Lubrizol Specialty Products, Inc.

Filing 179

MEMORANDUM AND ORDER granting 176 Motion to Stay Pending Decisions of Instituted Inter Partes Review Proceedings. Written status report due 10/16/17 and every four (4) months thereafter until IPR proceedings are concluded and case is reinstated on Court's active docket.(Signed by Judge Nancy F Atlas) Parties notified.(TDR, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

LUBRIZOL SPECIALTY PRODUCTS, §
INC.,
§
Plaintiff,
§
§
v.
§
§
BAKER HUGHES INCORPORATED, §
et al.,
§
Defendants.
§

May 23, 2017
David J. Bradley, Clerk

CIVIL ACTION NO. H-15-2915

MEMORANDUM AND ORDER
The Patent Trial and Appellate Board (“PTAB”) has instituted inter partes
review (“IPR”) of all asserted claims in all of the Patents-in-Suit. The case is now
before the Court on the Motion to Stay Pending Decisions on Instituted Inter Partes
Review Proceedings (“Motion to Stay”) [Doc. # 176] filed by Defendants Baker
Hughes Incorporated, Baker Petrolite Corporation, and Baker Petrolite LLC
(collectively, “Baker Hughes”). Plaintiff Lubrizol Specialty Products, Inc., n/k/a
Liquidpower Specialty Products, Inc. (“Lubrizol”) filed its Opposition [Doc. # 177],
and Baker Hughes filed a Reply [Doc. # 178]. Having reviewed the record and
governing legal authorities, the Court stays and administratively closes this case
pending the PTAB’s final decision on all IPR proceedings.

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This Court has authority to stay this case pending the inter partes review. See,
e.g., Procter & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 848-49 (Fed.
Cir. 2008) (citing 35 U.S.C. § 318). “District courts typically analyze stays under a
three-factor test: (i) whether a stay would unduly prejudice or present a clear tactical
disadvantage to the non-moving party; (ii) whether a stay will simplify the issues in
question and trial of the case; and (iii) whether discovery is complete and whether a
trial date has been set.” Murata Mach. USA v. Daifuku Co., Ltd., 830 F.3d 1357, 1361
(Fed. Cir. 2016) (internal quotations and citation omitted). The Court has the
“discretionary prerogative to balance considerations beyond those captured by the
three-factor stay test. The burden litigation places on the court and the parties when
IPR proceedings loom is one such consideration that district courts may rightfully
choose to weigh.” Id. at 1362. A stay of patent litigation is “particularly justified
when the outcome of a PTO proceeding is likely to assist the court in determining
patent validity or eliminate the need to try infringement issues.” Intellectual Ventures
II LLC v. BITCO Gen. Ins. Corp., 2016 WL 4394485, *2 (E.D. Tex. May 12, 2016)
(internal quotations and citation omitted).
With reference to the prejudice factor, Lubrizol argues that it will be prejudiced
by a stay because Baker Hughes is its direct competitor.

This argument is

unpersuasive because it appears from the current record that Baker Hughes is not

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currently marketing the allegedly infringing product. The Court finds that neither
party will be unduly prejudiced or suffer a clear tactical disadvantage if the case is
stayed.
With reference to the second factor, the stay will simplify the issues in question
and the trial of the case. The PTAB granted inter partes review of all asserted claims
in all Patents-in-Suit. If the PTAB ultimately determines that any of the patent claims
are invalid or otherwise narrows the scope of any asserted patent claims, the
proceedings in this Court will likely be resolved or simplified considerably. See, e.g.,
Destination Maternity Corp. v. Target Corp., 12 F. Supp. 3d 762, 769 (E.D. Pa. 2014)
(listing various ways case can be simplified through IPR, including alleviating
discovery disputes regarding prior art, case being dismissed if patents are declared
invalid, encouraging settlement, and reducing costs).

If the PTAB ultimately

determines that the validity challenges are without merit, Baker Hughes as the IPR
petitioner will not be allowed to argue in this case that the asserted claims are “invalid
on any ground that the petitioner raised or reasonably could have raised” during the
inter partes review process. See 35 U.S.C. § 315(e)(2). Regardless of the outcome
of the IPR process, this litigation is likely to be simplified. This factor weighs heavily
in favor of the stay.

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With reference to the timing factor, Lubrizol argues that Baker Hughes
unreasonably delayed filing the petitions for inter partes review. Baker Hughes filed
each of the IPR applications within the one-year period that Congress determined was
an adequate period of time for alleged infringers to review and evaluate prior art. See
35 U.S.C. § 315(b) (one-year limitation period for IPR application). Baker Hughes
moved for a stay promptly after the PTAB instituted inter partes review of the
asserted claims in each of the Patents-in-Suit. Although the lawsuit has been pending
for quite some time, it remains in a fairly early stage. The parties have not provided
expert reports nor engaged in expert discovery. Some fact discovery has been
conducted, but few depositions have occurred. Dispositive motions have not been
filed, and pretrial work has not begun. This factor weighs in favor of a stay.
The Court has also considered the burden litigation places on it and the parties.
This lawsuit involves complicated patents. Litigation will be costly, time-consuming,
and otherwise burdensome to the parties. The PTAB’s IPR process may reduce this
burden, and a stay will clearly reduce the burden of proceeding with both the IPR and
this lawsuit simultaneously.
The Court finds that a stay of this case pending the completion of the IPR
process will provide the Court and the parties with potentially important guidance
from the PTAB, will simplify the case, will avoid a needless waste of resources, and

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will prevent inconsistent results between the IPR proceedings and this lawsuit. The
Court finds also that the significant benefits from the stay outweigh any potential
prejudice to either party. As a result, it is hereby
ORDERED that Baker Hughes’s Motion to Stay [Doc. # 176] is GRANTED,
and this case is STAYED AND ADMINISTRATIVELY CLOSED pending final
decisions in the IPR proceedings. It is further
ORDERED that counsel shall file a written Joint Status Report on October 16,
2017, and every four (4) months thereafter until the IPR proceedings are concluded
and this case is reinstated on the Court’s active docket.
SIGNED at Houston, Texas, this 23rd day of May, 2017.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

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