ThroughPuter Inc v. Microsoft Corporation

Filing 109

ORDER granting Plaintiff's 104 Motion to Lift Stay. The parties shall confer and provide the Court with a joint status report and proposed revised scheduling order, due no later than 6/21/2024. Signed by Judge Barbara J. Rothstein. (SB)

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The Honorable Barbara J. Rothstein

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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NO. 22-cv-344-BJR
THROUGHPUTER, INC.,
ORDER GRANTING PLAINTIFF’S
MOTION TO LIFT STAY

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Plaintiff,
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v.
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MICROSOFT CORPORATION,
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Defendant.
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I.

INTRODUCTION

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ThroughPuter, Inc. initially asserted patent infringement of nine patents1 against Microsoft

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Corporation in the Eastern District of Virginia on March 31, 2021. Compl., ECF No. 1. The case

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was transferred to this Court in March 2022, and subsequently consolidated with ThroughPuter,

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Inc. v. Microsoft Corp., No. 2:22-cv-492-BJR, which was filed in the Western District of

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Washington on April 13, 2022, asserting patent infringement of two additional patents2. ECF Nos.

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61, 62, 89. An amended complaint was filed in the consolidated case. Am. Compl., ECF No. 92.

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United States Patent Nos. 9,424,090 (the “’090 Patent”); 9,632,833 (the “’833 Patent”); 10,133,599 (the “’599
Patent”); 10,310,902 (the “’902 Patent”); 10,318,353 (the “’353 Patent”); 10,430,242 (the “’242 Patent”); 10,437,644
(the “’644 Patent”); 10,620,998 (the “’998 Patent”); and 10,963,306 (the “’306 Patent”).
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United States Patent Nos. 11,50,948 (the “’948 Patent”); and 11,036,556 (the “’556 Patent”). These patents had not
yet issued when ThroughPuter filed its original action in the Eastern District of Virginia.

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ORDER GRANTING PLAINTIFF’S MOTION TO LIFT STAY

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Meanwhile, Microsoft filed petitions for inter partes review (“IPR”) by the Patent Trial and Appeal

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Board (“PTAB”) of seven of the eleven patents at issue. See Mot. 2, ECF No. 104. This case has

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been stayed pending resolution of the IPR proceedings. Stay Order, ECF No. 102. Now pending

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before the Court is Plaintiff ThroughPuter, Inc.’s Motion to Lift Stay and Request for Status

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Conference. Mot., ECF No. 104. Having reviewed the materials3 and the relevant legal authorities,

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the Court will grant ThroughPuter’s motion and lift the stay. The reasoning for the Court’s decision

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follows.

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II.

BACKGROUND

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ThroughPuter developed patents in cloud computing, computing acceleration, and related

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technologies beginning in 2010. Am. Compl. ¶ 27. In 2013, ThroughPuter reached out to Microsoft

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about a potential collaboration with its cloud computing team. Id. ¶¶ 2-3. ThroughPuter alleges that

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despite ongoing communications between them, in 2015, Microsoft filed patent applications on the

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same technologies disclosed by ThroughPuter to Microsoft without representing ThroughPuter’s

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inventions. Id. ¶¶ 2-3, 7, 9. ThroughPuter claims that Microsoft’s copying and infringement of its

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intellectual property has damaged ThroughPuter’s prospects for raising startup capital and entering

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the market while Microsoft has scaled up “the world’s largest and most successful cloud computing

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platform.” Id. ¶¶ 4, 7, 10.

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After ThroughPuter filed this lawsuit for patent infringement, Microsoft filed petitions for

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IPRs and filed a motion to stay this case pending resolution of the IPRs. Microsoft’s Mot. Stay,

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ECF No. 82. Initially, this Court denied as premature Microsoft’s motion to stay the case. Order

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Denying Stay, ECF No. 91. The Court also expressed concern over the significant delay in the case

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Including the motion, ECF No. 104; Microsoft’s response in opposition, ECF No. 106; and ThroughPuter’s reply,
ECF No. 108; together with attached exhibits and the record of the case to date.

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ORDER GRANTING PLAINTIFF’S MOTION TO LIFT STAY

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and the subsequent prejudice to ThroughPuter. Id. But shortly thereafter, the parties raised a

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discovery dispute that caused the Court to reexamine the denial. Stay Order, ECF No. 102. Upon

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reexamination, the Court determined that the PTAB’s resolution of Microsoft’s IPR petitions would

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simplify the issues, and this case was stayed. Id.

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Since the case was stayed, the PTAB denied institution on four of the seven IPR petitions

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filed by Microsoft. Mot. 2, 4. Of the three remaining petitions, one has concluded without appeal,

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and two are pending ThroughPuter’s appeal at the Federal Circuit Court of Appeals. Id. The parties

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estimate March 2025 for a decision from the Federal Circuit on these two petitions. Id. at 5, 7;

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Opp’n 4, ECF No. 106. Currently, nine of the eleven patents asserted by ThroughPuter are no longer

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subject to either IPR or appeal. Mot. 2. ThroughPuter has agreed that the two patents that are under

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appeal should not be litigated pending resolution but asks the Court to lift the stay as to the nine

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asserted patents that are not subject to any IPR proceeding. Id.

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Additionally, ThroughPuter has filed two other lawsuits that Microsoft asserts are related to

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this case—one in the Western District of Texas against Amazon Web Services, Inc. (Case No. 1:22-

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cv-01095-DAE), and one against Microsoft in the United Kingdom (Claim No. HP-2022-000009).

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Opp’n 4-5.

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III.

DISCUSSION

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A stay is “an exercise of judicial discretion, and the propriety of its issue is dependent upon

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the circumstances of the particular case.” Nken v. Holder, 556 U.S. 418, 433 (2009) (citations

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omitted, cleaned up). “The corollary to this power is the ability to lift a stay previously imposed.”

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Boyle v. Cnty. of Kern, No. 1:03-cv-05162-OWW-GSA, 2008 WL 220413, at *5 (E.D. Cal. Jan.

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25, 2008). The Court considered three factors when determining whether to stay litigation pending

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IPR: (1) whether a stay will simplify the issues in question, (2) the status of the case, and (3) whether

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a stay will unduly prejudice the non-moving party. See Order Denying Stay 2 (citing Pac.

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Bioscience Lab’ys, Inc. v. Pretika Corp., 760 F. Supp. 2d 1061, 1063 (W.D. Wash. 2011)) (finding

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that the factors did not support a stay); Order Staying Case (finding on reconsideration that the

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PTAB’s resolution of the IPR petitions would simplify the issues and granting the stay). Given the

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change in circumstances since the stay was granted in August 2022, the Court now considers these

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factors again to determine the propriety of maintaining the stay.

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A. Simplify the issues

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Microsoft did not file IPR petitions for four patents (the ‘599 Patent, the ‘902 Patent, the

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‘644 Patent, and the ‘998 Patent). Reply 2, ECF No. 108. The PTAB issued decisions denying

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institution of IPRs for four patents (the ‘242 Patent, the ‘306 Patent, the ‘556 Patent, and the ‘948

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Patent). Alciati Decl. ¶¶ 2-4, 6, ECF No. 105 (attaching excerpts of the decisions). The PTAB issued

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a decision on the ‘353 Patent, determining that some challenged claims are unpatentable. Id. ¶ 5.

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ThroughPuter did not appeal this decision, so it is final. Mot. 4. ThroughPuter appealed the PTABs

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decisions on the ‘833 and ‘090 Patents. Id.; Opp’n 1. Therefore, none of the asserted patents have

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pending IPR proceedings. Although two patents remain under appeal, the landscape has changed

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dramatically from August 2022 when this case was stayed. The case for a stay on simplification

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grounds no longer applies.

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Microsoft argues that the stay should continue until the appeals have concluded, because if

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ThroughPuter prevails on appeal, it intends to litigate the appealed patents. Opp’n 3. Microsoft

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contends that lifting the stay on the nine patents could lead to two separate litigations. Id.

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ThroughPuter notes, however, that a decision is expected in less than a year, and should it prevail

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in the appeals and pursue its assertion of the ‘833 and ‘090 Patents, the case schedule can be easily

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adjusted to avoid duplication of effort. Reply 3-4. ThroughPuter also notes that the final resolution

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of the appealed patents will have little bearing on the issues relating to the nine valid patents. Mot.

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4-5. While it is possible that the Federal Circuit will come to a different conclusion than did the

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PTAB, the possibility does not weigh heavily against proceeding with the nine valid patents. See

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Elm 3DS Innovations, LLC v. Samsung Elecs. Co., Ltd., CV 14-1430-LPS-CJB, 2018 WL 1061370,

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at *2 (D. Del. Feb. 26, 2018).

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B. Status of the case

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This case was stayed in its early stages as far as discovery is concerned, but it had already

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been significantly delayed at that time. Order Denying Stay 3. The Court initially denied a stay

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based partially on that delay. Id. The case has now been delayed over three years with virtually no

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progress towards resolution. As Microsoft notes, at the time the case was stayed, there were still

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15 months remaining in the case schedule. Opp’n 7. Based on the current circumstances, this weighs

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in favor of lifting the stay and allowing the case to proceed with a new schedule that can be adjusted

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as needed to accommodate a decision on the two patents under appeal. The Court agrees with

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ThroughPuter that “the existence of a stay, on its own, does not justify its perpetuation: this case

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would remain frozen in its nascent stage if the Court continued the stay.” Mot. 4 (quoting Oyster

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Optics, LLC v. Ciena Corp., 17-CV-05920-JSW, 2019 WL 4729468, at *2 (N.D. Cal. Sept. 23,

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2019)).

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C. Prejudice to ThroughPuter

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The Court previously found that ThroughPuter would be prejudiced by a stay. Order

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Denying Stay 4. Microsoft argues that since ThroughPuter has managed to survive to this point, its

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concerns about continued existence as a precarious start-up company were, and are, unfounded.

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Opp’n 7. However, a plaintiff is always prejudiced by delay in seeking justice, and there appears to

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be little to gain in making ThroughPuter wait further to move this case forward now that the IPR

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reviews are completed. See Neste Oil OYJ v. Dynamic Fuels, LLC, CV 12-1744-GMS, 2013 WL

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3353984, at *2 (D. Del. July 2, 2013) (noting “that staying a case pending PTO review risks

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prolonging the final resolution of the dispute and thereby may result in some inherent prejudice to

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the plaintiff.”).

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D. Cases in other jurisdictions

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Although not related to lifting the stay pending IPR, Microsoft contends that the courts in

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two other cases are positioned to resolve issues germane to this litigation, one in the Western

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District of Texas against Amazon, and one in the United Kingdom against Microsoft. Opp’n 4-6.

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In the Western District of Texas, the briefing of a summary judgment motion will be complete by

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May 30, 2024, and if Amazon prevails, several of ThroughPuter’s patents may be found invalid.

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Id. at 5. However, ThroughPuter notes that such a ruling would not impact the nine patents at issue

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in this case, and any ruling related to inventorship of patents that are not asserted against Microsoft

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will not serve to simplify this case. Reply 5. The United Kingdom litigation involves a

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ThroughPuter patent that is related to patents asserted in this case, and Microsoft argues that

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resolution in that proceeding would develop technical evidence relevant to this case. Opp’n 5-6.

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But a different patent is at issue, and it will be analyzed under United Kingdom law, not United

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States patent law. Although resolution in these other cases may have some evidentiary value, it does

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not add sufficient weight to change the Court’s conclusion that it is appropriate to lift the stay

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previously imposed in this case.
Accordingly, the Court will grant ThroughPuter’s motion to lift the stay in this case. The

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case will proceed with a revised scheduling order to be jointly proposed by the parties.

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ORDER GRANTING PLAINTIFF’S MOTION TO LIFT STAY
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IV.

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CONCLUSION

For the foregoing reasons,
1. Plaintiff ThroughPuter, Inc.’s Motion to Lift Stay and Request for Status
Conference, ECF No. 104, is GRANTED; and

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2. The parties shall confer and provide the Court with a joint status report and proposed
revised scheduling order, due no later than June 21, 2024.

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DATED this 24th day of May 2024.

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Barbara Jacobs Rothstein
U.S. District Court Judge

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