Review (Dkt. No.
104) (“the Motion”). Having considered the Motion and for the reasons set forth below, the Motion
is DENIED.
I.

Background
On August 31, 2016, Plaintiff Intellectual Ventures II LLC (“Intellectual Ventures” or

“Plaintiff”) sued Defendants FedEx Corporation, Federal Express Corporation, FedEx Ground
Package System, Inc., FedEx Freight, Inc., FedEx Custom Critical, Inc., FedEx Office and Print
Services, Inc., and GENCO Distribution System, Inc. (collectively, “FedEx” or “Defendants”).
(Dkt. No. 1.) Plaintiff alleges that Defendants infringe five different patents: U.S. Patent Nos.
6,633,900 (“the ’900 Patent”); 6,909,356 (“the 356 Patent”); 7,199,715 (“the ’715 Patent”);
8,494,581 (“the ’581 Patent”); and 9,047,586 (“the ’586 Patent”) (collectively, “the Asserted
Patents”).

In January and February of 2017, Defendants filed six petitions for inter partes review
(“IPR”) covering all of the Asserted Claims. (Dkt. No. 104 at 1.) The Patent Trial and Appeal
Board (“PTAB”) instituted review on twenty-three of the Asserted Claims and denied institution
on the remaining twenty-eight claims. (Dkt. No. 112 at 1.)

After some of its challenges were denied, FedEx filed a second round of “follow-on”
petitions on August 31, 2017, seeking review on the uninstituted claims. (Dkt. No. 104 at 1; Dkt.
No. 112 at 4). The PTAB has not rendered an institution decision for these “follow-on” petitions.
(Id.)
On September 1, 2017, Defendants filed the instant Motion seeking a stay in light of the
instituted IPRs and the then recently filed “follow-on” petitions. (Dkt. No. 104.) At that point,
the Parties had already filed claim construction briefing (Dkt. No. 91; Dkt. No. 102) and engaged
in substantial discovery. (Dkt. No. 112 at 12.) Additionally, the close of discovery is a few months
away and trial is set for May 7, 2018. (Dkt. No. 135.)
II.

Legal Standard
A district court has the inherent power to control its own docket, including the power to

stay proceedings. Clinton v. Jones, 520 U.S. 681, 706 (1997). “District courts typically consider
three factors when determining whether to grant a stay pending inter partes review of a patent in
suit: (1) whether the stay will unduly prejudice the nonmoving party, (2) whether the proceedings

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before the court have reached an advanced stage . . . and (3) whether the stay will likely result in
simplifying the case before the court.” NFC Techs. LLC v. HTC Am., Inc., Case No. 2:13-cv-1058WCB, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015) (Bryson, J.). Ultimately, the party
requesting a stay bears the burden of establishing that a stay is justified. Clinton, 520 U.S. at 709.
III.

Discussion
A. Whether a Stay Will Simplify the Issues
The Court finds that a stay would do little to simplify the issues here. Indeed, the PTAB

has declined to institute on a majority of the Asserted Claims. (Dkt. No. 112 at 1.) This sets the
present case apart from those in which this Court has stayed a case even as to uninstituted claims
because all but a few claims were the subject of an IPR. See, e.g., Intellectual Ventures II LLC v.
BITCO Gen. Ins. Corp., No. 6:15-cv-00059, 2016 WL 4394485, at *3 (E.D. Tex. May 12, 2016)
(“[T]he Court finds that the likelihood of simplification of issues is high since the PTAB has
instituted review of [nine of the ten] claims at issue in this case.”). Defendants’ “follow-on”
petitions do not alter that calculus. Cellular Commc’ns Equip., LLC v. Samsung Elecs. Co., No.
6:14-CV-759, 2015 WL 11143485, at *3 (E.D. Tex. Dec. 16, 2015) (“The likelihood of
simplification is far more speculative before the PTAB decides whether to institute inter partes
review.”). Defendants’ argument that these “follow-on” petitions will most assuredly be granted
is no less speculative than a plaintiff’s possible assertion that the pending constitutional challenge
to the continued existence of the PTAB will most assuredly be granted by the Supreme Court.
Predictions and future projections of these types do not move the Court.
Additionally, the instituted IPRs only cover a narrow slice of the invalidity arguments
Defendants have raised in this case. For example, Defendants have argued that the ’715 Patent is
invalid under § 102 with respect to at least eight references (Dkt. No. 112 at 15–16), under § 103

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with respect to at least twenty-six combinations (id. at 22–24), under § 112 (id. at 73–75), and
under § 101 (id. at 85–86). The PTAB’s decision will address a single theory, obviousness, with
respect to a single reference. (Dkt. No. 112 at 7.) Therefore, even a favorable PTAB decision for
Defendants leaves their other defenses, at least with respect to the uninstituted claims, in need of
resolution. Saint Lawrence Commc’ns LLC v. ZTE Corp., No. 2:15-CV-349-JRG, 2017 WL
3396399, at *2 (E.D. Tex. Jan. 17, 2017) (concluding that pending IPRs would “have a negligible
impact on potentially streamlining the case” where numerous defenses would remain live even
after IPR decision).
Accordingly, the Court concludes that this factor does not weigh in favor of granting a stay.
B. Whether a Stay Will Result in Prejudice
Defendants argue that Plaintiff will suffer no prejudice because Intellectual Ventures “does
not produce or sell any products” and thus it can be compensated, if infringement were eventually
found, through damages, including for the period covered by the stay. (Dkt. No. 104 at 9–10
(“[A]ny potential prejudice Intellectual Ventures may assert—receiving alleged damages later
rather than sooner—is minimal and entirely compensable through the ordinary damages phase of
the litigation.”).) However, as this Court explained in Saint Lawrence when presented with this
same argument, “a plaintiff has a right to timely enforcement of its patent rights.” Saint Lawrence,
2017 WL 3396399, at *2 (E.D. Tex. Jan. 17, 2017). See also Trover Grp., Inc. v. Dedicated Micros
USA, No. 2:13-CV-1047-WCB, 2015 WL 1069179, at *2 (E.D. Tex. Mar. 11, 2015) (Bryson, J.)
(collecting cases and concluding that prejudice to timely enforcement of plaintiff’s patent rights
cuts against granting a stay). Although Defendants argue that any prejudice is minimal because
the PTAB decisions must be rendered within the statutory one-year deadline, the PTAB can extend

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those deadlines, 37 C.F.R. § 42.100(c), and appellate review of the decision may also delay the
case many additional months. (Dkt. No. 112 at 15.)
C. The Stage of the Case
Defendants argue that this case is in its early stages and therefore a stay is appropriate.
(Dkt. No. 104 at 11–12.) Plaintiff responds by arguing that this case is set to go to trial several
months before the PTAB’s deadline for issuing a written decision with respect to claims it has
instituted on and nearly a year before it would issue a decision on the remaining claims (if the
PTAB decides to institute) and therefore proceeding to trial is “the fastest, most complete, and
most efficient way to resolve the parties’ disputes.” (Dkt. No. 112 at 11–12.) Plaintiff also argues
that this case has proceeded through substantial discovery and claim construction and thus a stay
would be inefficient. (Id.)
The Court agrees that the Parties have already invested substantial effort and resources
during discovery and in preparing claim construction briefing. (Dkt. No. 91; Dkt. No. 102; Dkt.
No. 112 at 12.) These circumstances weigh against staying this case. See, e.g., Unifi Sci. Batteries,
LLC v. Sony Mobile Commc’ns AB, No. 6:12CV221 LED-JDL, 2014 WL 4494479, at *3 (E.D.
Tex. Jan. 14, 2014). This is particularly true with respect to Defendants’ “follow-on” petitions,
which were filed well after this case was underway.
IV.

Conclusion
Taking the factors discussed above together and for the reasons set forth herein, the Court

concludes that Defendants failed to carry their burden to show that a stay is warranted in light of
their IPR petitions. Accordingly, their Motion to Stay (Dkt. No. 104) is DENIED. However,
Defendants may re-urge their motion in light of the PTAB’s decisions on the uninstituted claims.

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SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 24th day of October, 2017.

____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

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