Jinni Tech Ltd et al v. Red.com Inc et al

Filing 59

ORDER granting Plaintiffs' 49 Motion to Stay. Signed by Judge James L. Robart. (PM)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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JINNI TECH LTD, et al.,

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CASE NO. C17-0217JLR

Plaintiffs,

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ORDER GRANTING STAY

v.
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RED.COM, INC., et al.,

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Defendants.

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I.

INTRODUCTION

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Before the court is Plaintiffs Jinni Tech, Ltd. (“Jinni Tech”) and Bruce Royce’s

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(collectively, “Plaintiffs”) motion to stay. (MTS (Dkt. # 49).) Defendants RED.com,

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Inc. and RED.com, LLC (collectively, “Defendants” or “RED”) oppose the motion

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(Resp. (Dkt. # 54)), and Plaintiffs filed a reply (Reply (Dkt. # 56)). The court has

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considered the parties’ submissions in support of and in opposition to the motion, the

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relevant portions of the record, and the applicable law. Being fully advised, 1 the court

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GRANTS Plaintiffs’ motion to stay.

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II.

BACKGROUND

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The court detailed this case’s factual and procedural background in its prior order

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on RED’s motion to dismiss or transfer. (See 10/20/17 Order (Dkt. # 32) at 2-8.) Thus,

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in this order, the court recounts only the facts and procedural history salient to the instant

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motion.

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A.

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Jinni Tech and RED’s Products
This case involves competing filmmaking products manufactured and sold by the

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parties. (See FAC (Dkt. # 10) ¶¶ 3-6; Answer (Dkt. # 33) ¶ 3.) RED manufactures and

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sells high-end, digital cameras, which are widely used by the filmmaking industry. (See

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FAC ¶ 3; Answer ¶ 3.) As part of their business, Defendants also sell the RED

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Mini-Mag—a memory storage device, known as a solid state drive (“SSD”), that is

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compatible with RED digital cameras. (FAC ¶¶ 41-42; Answer ¶¶ 17-18.) According to

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Plaintiffs, Defendants’ President, Jarred Land, owns and operates a website called

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reduser.net, which hosts a forum for individual RED camera owners and others active in

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the cinematography industry to “share information about RED cameras and accessories.”

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(FAC ¶¶ 23, 43-44; see also Answer ¶¶ 11, 20.)

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Neither party requests oral argument on the motion (see MTS at 1; Resp. at 1), and the
court finds oral argument unnecessary to its disposition of the motion, see Local Rules W.D.
Wash. LCR 7(b)(4).

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Jinni Tech also manufactures and sells cinematography equipment. (See FAC

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¶ 34.) On July 31, 2016, Jinni Tech introduced a competing SSD media accessory called

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the JinniMag, which it marketed as “an affordable third-party media accessory that is

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compatible with RED cameras.” (Id. ¶ 38; see id. ¶¶ 34-37, 66-67.)

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B.

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Statements Regarding Plaintiffs After the Introduction of JinniMag
Plaintiffs allege that, after Jinni Tech introduced the JinniMag, RED made or

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encouraged a series of allegedly false statements about Jinni Tech. These statements

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insinuated that the JinniMag was a “scam,” an “IP theft,” and “a fake.” (Id. ¶ 71.)

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Plaintiffs claim that Mr. Land accused Jinni Tech of duplicating RED’s intellectual

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property and “describing Jinni Tech and/or Mr. Royce as a hacker, a pirate, and a thief.”

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(Id. ¶¶ 72, 75.) Plaintiffs allege that numerous similar statements were made on the

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reduser.net forum and Facebook. (See, e.g., id. ¶¶ 70-71c; 73, 77a-77g; 85-86c.)

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According to Plaintiffs, these actions damaged Mr. Royce’s professional reputation and

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caused Mr. Royce and his family “serious emotional distress, anxiety, and stress,

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resulting in harm to Mr. Royce’s emotional and physical health, including severe physical

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pain and a sleep disorder.” (Id. ¶¶ 97-98.)

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C.

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Procedural History
Plaintiffs filed suit on February 10, 2017. (See Compl. (Dkt. # 1).) Their

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complaint alleges that Defendants falsely advertised RED’s products and engaged in

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unfair competition, in violation of the Lanham Act, 15 U.S.C. § 1125(a). (Id. ¶¶ 90-108;

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FAC ¶¶ 107-25.) It also asserts various violations of Washington law, including product

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disparagement and trade libel (Compl. ¶¶ 109-15; FAC ¶¶ 126-34); tortious interference

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(Compl. ¶¶ 116-22; FAC ¶¶ 135-42); intentional and negligent infliction of emotional

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distress (Compl. ¶¶ 136-43; FAC ¶¶ 157-64); defamation (Compl. ¶¶ 144-52; FAC

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¶¶ 165-73); and portraying Plaintiffs in a false light (Compl. ¶¶ 153-61; FAC ¶¶ 174-82).

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Finally, the complaint alleges that Defendants violated the Washington Consumer

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Protection Act by engaging in unfair competition in violation of RCW 19.86 (Compl.

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¶¶ 123-28; FAC ¶¶ 143-49) and violating Mr. Royce’s right of privacy in contravention

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of RCW 9.73.060 (Compl. ¶¶ 129-35; FAC ¶¶ 150-56).

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A month later, on March 2, 2017, RED.com, Inc. brought suit against Jinni Tech
and Mr. Royce in the Central District of California, alleging patent infringement,

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trademark infringement, and other violations of federal and state law. See generally

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Red.com, Inc. v. Jinni Tech, Ltd., No. 8:17-cv-00382-CJC-KES, Dkt. # 1 (“Compl.”)

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(C.D. Cal.) (hereinafter, “the California case”). The complaint describes the ’385 patent,

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owned by RED, which covers the RED SSD accessories. Id., Compl. ¶ 14. It asserts that

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Jinni Tech and Mr. Royce “have in the past infringed and are currently infringing the

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’385 patent.” Id., Compl. ¶ 43. Jinni Tech and Mr. Royce moved to dismiss the

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California case on various grounds, including lack of personal jurisdiction and improper

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venue, and alternatively, to transfer the action to this district. Id., Dkt. # 30 (“Order on

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MTD”) at 1-2. The Central District of California denied the motion. See generally id.,

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Order on MTD.

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On May 23, 2017, Jinni Tech and Mr. Royce filed an amended complaint in this

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suit, adding two claims seeking declaratory judgments of noninfringement and invalidity

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of the ’385 Patent—the same patent at issue in the California case. (See FAC ¶¶ 183-88.)

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Defendants then filed a motion to dismiss or transfer. (See MTD (Dkt. # 15).) The court

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granted Defendants’ request to dismiss Plaintiffs’ patent-related claims pursuant to the

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first-to-file rule. (See 10/20/17 Order at 37.) The court denied the remainder of

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Defendants’ motion after finding that it had personal jurisdiction over RED.com, Inc. and

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RED.com, LLC, and that venue in this court was proper for Plaintiffs’ non-patent claims.

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(Id.) The court also declined to transfer the case to the Central District of California, and

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denied Defendants’ 12(b)(6) motion to dismiss. (Id.)

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On November 29, 2017, the Central District of California reversed its order

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upholding Red.com’s patent infringement suit. (See Whitaker Decl. (Dkt. # 37) ¶ 3, Ex.

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A.; see also 1/25/18 Order (Dkt. # 41) at 3.) On a motion for reconsideration, the

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California court held that “[b]ecause the ‘385 Patent had not issued when [RED.com]

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filed its Complaint, there was no justiciable case or controversy at the time of filing.”

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(Id.) Accordingly, the Central District of California dismissed RED.com’s patent

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infringement claims without prejudice. (Id.) Both parties immediately took action that

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same day. RED.com refiled a suit for infringement of the ‘385 Patent in the Central

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District of California. (See Whitaker Decl. ¶ 4, Ex. B; 1/25/18 Order at 3.) Plaintiffs

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then filed what was styled as a motion for reconsideration in this court—but in fact was a

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motion for relief brought pursuant to Federal Rule of Civil Procedure 60(b)—asking the

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court to reinstate the declaratory judgment patent claims. (See MFR (Dkt. # 36).) The

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court denied Plaintiffs’ Rule 60(b) motion on numerous grounds. (See generally 1/25/18

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Order.)

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The California case is scheduled for trial on May 7, 2019. (MTS at 5.) This case

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is scheduled for trial on August 19, 2019. (Sched. Order (Dkt. # 24) at 1.)

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D.

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Present Motion
Plaintiffs now move to stay this action pending resolution of the California case.

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(See MTS at 1.) Plaintiffs claim that the issues in the California case “are intimately

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related, and indeed foundational to issues here.” (Id.) In short, Plaintiffs argue that the

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question whether Jinni Tech has infringed on RED’s patent—which is at issue in

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California—is central to, if not dispositive of, Plaintiffs’ non-patent claims in this court.

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(See generally id.) For example, Plaintiffs allege that this court cannot determine

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whether RED falsely accused Plaintiffs of “stealing from RED and committing

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intellectual property theft” (see, e.g., FAC ¶ 119c) until the Central District of California

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decides whether patent infringement occurred (MTS at 5). For this reason, Plaintiffs

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argue that the disposition of the California case will clarify the issues in this case, if not

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resolve this case entirely. (Id. at 5.) Moreover, Plaintiffs contend that if both this case

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and the California case proceed as scheduled, the two juries could return conflicting

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verdicts, leaving the Ninth Circuit in an untenable position. (Id. at 6.)

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Conversely, RED claims that there is little overlap between the issues in the two

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cases, such that a resolution in the California case will not aid this court in deciding the

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non-patent claims. (Resp. at 8-9.) RED also asserts that Plaintiffs’ true motivation in

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seeking a stay is not for reasons of consistency or judicial economy, but rather to avoid

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discovery—especially Mr. Bruce’s deposition—and delay Defendants’ forthcoming

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summary judgment motion. (Id. at 9-11.) Lastly, RED argues that Plaintiffs should be

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judicially estopped from achieving a stay. (Id. at 11-13.) According to RED, Plaintiffs’

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current position that the two cases are linked is inconsistent with Plaintiffs’ opposition to

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RED’s motion to transfer, where Plaintiffs argued against a transfer because the two

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cases were distinct. (Id. at 11-13; see also MTD (Dkt. # 15); MTD Resp. (Dkt. # 21).) In

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the alternative, Defendants request that, if the court grants the motion to stay, the court

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should still allow the parties to continue discovery and allow RED to file its motion for

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summary judgment. (Resp. at 13.)

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The court now addresses the motion.

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III.
A.

ANALYSIS

The Court’s Authority to Issue a Stay
“A district court has inherent power to control the disposition of the causes on its

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docket in a manner which will promote economy of time and effort for itself, for counsel,

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and for litigants.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). “[T]he District

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Court has broad discretion to stay proceedings as an incident to its power to control its

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own docket.” Clinton v. Jones, 520 U.S. 681, 706-07 (1997) (citing Landis v. N. Am.

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Co., 299 U.S. 248, 254 (1936)). A district court may stay an action “pending resolution

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of independent proceedings which bear upon the case” even if the other proceedings do

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not control the action before the court. Leyva v. Certified Grocers of Cali, Ltd., 593 F.2d

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857, 863-64 (9th Cir. 1979) (citations omitted). “Indeed, where a stay is considered

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pending the resolution of another action, the court need not find that two cases involve

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identical issues; a finding that the issues are substantially similar is sufficient to support a

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stay.” Washington v. Trump, No. C17-0141JLR, 2017 WL 1050354, at *4 (W.D. Wash.

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Mar. 17, 2017) (citing Landis, 299 U.S. at 254). A stay based on independent

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proceedings should only be granted if “it appears likely the other proceedings will be

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concluded within a reasonable time in relation to the urgency of the claims presented to

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the court.” Leyva, 593 F.2d at 864.

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“The proponent of a stay bears the burden of establishing its need.” Clinton, 520

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U.S. at 708 (citing Landis, 299 U.S. at 255). “[I]f there is even a fair possibility” that the

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stay will damage another party, then the proponent of the stay “must make out a clear

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case of hardship or inequity in being required to go forward.” Landis, 299 U.S. at 255.

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B.

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The Factors the Court Considers
In considering a stay, a district court must weigh the following competing

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interests: (1) “the possible damage which may result from the granting of a stay”;

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(2) “the hardship or inequity which a party may suffer in being required to go forward”;

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and (3) “the orderly course of justice measured in terms of the simplifying or

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complicating of issues, proof, and questions of law which could be expected to result

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from a stay.” CMAX, 300 F.2d. at 268 (citing Landis, 299 U.S. at 254-55).

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1. Possible Damage Resulting from a Stay

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Because RED opposes the motion, the court considers any damage that may result

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to RED if the court imposes a stay. See Lockyer v. Mirant Corp., 389 F.3d 1098, 1110

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(9th Cir. 2005); Washington, 2017 WL 1050354, at *4. Plaintiffs argue that they are the

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only party that could potentially be harmed by a stay because they are effectively unable

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to sell the JinniMag while the cases remain pending. (MTS at 5.) RED, however, asserts

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that a stay will damage its ability to conduct timely and complete discovery, including

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taking Mr. Bruce’s deposition, preventing it from finalizing its summary judgment

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motion and resolving this case. (Resp. at 9-10.) Plaintiffs state that RED’s issue with

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Mr. Bruce’s deposition is a red herring—Mr. Bruce’s deposition was initially delayed

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because Plaintiffs changed counsel, and Mr. Bruce has now agreed to appear for a

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deposition between October 22 and October 27. (Reply at 3.) The court finds that any

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damage to RED caused by a delay in proceedings would be minimal.

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Although a court considering a stay should be mindful of a possible “loss of

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evidence, including the inability of witnesses to recall specific facts,” Clinton, 520 U.S. at

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707-08, this is not a significant concern in this case. The parties have already completed

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significant discovery. (See Resp. at 4 (“the Washington case has progressed through

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much of discovery and even a mediation”).) And RED’s chief discovery complaint—its

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inability to take Mr. Bruce’s deposition—appears to be resolved, or will be resolved

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shortly. (See Reply at 3.) Moreover, the court’s stay, as detailed below, will allow

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discovery to proceed on its current schedule. (See Sched. Order at 2 (discovery cutoff

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date is March 8, 2019)); see also infra § III.D.

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RED’s other concern—that it will not be able to immediately file its summary

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judgment motion—is not the type of damage described in Landis. 299 U.S. at 255. In

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essence, RED argues that it will suffer damage from a stay because this case will exist

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longer than it otherwise would. (See Resp. at 10.) But this is not a case where a stay

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would be “indefinite in nature.” See Dependable Highway Express, Inc. v. Navigators

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Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (“Generally, stays should not be indefinite

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in nature.”). Rather, a stay would only minimally extend the case: the California case is

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scheduled for trial on May 7, 2019, which is three months before this case’s current

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August 19, 2019, trial date. Moreover, the purpose of the proposed stay is to help resolve

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the issues before this court. Even if RED were to file its summary judgment motion in

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the near future, it is not clear that the court could decide the motion without knowing

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whether patent infringement occurred. Nor is it certain that the motion would resolve this

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case: discovery does not close until March 2019, and Plaintiffs suggest that they would

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request a Rule 56(d) deferment of any summary judgment motion until relevant discovery

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is completed. (Reply at 4); Fed. R. Civ. P. 56(d) (“If a nonmovant shows . . . it cannot

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present facts essential to justify its opposition, the court may: (1) defer considering the

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motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery;

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or (3) issue any other appropriate order.”).

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In short, RED does not point to any actual harm that would result from a stay,

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other than the general unpleasantness of being involved in a lawsuit. (See generally

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Resp.) But RED offers no authority that says involvement in litigation is itself a harm

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sufficient to defeat a stay. 2 (See generally Resp.). Courts that have denied stays have

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cited different and more significant harms than RED has alleged. See, e.g., Dependable

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Highway, 498 F.3d at 1066 (overruling a stay that would first force a company to enter

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into arbitration in a foreign country when it was unclear if the company even agreed to

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arbitrate); Lockyer, 398 F.3d at 1112 (finding that a stay was inappropriate where the stay

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Although Clinton v. Jones asks the court to take into account a party’s “interest in
bringing the case to trial,” this interest is tied to not delaying trial such that the parties could
suffer a “loss of evidence, including the inability of witnesses to recall specific facts, or the
possible death of a party.” 520 U.S. at 707-08.

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could allow an illegal concentration of market power and could threaten economic harm

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to electricity consumers). Moreover, RED’s argument is undermined by the fact that it is

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still subject to the California case, which it initiated.

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In sum, the court finds that RED will suffer minimal harm, if any, as a result of a

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limited stay pending resolution of the California case. Landis, 299 U.S. at 255.

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2. Possible Hardship or Inequity Resulting from Going Forward

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Because Plaintiffs move for the stay, the court considers any hardship or inequity

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that they might suffer as a result of going forward. See Lockyer, 389 F.3d at 1110;

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Washington, 2017 WL 1050354, at *4. Here, the court finds that denying Plaintiffs’

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motion would not subject them to hardship or inequity. Plaintiffs would have to engage

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in discovery and respond to RED’s summary judgment motion, “but ‘being required to

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defend a suit, without more, does not constitute a clear case of hardship or inequity’ for

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purposes of a stay.” Washington, 2017 WL 1050354, at *4 (quoting Lockyer, 389 F.3d at

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1112). This is all the more so because Plaintiffs initiated this suit. However, should the

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two juries reach inconsistent rulings, both parties could experience hardship or inequity.

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See Hawai’i v. Trump, No. CV 17-00050 DKW-KJM, 2017 WL 536826, at * 3 (D. Haw.

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Feb. 9, 2017). Therefore, the court considers this factor either neutral or slightly favoring

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a stay.

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3. The Orderly Course of Justice

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Finally, the court considers “the orderly course of justice measured in terms of the

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simplifying or complicating of issues, proof, and questions of law which could be

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expected to result from a stay.” CMAX, 300 F.2d. at 268 (citing Landis, 299 U.S. at

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254-55). Plaintiffs argue that the issues in the California case “are intimately related, and

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indeed foundational to issues here.” (MTS at 1.) RED claims the opposite. (See Resp. at

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8-11.) The court finds that there is a significant overlap of the issues such that a limited

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stay pending resolution of the California case would benefit the orderly course of justice.

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As explained above, the California case relates to whether Jinni Tech or Mr.

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Royce infringed RED’s rights by manufacturing and selling the JinniMag. See supra

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§ II.C. The present case is in large part concerned with whether comments attributable to

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RED, which accuse Jinni Tech and Mr. Royce of stealing RED’s intellectual property, are

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potentially actionable forms of disparagement or permissible truthful statements. Indeed,

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all of Plaintiffs’ claims ask this court to consider to some extent whether patent

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infringement occurred. (See FAC ¶¶ 119a-d (“These acts include false and disparaging

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statements: a. identifying Jinni Tech and JinniMag as a scam, b. accusing Jinni Tech of

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making false claims and committing violations, c. accusing Jinni Tech of stealing from

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RED and committing intellectual property theft, and d. labeling Jinni Tech as a criminal,

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a hacker, and a pirate.”); see also ¶¶ 109d; 128a-d; 138; 144; 151; 158; 166-68; 175-77.)

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Moreover, some of RED’s affirmative defenses require the court to know whether

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Plaintiffs committed patent infringement. For example, RED raises the affirmative

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defense that it was telling the truth when it purportedly said that Plaintiffs’ stole its

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intellectual property. (Answer ¶ 1.28.) But it will be difficult for the court to determine

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whether RED’s alleged statements are truthful if the court does not know whether

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Plaintiffs infringed RED’s intellectual property rights. And whether intellectual property

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infringement occurred is strictly the province of the Central District of California. (See

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10/20/17 Order at 37 (dismissing Plaintiffs’ patent claims under the first-to-file rule);

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1/25/18 Order at 7 (same).)

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For all these reasons, the court finds that a stay will promote judicial economy.

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Even though the issues in the California case are not identical to the issues here, the court

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finds that resolution of the California case will help decide the factual and legal issues

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before the court. Lockyer, 398 F.3d at 1113. At the very least, the California case will

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resolve the technical patent questions that will likely arise in this case. See CMAX, 300

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F.2d at 269 (granting a stay pending the resolution of administrative proceedings that

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would help develop evidence that related to highly technical tariff questions that were

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likely to arise in the district court case). Moreover, granting the stay will reduce the risk

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of inconsistent jury verdicts—e.g., the California jury finds that no patent infringement

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occurred, while the Washington jury finds that no defamation occurred because Plaintiffs

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did, in fact, infringe RED’s patent.

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Therefore, the court finds that a stay pending resolution of the California case will

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contribute to the orderly course of justice by simplifying the issues, proof, and questions

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of law in the present case.

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C.

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Judicial Estoppel
Judicial estoppel “is an equitable doctrine invoked by a court at its discretion.”

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Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990) (citing Religious Tech. Ctr. v. Scott,

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869 F.2d 1306, 1311 (9th Cir. 1989)). The doctrine “is invoked to prevent a party from

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changing its position over the course of judicial proceedings when such positional

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changes have an adverse impact on the judicial process.” Id. It “is most commonly

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applied to bar a party from making a factual assertion in a legal proceeding which

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directly contradicts an earlier assertion made in the same proceeding or a prior one.” Id.

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Here, RED argues that Plaintiffs should be judicially estopped from achieving a

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stay because Plaintiffs’ current position contradicts their prior opposition to RED’s

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motion to transfer in which they argued against a transfer because the two cases were

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distinct and should not be tried together. (Resp. at 11-13; see also MTD; MTD Resp.)

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The court disagrees.

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RED mischaracterizes Plaintiffs prior opposition to RED’s motion to transfer this
case to the Central District of California. Plaintiffs did not oppose transfer because the

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non-patent issues are unrelated to the patent claims in the California case. Rather,

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Plaintiffs opposed transfer by claiming that the Central District of California lacked

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personal jurisdiction over Plaintiffs and was an improper venue for the patent and

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non-patent claims. (See MTD Resp. at 18-22.) Moreover, Plaintiffs attempted to try all

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the claims together when they moved to transfer the California case to this district. See

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generally Red.com, Inc. v. Jinni Tech, Ltd., No. 8:17-cv-00382-CJC-KES, Order on

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MTD.

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The court finds that Plaintiffs have not changed their position during this litigation

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or contradicted their previous assertions, certainly not in a way that has had “an adverse

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impact on the judicial process.” Russell, 893 F.2d at 1037. Therefore, the court DENIES

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Defendants’ request to dismiss Plaintiffs’ motion on the basis of judicial estoppel.

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D.

Parameters of the Stay

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The general policy favors “stays of short, or at least reasonable, duration.”

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Dependable Highway, 498 F.3d at 1067. A court should articulate the limits of its stay.

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See Landis, 299 U.S. at 257. “When once those limits have been reached, the fetters

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should fall off.” Id.

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Here, Plaintiffs request a stay pending resolution of the trial in the California case.

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(MTS at 1.) The court finds that this request is reasonable. The California case is

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scheduled for trial on May 7, 2019, which is three months before this case’s current

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August 19, 2019, trial date. Therefore, except for matters related to discovery, the court

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stays this case until the proceedings before the Central District of California are

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complete. During this stay, however, the parties must continue conducting discovery

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according to the current scheduling order. (See generally Sched. Order.) The discovery

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cutoff date of March 8, 2019, remains in effect, as does the deadline for filing motions

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related to discovery. (See id. at 2.); cf. CMAX, 300 F.2d at 269 (granting a stay in a case

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where all discovery proceedings had concluded, but allowing the parties to apply to the

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court for further discovery during the stay if necessary). This stay will permit the court to

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conserve resources and benefit from the California case’s disposition of the patent claims.

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This limited stay, which addresses Defendants’ concerns about completing discovery,

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will work minimal hardship, if any, on the parties, and will guard against the risk of

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inconsistent rulings.

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Within fourteen (14) days of completion of the proceedings before the Central
District of California, the parties shall file a joint status report, briefly outlining the

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resolution of the California case and proposing a new case schedule. In addition, should

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circumstances otherwise change such that lifting the stay is warranted, either party may

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move to lift the stay. Once the stay is lifted, the court will enter a new scheduling order

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as soon as practicable.

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IV.

CONCLUSION

For the foregoing reasons, the court GRANTS Plaintiffs’ motion to stay as
described in this order. (Dkt. # 49.)
Dated this 26th day of October, 2018.

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A

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JAMES L. ROBART
United States District Judge

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