buySAFE, Inc. v. Google, Inc.
Filing
81
MEMORANDUM OPINION. Signed by District Judge Henry E. Hudson on 06-16-14. (kyou, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division
buySAFE, INC.,
Plaintiff,
Civil Action No. 3:13cv781-HEH
GOOGLE, INC.,
Defendant.
MEMORANDUM OPINION
(Granting a Partial Limited Stay)
This matter is before the Court on Google, Inc.'s ("Defendant") Motion to Stay
(ECF No. 46), filed on May 12, 2014. Specifically, Defendant requests that this case be
stayed pending completion of a Covered Business Method ("CBM") Review (the Petition
for Review and the Review itself) of U.S. Patent No. 8,515,791 ("the '791 Patent"), the
asserted patent. The parties have fully briefed the issue, and the Court heard oral
argument on June 9, 2014. For the reasons stated herein, the Court grants a partial
limited stay.
I. BACKGROUND
This case involves the parties' allegedly competing products. Both provide a type
of guarantee or verification to online shoppers, and consumer behavior information.
Plaintiff "sells to Internet retailers a patented service that provides third-party
certification and transactional guarantees for online merchants." (Compl. at fflj 2, 9, ECF
No. 1.) Plaintiff "has also invented methods for performing systematic analysis of
consumer behavior data to predict consumer demand in relation to the offering of a thirdparty transactional guarantee." {Id. at 110.) These methods are covered by the '791
Patent, which issued on August 20, 2013. {Id. at f 11.)
According to the Complaint, in 2011 Defendant launched Google Trusted Stores
("GTS"), which provides "merchants with a trust seal[,] guarantee[s] the purchases of
online shoppers," and "collect[s] consumer purchase information." {Id. atffl| 12, 16.)
Defendant contends that GTS does not offer a guarantee - rather, it provides "consumers
with information about online merchants, including seller rating and shipping
information, and to help consumers feel confident in their purchases by allowing retailers
to display the GTS badge on their website." (Def.'s Reply Br. Supp. Mot. to Stay at 3,
ECF No. 77.) Plaintiff filed suit against Defendant on November 25, 2013, alleging that
Defendant is infringing the '791 Patent. (Compl. at ^| 23.)
The Leahy-Smith America Invents Act ("AIA"), 112 Pub. L. No. 29 (2011),
provides for U.S. Patent and Trademark Office ("PTO" or "the Patent Office") Patent
Trial and Appeal Board ("PTAB") review of CBM patents upon petition. 35 U.S.C. §
321. Under the AIA, "a person who is not the owner of a patent may file with the Office
a petition to institute a post-grant review of the patent." Id. at § 321(a). Specifically, "[a]
petitioner in a post-grant review may request to cancel as unpatentable 1 or more claims
of a patent on any ground that could be raised under paragraph (2) or (3) of section
282(b) [35 U.S.C. § 282(b)] (relating to invalidity of the patent or any claim)." Id. at §
321(b).
On May 9, 2014, Defendant filed a Petition for Transitional Post-Grant Review of
a patent (CBM Review) with PTAB ("the Petition"), seeking to invalidate all claims of
the '791 Patent pursuant to 35 U.S.C. § 321. (Def.'s Mem. Supp. Mot. to Stay, ECF No.
47, Ex. 1 thereto). The AIA allows Plaintiff three months from May 9, 2014 to file its
response to the Petition. 37 C.F.R. § 42.207(b). Under 35 U.S.C. § 324(c)(1), PTAB has
three months after "receiving a preliminary response to the petition" from Plaintiff to
determine whether to conduct a CBM Review. Thus, PTAB will have decided whether to
conduct a CBM Review no later than six months after May 9, 2014 (or by November 9,
2014). If the Petition is granted, Plaintiff may make a motion to PTAB to amend claims
of the '791 Patent, but amendments "may not enlarge the scope of the claims of the
patent or introduce new matter." 35 U.S.C. § 326(d).
II. STANDARD OF REVIEW
"As the movantf] seeking a stay, Defendant[] bearfs] the burden of demonstrating
that a stay is warranted." Segin Sys. v. Stewart Title Guar. Co., 2014 U.S. Dist. LEXIS
45595, at *5-6 (E.D. Va. Mar. 31, 2014) (citing Market-Alerts Pty. Ltd. v. Bloomberg
Finance L.P., 922 F. Supp. 2d 486, 489-90 (D. Del. 2013)).
The AIA provides that "[i]f a party seeks a stay of a civil action alleging
infringement of a patent under section 281 of title 35, United States Code, relating to a
transitional proceeding for that patent, the court shall decide whether to enter a stay based
on" the following four factors:
(A) whether a stay, or the denial thereof, will simplify the issues in question
and streamline the trial;
(B) whether discovery is complete and whether a trial date has been set;
(C) whether a stay, or the denial thereof, would unduly prejudice the
nonmoving party or present a clear tactical advantage for the moving party;
and
(D) whether a stay, or the denial thereof, will reduce the burden of litigation
on the parties and on the court.
AIA, 112 Pub. L. No. 29 § 18(b)(1) (2011).
Congress could have created an automatic stay of litigation pending CBM Review,
but did not. See Segin, 2014 U.S. Dist. LEXIS 45595, at *8. Thus, while a stay may be
appropriate in many circumstances, it is only proper where the AIA § 18(b)(1) factors
weigh in favor of a stay.1 "The Supreme Court has long recognized that district courts
have broad discretion to manage their dockets, including the power to grant a stay of
proceedings." Proctor & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 848-49
(Fed. Cir. 2008).
III. DISCUSSION
A. RIPENESS
As an initial matter, the Court finds that the Motion to Stay is ripe for disposition.
At oral argument, Plaintiff relied on Sunbeam Prods, v. Hamilton Beach Brands, Inc.,
2010 U.S. Dist. LEXIS 45654 (E.D. Va. May 7,2010), and Segin Sys. v. Stewart Title
Guar. Co., 2014 U.S. Dist. LEXIS 45595 (E.D. Va. Mar. 31, 2014),2 to argue that the
question of whether to grant a stay is not ripe when a reexamination request has not been
granted. However, the court in Sunbeam considered whether to stay litigation pending
1The Court does not consider Defendant's emphasis on legislative history stating that a stay is
almost always granted while CBM Reviews are pending because "such sentiments are not
reflected in the statutory text." Segin, 2014 U.S. Dist. LEXIS 45595, at *8.
2For the reasons detailed infra, the Court is not persuaded that the reasoning of Segin supports
denial of a stay at this time.
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inter partes reexamination - not CBM Review - of the asserted patents. CBM Reviews
differ from interpartes reexaminations in at least three pertinent ways.
First, courts consider different factors when deciding whether to stay litigation
pending inter partes reexamination as opposed to CBM Reviews.3 Second, inter partes
reexamination can take several years to run its course. See Sunbeam, 2010 U.S. Dist.
LEXIS 45654, at *9 (noting that "the reexamination process, if it is a typical one, would
not conclude for another six years."). Whereas, CBM Review is statutorily required to be
completed within one year of institution, except that the time may be extended by six
months for good cause. 37 C.F.R. § 42.300(c). Third, interpartes and ex parte
reexaminations, which predate the AIA, require a showing of a "substantial new
question" of patentability, which CBM Review does not require. See 35 U.S.C. § 303(a).
Thus, given the differences between interpartes reexamination and CBM Review, the
analysis in Sunbeam is inapposite.
Furthermore, regardless of whether PTAB grants the Petition and a CBM Review
is ultimately conducted, this Court must apply the AIA § 18(b)(1) factors to determine if
a stay is appropriate at the time the Petition is first filed. Market-Alerts, 922 F. Supp. 2d
3Specifically,
The substantial difference between the test set forth in [AIA] § 18(b)(1) and that
employed by courts in the ordinary patent reexamination context is the inclusion
of a fourth factor, which requires the court to consider 'whether a stay, or the
denial thereof, will reduce the burden of litigation on the parties and on the court.'
[AIA ]§ 18(b)(1)(D).
Market-Alerts, 922 F. Supp. 2d at 489-490.
at 490, n.5 (quoting Office Patent Trial Practice Guide, 77 Fed. Reg. 48757 (Aug. 14,
2012)).4 Therefore, the Court finds that the question of whether to grant a stay is ripe,
and applies the AIA § 18(b)(1) factors at this time.
B. SCOPE OF STAY
The Court has considered the AIA § 18(b)(1) factors, and in exercising its
discretion finds that they weigh in favor of granting a partial limited stay of proceedings
and motion deadlines.
The partial limited stay will remain in effect pending PTAB's consideration of the
Petition for CBM Review. Immediately after PTAB decides whether to grant the
Petition, the parties are ordered to notify the Court of PTAB's decision. If PTAB denies
the Petition, a status hearing will be held within ten days after PTAB's decision to reset
the dates for trial and other proceedings. However, if PTAB elects to conduct a CBM
Review, the partial limited stay shall be extended, pending the conclusion of the CBM
4The Court adopts the District Court of Delaware's analysis and conclusion on this issue as
follows:
One preliminary issue is whether the statutory stay analysis set forth in § 18(b) is
triggered upon a party's petition for post-grant review or only upon the ...
PTAB's ... institution of such review. (D.I. 19 at 8; D.I. 22 at 6.) The AIA states
that "the court shall decide whether to enter a stay based on [the four enumerated
factors]" whenever "a party seeks a stay of a civil action alleging infringement of
a patent.. . relating to a transitional proceeding for that patent." § 18(b)(1)
(emphasis added). Since the PTO has recognized that "the proceedings begin with
the filing of a petition," the court finds that the relevant stay provisions apply
when the petition is first filed. Office Patent Trial Practice Guide, 77 Fed. Reg.
48757 (Aug. 14, 2012) (emphasis added).
Market-Alerts, 922 F. Supp. 2d at 490, n.5.
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Review. In that case, a status hearing will be held within ten days after the conclusion of
the CBM Review.
The stay is limited with respect to discovery, which will move forward as set forth
in the existing Scheduling Order. In addition, the parties are ordered to meet with
Magistrate Judge David J. Novak for another settlement conference no later than August
31, 2014. It is the Court's understanding that the parties have already met with Judge
Novak twice and that progress has been made. The parties would be best served by
continuing settlement negotiations as the Patent Office considers the CBM Review.
In reaching this decision, the Court notes that given how recently the AIA was
enacted, there is little or no guidance from the Federal Circuit on how to apply the AIA §
18(b)(1) factors. District court opinions on the subject are not controlling and are
inconsistent, largely due to the discretionary nature of the issue. Accordingly, the Court
bases its decision to grant a partial limited stay, on its analysis of the AIA § 18(b)(1)
factors as follows.
C. AIA § 18(b)(1) Factors
Plaintiff argues that this case is akin to Segin Sys. v. Stewart Title Guar. Co., 2014
U.S. Dist. LEXIS 45595 (E.D. Va. Mar. 31, 2014), where Judge Jackson denied a stay
pending a petition for CBM Review. In Segin, it was "difficult to predict the impact of a
stay because it is completely unknown whether or not that review will occur." Id. at *10.
Thus, the court in Segin was "unable to determine at th[at] juncture how likely it is that
PTAB will conclude that 'it is more likely than not that at least one of the claims
challenged in the petition is unpatentable,' a finding that the PTAB must make before
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granting review." Id. at *10-11 (quoting 37 C.F.R. §42.208(c)).5 For the reasons that
follow, this Court reaches a different conclusion on the circumstances before it, and finds
that a partial limited stay is warranted.
While not controlling, and factually distinguishable, the Segin opinion provides a
helpful benchmark against which this Court can measure its analysis of the AIA §
18(b)(1) factors.
i. AIA § 18(b)(1)(A)
The Court finds that a stay "will simplify the issues in question and streamline the
trial." AIA§ 18(b)(1)(A).
The court in Segin found that "the first factor weighs only slightly in favor of
staying the action." Segin, 2014 U.S. Dist. LEXIS 45595, at *12-13. Relying on the fact
that "in addition to the patent infringement claim, Plaintiffs have brought a breach of
contract claim" and "Defendants raise invalidity arguments in their Answers that they
have not raised in their CBM petition," the court in Segin found that "unless the PTAB
finds every claim of the patent invalid, some invalidity issues will remain" and, thus, any
"simplification of the issues would be only moderate." Id. at *11-12. In Segin, the
presence of a breach of contract claim weighed against a stay, presumably because that
entire claim would be marginalized while PTAB construed the invalidity claims. Thus,
537 C.F.R. § 42.208(c) states that "[p]ost-grant review shall not be instituted for a ground of
unpatentability, unless the Board decides that the petition supporting the ground would, if
unrebutted, demonstrate that it is more likely than not that at least one of the claims challenged in
the petition is unpatentable."
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the issues in Segin would not have been significantly simplified by the CBM Review.
Here, all of the claims in this litigation will be affected by a CBM Review.
It is evident that a partial limited stay will simplify the issues since every claim
asserted in this case is raised in the Petition, and if PTAB grants the Petition, it will
address the validity of these claims. The Petition in this case highlights two
combinations of references which Defendant contends the Patent Office has never
considered: (1) the references the Patent Examiner used to reject the original claims of
the '791 Patent, in combination with the allegedly previously withheld U.S. Patent No.
7,644,019 ("the '019 Patent") which arguably renders all of the claims invalid as obvious;
and (2) a new prior art reference, U.S. Patent No. 7,228,287 ("the '287 Patent") by
Samson, which may render the claims obvious when combined with the withheld '019
Patent.6
In the first of these combinations of references, Defendant alleges there is relevant
prior art (the '019 Patent), which was not before the PTO in the prosecution of the '791
Patent. According to Defendant, PTO has never considered whether combining the
known prior art, the guaranty concept, with the known prior art consumer research
concept is valid.7 Irrespective of whether this prior art was intentionally or
6Plaintiff did not address the second combination of references on brief or at oral argument.
Thus, the Court only considers the first combination of references submitted by Defendant in its
Petition.
7Specifically, Defendant contends that at the time Plaintiff was litigating the '019 Patent in
Delaware, it was also prosecuting the application that led to the '791 Patent. During prosecution
of the '791 Patent, the applicants initially argued the prior art failed to disclose the monitoring of
post-transaction activity. (Def.'s Mem. Supp. Mot. to Stay, Ex. 4 thereto, November 4,2011
Amendment, at 6.) The Patent Office rejected the pending claims twice. {Id. Ex. 5 thereto,
unintentionally withheld, it reveals that there may have been a similar patent that
provides both consumer research and retailer guaranty, potentially rendering the '791
Patent unpatentable. This is an issue that the PTO or PTAB has not had the opportunity
to address.
Plaintiff contends that a stay would not simplify the issues because a CBM
Review would be duplicative of the prosecution of the '791 Patent, in which PTO already
considered whether it was obvious in view of cumulative prior art. Plaintiff further
argues that given the cumulative nature of the prior art, it is unlikely PTAB will grant the
Petition. Specifically, Plaintiff contends the '019 Patent is cumulative of U.S. Patent No.
7,343,339 ("the '339 Patent"), "Electronic Bond and Guaranty Business Method," and an
application for "A Method and System Providing a World E-Commerce Exchange" (WO
02/25400 "the 400 application"), which are similar to the '019 Patent in that they claim a
type of guaranty for an online transaction like the '019 Patent, but do not analyze
consumer behavior in relation to an online sales transaction. The '339 Patent and the 400
August 23,2011 Office Action; Id. Ex. 6 thereto, March 1,2012 Office Action.) Plaintiff then
amended its claims to add the limitation of determining whether to accept the obligations of a
party to the claimedsales transaction. {Id. Ex. 7 thereto, August 17,2012 Amendment.) When
Plaintiff added that limitation, it told the Patent Office the prior art did not disclose the newlyadded limitations. {Id. Ex. 8 thereto, June 11, 2012, Applicant-Initiated Interview Summary; Id.
Ex. 7 thereto, August 17, 2012 Amendment after Final.) The Patent Office then allowed the
claims. {Id. Ex. 9 thereto, May 21,2013 Applicant-Initiated Interview Summary.) Defendant
argues Plaintiff failed to disclose to the PTO that the claim limitation added to overcome
rejection came directly from the '019 Patent or that the '019 Patent was the subject of litigation
in Delaware.
8In an attempt to persuade the Court that a stay will not simplify the issues in this case, Plaintiff
emphasizes that evidence of Defendant's copying Plaintiffs product is a secondary consideration
ofnonobviousness. Power Integrations, Inc. v. FairchildSemiconductor Int'l, Inc., 711 F.3d
1348, 1368-1369 (Fed. Cir. 2013). However, obviousness is not before the Court at this stage of
litigation.
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application were considered during prosecution of the '791 Patent. However, it appears
that Plaintiffs new argument that the '019 Patent is cumulative prior art is contrary to its
previous representations to the PTO. (Def.'s Reply Br. Supp. Mot. to Stay, Ex. 21
thereto, PL's Resp. Def.'s First Requests for Admission, at Nos. 84-89; Id. Ex. 18 thereto,
Dep. Tr. of Jeffrey A. Grass, at 281:16-284:3, 293:19-294:1; Def.'s Mem. Supp. Mot. to
Stay, Ex. 14 thereto, PL's Resp. Def.'s First Interrog., at No. 7.) Thus, it remains clear
that PTAB's consideration of the purportedly withheld prior art bears on this critical
issue, and a stay would simplify important issues.
This is particularly apparent because in the Delaware litigation between buySAFE
and Google over the '019 Patent, the District Court of Delaware found that the '019
Patent was invalid as claiming unpatentable subject matter pursuant to 35 U.S.C. § 101.
buySAFE, Inc. v. Google Inc., 964 F. Supp. 2d 331, 337 (D. Del. 2013). The court also
construed the terms "guaranty" and "transaction performance guaranty" (terms that are
also in the '791 Patent). buySAFE, Inc. v. Google Inc., 2013 U.S. Dist. LEXIS 105603, at
*6-l 1 (D. Del. July 29, 2013). Given that the '019 Patent was unpatentable, there is a
reasonable likelihood that the '791 Patent is similarly unpatentable since both of these
patents, though not directly related, have key concepts and terms in common.
Furthermore, both patents disclose methods of providing a guaranty for some or all of a
party's obligations in an online transaction. {See, e.g., Def.'s Mem. Supp. Mot. to Stay,
Ex. 3 thereto, the '791 Patent, and Ex.10 thereto, the '019 Patent.)
The validity of the claims in the '791 Patent, in light of the allegedly withheld
prior art, will also affect Defendant's inequitable conduct defense, which appears to be
11
central to the litigation. After CBM Review, some or all of the claims could be cancelled
or amended under 35 U.S.C. § 326(d). If the CBM Review results in some claims being
amended or cancelled in view of the withheld '019 Patent, this result would demonstrate
that the '019 Patent was material to the patentability of the '791 Patent. Defendant's
inequitable conduct defense requires, among other things, a showing that the withheld
prior art was "material" to patentability of any claims of the '791 Patent. See Therasense,
Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011). Materiality can
be shown by establishing that "but for" the withholding of the prior art reference, the
Patent Office would not have allowed the claims of the patent. Id. at 1291-92. Thus, a
CBM Review will likely simplify the principal defense in this case.
For the foregoing reasons, the Court finds that a partial limited stay would
simplify some of the important issues in this case.
ii. AIA § 18(b)(1)(B)
The Court now turns to AIA § 18(b)(1)(B). The court in Segin found that AIA §
18(b)(1)(B) was neutral with regard to whether a stay should be granted. There, the trial
date had been set, discovery had only recently begun, and claim construction briefing was
due on the same day as the deadline for PTAB's decision. Segin, 2014 U.S. Dist. LEXIS
45595, at *13-14. The court noted that "although preparations for the Markman hearing
will have been substantially completed by [the time PTAB decides whether to grant the
petition]... the parties' preparation and briefing for that hearing will overlap to some
extent with the efforts they must undertake before the PTAB." Id. at *14.
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Here, while a trial date has been set, it was scheduled early in the proceedings as is
customary in this District. Claim construction briefs have been filed, but a number of
deadlines remain. For example, discovery is ongoing, but summary judgment motions
have not been filed. Thus, this case is approaching its most critical stages. Many of the
issues left to be addressed - claim construction, infringement, and damages - may be
mooted by the CBM Review. Like in Segin, there will likely be overlap between
preparations for the Markman hearing and proceedings before PTAB.
Significantly, if PTAB finds any of the claims invalid, that determination will
govern, regardless of this Court's ultimate determination on validity. Fresenius USA,
Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1344 (Fed. Cir. 2013) (holding a PTO decision of
invalidity is binding even post-trial "because Congress has expressly delegated
reexamination authority to the PTO under a statute requiring the PTO to cancel rejected
claims, and cancellation extinguishes the underlying basis for suits based on the patent.").
The binding nature of PTAB's decision weighs in favor of granting a stay.
While the Court finds that these circumstances support granting a limited stay,
discovery and settlement discussions will move forward, in the interest of keeping the
case moving to a reasonable extent while PTAB considers the Petition.
iii. AIA § 18(b)(1)(C)
Next, the Court finds that a partial limited stay will not "unduly prejudice
[Plaintiff] or present a clear tactical advantage [to Defendant]" under AIA § 18(b)(1)(C).
As the District Court of Delaware noted in Market-Alerts, 922 F. Supp. 2d at 494, "the
potential for delay does not, by itself, establish undue prejudice." (emphasis in the
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original). "[I]n determining whether a plaintiff might be unacceptably prejudiced by a
stay, the court turns to additional considerations including the timing of the stay request,
the timing of the administrative review request, the status of the review proceedings, and
the relationship between the parties," e.g., whether the parties are marketplace
competitors. Id.
The Court finds that the timing of Defendant's Petition and Motion to Stay weigh
in favor of a partial limited stay. "A petition for a post-grant review may only be filed
not later than the date that is 9 months after the date of the grant of the patent or of the
issuance of a reissue patent (as the case may be)." 35 U.S.C. § 321(c). The '791 Patent
was issued on August 20, 2013. (Compl., ECF No. 1, Ex. 1 thereto.) While Defendant
could have filed its CBM Petition earlier in this litigation, it was timely filed on May 9,
2014 and done so within a reasonable amount oftime.9 Three days later, Defendant
promptly filed its Motion to Stay on May 12, 2014. There is a reasonable likelihood that
the Petition will be granted for the reasons discussed herein - especially in light of
Defendant's representation to the Court that 78% of CBM Petitions have been granted, to
date. If the Petition is denied, the case will be promptly rescheduled for trial, minimizing
any prejudice to Plaintiff.
The Court now turns to the relationship between the parties. Plaintiff contends
that Defendant copied its product. Therefore, Plaintiff concludes that the parties have a
9Defendant only has one opportunity to petition for CBM Review. 35 U.S.C. § 32. Thus, the
Court notes the importance for Defendant to thoroughly, and not hastily, compose its petition.
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competitive relationship. For the reasons explained supra, this Court does not consider
the alleged copying at this stage of the case.
The court in Segin found that AIA § 18(b)(1)(C) "weighs strongly in favor of
denying a stay" after finding the parties were direct competitors. Segin, 2014 U.S. Dist.
LEXIS 45595, at * 18, 20-21. Unlike in Segin, the parties are not direct competitors here,
and that weighs in favor of granting the stay. See VirtualAgility, Inc. v. Salesforce.com,
Inc., 2014 WL 94371, at *6 (E.D. Tex. Jan. 9, 2014) (finding stay pending CBM Review
inappropriate where parties were direct competitors). The parties may or may not be
competitors with respect to consumer protection. However, they are not competitors on
methods of monitoring and analyzing consumer behavior in online sales transactions
because up until the filing of its Opposition Brief to the Motion to Stay, Plaintiff admitted
it never marketed or sold a product or service covered by the '791 Patent. (Def.'s Reply
Br. Supp. Mot. to Stay, Ex. 18 thereto, Dep. Tr. of Jeffrey A. Grass, at 281:16-284:3,
293:19-294:1.) Thus, there is insufficient evidence at this point that the parties are direct
competitors with respect to the '791 Patent.
The Court is sensitive to Plaintiffs concerns about the financial losses it may
incur because of a stay. (PL's Br. Opp. Def.'s Mot. to Stay, Ex. 1 thereto, Dec. of Jeffrey
A. Grass, at ffl] 1, 6-7.) However, Plaintiffs testimony of past financial loss is not
dispositive on this factor because the testimony covers a time period before the '791
Patent was issued. Thus, the deposition testimony does not necessarily show prejudice as
a result of a stay of the '791 Patent litigation. To limit any resulting prejudice to
15
Plaintiff, the Court will order the parties to continue the pace of discovery during the
CBM Review process.
Also of significance in Segin was "[t]hat Defendants may have two separate
opportunities in two separate forums to challenge the validity of the Plaintiffs' patent
[and that] raise[d] a concern of an unfair tactical advantage, [which would] giv[e] them
two bites of the apple as to a central defense" where "Defendants have not raised all of
their invalidity defenses before the PTAB." Segin, 2014 U.S. Dist. LEXIS 45595, at *2021. Unlike in Segin, Defendant raised claims in its Petition that bear on the central
invalidity defense in this case, inequitable conduct.
iv. AIA § 18(b)(1)(D)
Lastly, the court in Segin held that the fourth factor "weighs slightly in favor of a
stay," drawing heavily on its analysis under the first factor. Segin, 2014 U.S. Dist.
LEXIS 45595, at *22-23. Similarly, this Court relies on its analysis under AIA §
18(b)(1)(A) to support its conclusion under AIA § 18(b)(1)(D), and finds that a partial
limited stay "will reduce the burden of litigation on the parties and on the court." A
partial limited stay will spare the burden of arguing the same issues of validity of the
claims and the inequitable conduct defense twice. AIA § 18(b)(1)(D). A partial limited
stay will also reduce the Court's burden by allowing PTAB to determine the validity of
the '791 Patent claims and the materiality of the allegedly withheld '019 Patent, which
may support Defendant's inequitable conduct defense.
The Court recognizes that the AIA § 18(b)(1)(D) factor "was included, in part, to
ease the movant's task of demonstrating the need for a stay," and finds that AIA §
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18(b)(1)(D) weighs strongly in movant's favor here. Market-Alerts, 922 F. Supp. 2d at
489-490.
IV. CONCLUSION
Based on the foregoing analysis, a partial limited stay will be granted under AIA §
18(b)(1), pending disposition of the CBM Petition.
An appropriate Order will accompany this Memorandum Opinion.
>^
/s/
Henry E. Hudson
United States District Judge
Date: 4on«. 1(^201*/
Richmond, Virginia
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