Milwaukee Electric Tool Corporation et al v. Hilti Inc

Filing 72

ORDER signed by Judge J P Stadtmueller on 10/2/15: granting 44 Motion to Stay; the case is stayed until completion of the instituted IPR proceedings, Nos. IPR IPR2015-00595, IPR2015-00596, and IPR2015-00597; the parties shall report back to thi s Court within 10 days of the issuance of Final Written Decision by the USPTO; denying without prejudice: 35 & 40 Motions for Summary Judgment and 59 & 70 Motions for Leave to File; and, granting 34 39 48 57 61 65 69 Motions to Seal. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MILWAUKEE ELECTRIC TOOL
CORPORATION, METCO BATTERY
TECHNOLOGIES LLC, AC (MACAO
COMMERCIAL OFFSHORE) LIMITED, and
TECHTRONIC INDUSTRIES CO. LTD.,
v.

Case No. 14-CV-1288-JPS

Plaintiffs,

HILTI, INC.,
Defendant.

MILWAUKEE ELECTRIC TOOL
CORPORATION, METCO BATTERY
TECHNOLOGIES LLC, AC (MACAO
COMMERCIAL OFFSHORE) LIMITED, and
TECHTRONIC INDUSTRIES CO. LTD.,
v.

Case No. 14-CV-1289-JPS

Plaintiffs,

CHERVON NORTH AMERICA, INC.,
Defendant.
MILWAUKEE ELECTRIC TOOL
CORPORATION, METCO BATTERY
TECHNOLOGIES LLC, AC (MACAO
COMMERCIAL OFFSHORE) LIMITED, and
TECHTRONIC INDUSTRIES CO. LTD.,
v.

Plaintiffs,

POSITEC TOOL CORPORATION and
POSITEC USA, INC.,
Defendant.

Case No. 14-CV-1295-JPS

MILWAUKEE ELECTRIC TOOL
CORPORATION, METCO BATTERY
TECHNOLOGIES LLC, AC (MACAO
COMMERCIAL OFFSHORE) LIMITED, and
TECHTRONIC INDUSTRIES CO. LTD.,

Case No. 14-CV-1296-JPS

Plaintiffs,

v.

ORDER

SNAP-ON INCORPORATED,
Defendant.

On August 5, 2015, in the above-captioned cases, the defendants filed
motions to stay1 pending completion of the U.S. Patent and Trademark
Office’s (“USPTO”) inter partes review (“IPR”).2 The motions are now fully
briefed and ready for disposition. After careful consideration, the Court will
grant the defendants’ motions to stay.
1.

BACKGROUND
The Court finds it helpful to begin its discussion with a general

overview of the relatively new IPR process, followed by factual background
specific to the above-captioned cases.
1.1

IPR Procedure

IPR is a relatively new procedure introduced by the Leahy–Smith
America Invents Act (“AIA”) through which the USPTO's Patent Trial and
1

The Court notes that the defendants in each separate case filed their own
motions to stay. However, in order to minimize redundant argument, the
defendants adopted Chervon’s arguments and case law citations in its brief. (Case
No. 14-CV-1289, Docket #65). Similarly, the plaintiffs incorporated by reference
their opposition to Chervon’s motion (Case No. 14-CV-1289, Docket #74). The Court
extends its sincere thanks to all parties for their efforts to avoid redundancy and
conserve judicial resources.
2

It may be very confusing to cite to the docket sheets in each of the separate
cases. As such, the Court will do so sparingly and only where absolutely necessary.

Page 2 of 21

Appeal Board (“PTAB”) may review the patentability of one or more claims
in a patent. See Pub.L. No. 112–29, § 6(a), 125 Stat. 284, 299–304 (2011),
codified at 35 U.S.C. §§ 311–319 (2013). This mechanism replaces the previous
inter partes reexamination procedure and converts the process from an
examinational to an adjudicative one. See Abbot Labs. v. Cordis Corp., 710 F.3d
1318, 1326 (Fed. Cir. 2013) (quoting H.R.Rep. No. 112–98, pt. 1, at 46–47
(2011)). Under this new procedure, any party other than the patent owner
may file a petition to institute IPR in order to establish that the identified
claims are invalid under 35 U.S.C. §§ 102 and/or 103. 35 U.S.C. §§ 311(a)–(b).
The petitioner must rely “only on…prior art consisting of patents
or printed publications.” 35 U.S.C. § 311(b). The patent owner may file
a preliminary response, “setting forth the reasons why no inter partes
review should be instituted” within three months of the petition, or may
expedite the proceeding by waiving the preliminary response. 37 C.F.R.
§ 42.107(a)–(b). The USPTO must decide whether to institute IPR within three
months of the patent owner’s preliminary response, or, in the event no
response is filed, by the last date on which the response could have been
filed. 35 U.S.C. § 314(b).
If the USPTO institutes IPR, the proceeding is conducted before a
panel of three technically-trained Administrative Patent Judges of the
newly-formed PTAB. See 35 U.S.C. §§ 6(a)–(c), 311. The parties are permitted
to take limited discovery and respond to each other’s arguments; they also
have the right to an oral hearing. 35 U.S.C. §§ 316(a). The PTAB must, under
most circumstances, issue its final determination within one year of the
institution date. 37 C.F.R. § 42.100(c). After receiving a final determination

Page 3 of 21

from the PTAB, the parties have the option to appeal to the Federal Circuit.
35 U.S.C. §§ 141(c), 319.
In enacting the AIA, Congress sought “to establish a more efficient
and streamlined patent system that will improve patent quality and limit
unnecessary and counterproductive litigation costs” and “to create a timely,
cost-effective alternative to litigation.” Changes to Implement Inter Partes
Review Proceedings, Post–Grant Review Proceedings, and Transitional
Program for Covered Business Method Patents, 77 Fed. Reg. 48680–01 (Aug.
12, 2012) (codified at 37 C.F.R. §§ 42.100 et seq.). To that end, IPR affords at
least three advantages to the parties and the district court in any corollary
civil action. First, IPR provides a path to receive expert guidance from the
PTO under a more accelerated timeline than the previous inter partes
reexamination procedure: petitioners must file for IPR within one year of
being served with a patent infringement complaint (35 U.S.C. § 315(b)) and
IPR, if instituted, will typically conclude within 18 months of the filing date.
In contrast, the average time from filing to conclusion of the previous IPR
procedure ranged from 28.9 to 41.7 months. See 77 Fed.Reg. 48680–01 at
48721. Second, the decision to institute IPR signals that at least one of the
subject claims may be modified or cancelled. See 35 U.S.C. § 314(a) (requiring
“a reasonable likelihood that the petitioner would prevail with respect to at
least 1 of the claims challenged in the petition” in order for IPR to be
instituted). This new threshold requirement presents a more stringent
standard than the previous “substantial new question of patentability” and
thus provides some assurance that the delay suffered as a result of IPR will
be worthwhile. Third, IPR imposes an estoppel requirement that precludes
the petitioner from asserting invalidity during a later civil action “on any

Page 4 of 21

ground that the petitioner raised or reasonably could have raised during that
inter partes review.” 35 U.S.C. § 315(e)(2). This critical limitation results in
more streamlined litigation and reduces the likelihood of inconsistent
judgments.
1.2

Case History

The plaintiffs filed eight separate cases in this Court on October 14,
2014, alleging patent infringement against several defendants; at the time of
the filing of the present motion, only four cases remained. The remaining
defendants are: Hilti, Inc. (“Hilti”) (Case No. 14-CV-1288), Chervon North
America, Inc. (“Chervon”) (Case No. 14-CV-1289), Positec Tool Corporation
and Positec USA, Inc. (“Positec”) (Case No. 14-CV-1295), and Snap-On
Incorporated (“Snap-On”) (Case No. 14-CV-1296 ) (collectively the “Related
Cases”).3 The plaintiffs allege that all the defendants infringed the following
patents: the ‘290 patent, the ‘173 patent, and the ‘510 patent. The plaintiffs
also allege infringement of two additional patents—the ‘257 patent and ‘167
patent—in their cases against defendants Chervon and Positec. All of the
patents-in-suit relate to alleged inventions in the area of Lithium-ion
(“Li-Ion”) powered handheld cordless power tools and related technologies
for controlling and charging battery packs for such tools.
On January 21, 2015, Chervon, Positec and Hilti filed three petitions
for IPR with the USPTO seeking to invalidate the three patents asserted in
each of the Related Cases: patent ‘290; ‘173; and ‘510. (Defs’ Exs. 12-14).
Plaintiffs filed responses to these petitions on May 3, 2015. On July 31, 2015,

3

Defendants Richpower Industries Inc., Sunrise Global Marketing, LLC,
Max USA Corp., and Tooltechnic Systems LLC all signed stipulations for voluntary
dismissal, and are no longer relevant.

Page 5 of 21

the USPTO granted all three of the petitions. The IPRs have been instituted
with respect to all claims of all remaining Patents-in-Suit in the Related
Cases. In its decisions, the USPTO found that there was a “reasonable
likelihood” that every claim of the ’290, ’173, and ’510 Patents is invalid and
unpatentable. (Defs’ Exs. 1–3, USPTO Institution Decisions). Under the
USPTO’s statutory schedule, final written decisions on the IPRs are expected
by July 31, 2016. 35 U.S.C. § 316(a)(11). Ultimately, when the USPTO issues
final written decisions in these IPRs, Chervon, Hilti, and Positec will be
bound by the estoppel provision 35 U.S.C. § 315(e)(2) that precludes them
from challenging the validity of the patents on any ground that could have
been reasonably raised in the IPRs.4
Additionally, on May 6 and May 22, 2015, Hilti and Snap-On,
respectively, filed five more IPR petitions against Milwaukee Tool’s patents.
The USPTO will issue decisions on the institution of these IPRs by November
18, 2015, and December 5, 2015, respectively. 35 U.S.C. § 314(b); 37 C.F.R.
§ 42.107(b).
2.

LEGAL STANDARD
A district court’s power to stay a proceeding is “‘incidental to the

power inherent in every court to control the disposition of the causes on its
docket with economy of time and effort for itself, for counsel, and for
litigants.’” Texas Indep. Producers & Royalty Owners Assoc. v. EPA, 410 F.3d
964, 980 (7th Cir. 2005) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)).
This authority extends to patent cases in which review by the USPTO has
4

Defendants note that Snap-On has also agreed to be estopped in its
litigation from asserting the prior art combinations used in the January 2015
IPR petitions after the USPTO issues its final written decisions. (Defs’ Opening Br.
at 5-6).

Page 6 of 21

been requested. See Black & Decker Inc. v. Positec USA, Inc., No. 13–3075, 2013
WL 5718460, *3 (N.D. Ill. Oct. 1, 2013) (citing Ethicon, Inc. v. Quigg, 849 F.2d
1422, 1427 (Fed. Cir. 1988)). A stay 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.” Evolutionary
Intelligence, LLC v. Millennial Media, Inc., No. 5:13–CV–4206, 2014 WL
2738501, at *2 (N.D. Cal. June 11, 2014).
Because IPR is a relatively new process, the Federal Circuit has not yet
spoken on the appropriate standard for evaluating motions to stay a related
district court action while IPR involving the same patent or patents is
pending. District courts have continued to apply the framework governing
stays with respect to the administrative process that preceded IPR, inter
partes reexamination. SurfCast, Inc. v. Microsoft Corp., No. 2:12-CV-333-JDL,
2014 WL 6388489, at *1 (D. Me. Nov. 14, 2014). In deciding whether to stay
a patent case pending IPR, courts have typically considered three factors:
(1) the stage of the litigation, including whether discovery is
complete and a trial date has been set; (2) whether a stay will
simplify the issues in question and the trial of the case; and (3)
whether a stay will unduly prejudice or present a clear tactical
disadvantage to the nonmoving party.
ACQIS, LLC v. EMC Corp., No. 14-CV-13560-ADB, 2015 WL 3617106, at *4 (D.
Mass. June 10, 2015) (quoting SurfCast, 2014 WL 6388489, at *1.
3.

DISCUSSION
3.1

Stage of Litigation

This factor requires that the Court consider whether a stay is
appropriate in light of the progress of litigation in a case. The Related Cases
were filed nearly one year ago. As noted above, the Court’s analysis under

Page 7 of 21

this prong often includes whether discovery is complete and whether a trial
date has been set. Id.
3.1.1

Discovery

To be sure, it is not true, as asserted by defendants, that the cases are
in their “early stages.” (Defs’ Opening Br. at 14). By August, when the
defendants filed the motion to stay, the case was approximately nine months
old and, by now, approximately one year old. As detailed below, the parties
have conducted a considerable amount of discovery. However, it is equally
not true, as asserted by the plaintiffs, that this case is anywhere near the
finish line for discovery, and other pretrial matters. (Pls’ Opp. at 6-8). And,
rather ironically, both sides blame each other for any delays in discovery.
Like many things in life, and particularly in complex legal issues, here the
answer lies somewhere in the middle of the parties’ arguments.
The plaintiffs argue that discovery is at an “advanced” stage because it
began approximately seven months ago, and the plaintiffs have: (1) produced
more than 294,000 pages of documents; (2) answered 20 interrogatories; (3)
produced two key inventors for three days of depositions; and (4) provided
470 pages of infringement claim charts, which detail their infringement case
and its claim construction positions. (Pls’ Opp. at 7). Further, the plaintiffs
note that Chervon has agreed to the deposition dates for six of its witnesses,
responded to 1,155 requests for admission, responded at least partially to 113
document requests, and responded to, at least partially, 19 interrogatories.
(Pls’ Opp. at 7). The plaintiffs agree that “some fact discovery and expert
discovery remain to be completed,” but argue that discovery is not further
along only due to the defendants delay in the production of documents. (Pls’
Opp. at 7).

Page 8 of 21

In contrast, the defendants argue that a significant amount of
discovery remains, noting that opening expert reports are not due until
October 6, 2015, and fact discovery does not close until December 5, 2015.
(Defs’ Opening Br. at 10) (citing Fed. R. Civ. P. 26(a)(2)(D)(i), (3)(B)).
Additionally, the defendants argue that discovery is ongoing because only
two depositions have been taken by defendants, and the plaintiffs have not
noticed or taken any depositions. (Defs’ Opening Br. at 10). The defendants
also argue that any delay in the Related Cases has been the plaintiffs’ own
doing, and point to the fact that discovery would be completed by now, but
for the plaintiffs’ own refusal to cooperate with the previously agreed upon
end of discovery prior to the July 31, 2015 summary judgment deadline.
(Def’s Reply at 5).
In considering the parties’ arguments, the Court finds that the stage
of discovery in this case weighs slightly in favor of granting a stay. The Court
recognizes the substantial amount of discovery completed to date; however,
it also recognizes that a significant amount of expert and fact discovery
remains, particularly as to the taking of depositions. The Court now turns to
address the second consideration of the stage of the proceedings relating to
trial.
3.1.2

Trial

The parties do not dispute that the Related Cases are currently set for
a jury trial on January 4, 2016. The plaintiffs, thus, argue that this factor
weighs heavily against granting a stay, and rely on several cases where
courts denied a stay where a trial date was set, including: Unifi Scientific
Batteries, LLC v. Sony Mobile Commcn’s AB, NO. 6:12-CV-224-JDL, 2014 WL
4494479 (E.D. Tex. Jan. 14, 2014) (denying motion to stay pending IPR where

Page 9 of 21

court had set trial date that would occur before IPRs would be completed);
SurfCast, Inc. v. Microsoft Corp., 6 F. Supp. 3d 136, 143 (D. Me. 2014) (“If the
parties proceed briskly to dispositive motions and trial, the Federal Circuit
will have the advantage of the outcome in this Court when considering the
result of the IPR process.”). (Pls’ Opp. at 8).
The Court well recognizes that many other courts have found that the
setting of a trial date weighs heavily in denying the grant of a stay. In this
case, however, the Court does not find this factor alone to be persuasive one
way or another. Unlike many other district courts, it is the common practice
of this Court to set trial dates in all civil cases at the outset, during the first
scheduling conference. Indeed, the Court announced the trial date in the
Related Cases on January 29, 2015, approximately eight months ago, during
its standard Federal Rule of Civil Procedure 16 scheduling conference. For
this reason alone, the fact that trial is set in this case adds little to the Court’s
analysis.
The more important factor to consider is whether the cases have
actually gone to trial. (Defs’ Reply at 6). In SmartFlash LLC v. Samsung
Elecs. Co., Ltd., No. 15-1701, 2015 WL 4603820 (Fed. Cir. July 30, 2015)
(nonprecedental), the Federal Circuit recently considered whether two
separate cases against Apple and Samsung, respectively, should be stayed
pending covered-business-method-review (“CBM”) proceedings, which, like
IPRs, were created by the AIA. Id. at *3. Ultimately, the Federal Circuit
upheld the denial of a stay in the Apple case, but, in contrast, found that the
district court erred in denying a stay of the Samsung case, even after giving
deference to the district court’s discretion. Id. at *10. In doing so, the court
noted that the “critical distinction” between the two cases was that the
Page 10 of 21

Samsung case had yet to go to trial. Id. at *9. The court further recognized that
the complexities and cost of a trial, including various witnesses from
overseas requiring interpreters, weighed in favor of a stay. Id.5
Similarly here, none of the Related Cases have gone to trial, and the
defendants anticipate requiring witnesses from overseas who will require
interpreters. (Defs’ Opening Br. at 11-12). Notably, the Related Cases will
require not one, but four, trials, since the Related Cases have not been
consolidated; rather, they have been coordinated for only pretrial purposes.
Additionally, although the parties’ motions for summary judgment are now
fully briefed,6 the Court has yet to resolve any of the issues. In light of the
foregoing, there remains considerable work to be done in the Related Cases,
particularly in relation to the numerous outstanding trials, and the Court,
therefore, finds this factor to weigh in favor of granting a stay.
3.2

Simplification of Issues

In the Court's view, the most important factor bearing on whether to
grant a stay in this case is the prospect that the IPR proceeding will result in
simplification of the issues before the Court. The Court finds that there is a
significant possibility that IPR will simplify the infringement issues for trial.

5

The plaintiffs argue that SmartFlash is distinguishable because it did not
involve IPR proceedings, but rather covered-business-method-review (“CBM”)
proceedings, a related post-grant review procedure created by the AIA. (Pls’ Opp.
at 11-12). The Court does not find this line of reasoning to be persuasive because
nothing in the Federal Circuit’s analysis suggests it based its decision on the fact
that the Samsung case involved CMB as opposed to IRP proceedings, and the factors
in considering a stay are nearly identical.
6

The summary judgment motions were not fully briefed on August 5, 2015,
when the defendants filed the motions to stay.

Page 11 of 21

The plaintiffs contend that “the only scenario under which the IPRs
will streamline the issues in this case is if the PTAB finds that all of the
asserted claims are invalid, and those decisions are upheld on appeal.” (Pls’
Opp. at 11) (emphasis in original). This assertion, however, is incorrect; the
question is merely whether the issues will be simplified, and not whether the
entire case will be resolved. See Serv. Solutions U.S. LLC v. Autel. US Inc., No.
13-10534, 2015 WL 401009, at *3 (E.D. Mich. Jan. 28, 2015) (finding that “an
IPR review need not dispose of a case completely to simplify the issues of a
case”); see also Evolutionary Intelligence, LLC v. Sprint Nextel Corp., No.
C-13-4513-RMW, 2014 WL 819277, at *5–6 (N.D. Cal. Feb. 28, 2014) (rejecting
proposition that IPRs must “eliminate all of the issues in this litigation”).
Indeed, the plaintiffs’ suggestion is but one of several ways the issues
may be simplified by the IPR proceeding. For example, if only some claims
are invalidated or canceled, then the Court and the parties will not have to
address the validity or infringement of those claims. See Asetek Holdings, Inc.
v. Cooler Master Co., Ltd., No. 13–CV–00457–JST, 2014 WL 1350813, at * 3 (N.D.
Cal. Apr. 3, 2014) (“[O]rdinarily, if any of the asserted claims are canceled [by
review] the ordeals of claim construction and trial will become unnecessary
for those claims.”) (citations and internal alterations omitted); Ignite USA,
LLC v. Pac. Mkt. Int’l, LLC, No. 14 C 856, 2014 WL 2505166, at *4 (N.D. Ill.
May 29, 2014) (“If the USPTO cancels all or some of the asserted claims, then
the issue of infringement for those claims would no longer exist.”).
Moreover, even in the event that none of the claims are invalidated,
the Court will still benefit from the USPTO’s expertise in evaluating the
scope and validity of those claims. NFC Tech. LLC v. HTC Am., Inc., No.
2:13-CV-1058-WCB, 2015 WL 1069111, *4 (E.D. Tex. Mar. 11, 2015) (stating
Page 12 of 21

that IPR was designed to “simplify proceedings before the courts and to give
the courts the benefit of the expert agency's full and focused consideration
of the effect of prior art on patents being asserted in litigation.”); SenoRx, Inc.
v. Hologic, Inc., 2013 WL 144255, 4 (D. Del. Jan. 11, 2013) (“[E]ven if certain (or
all) of the claims are ultimately confirmed, the Court will likely benefit…from
the PTO's analysis of prior art that is later presented to the Court.”).
The plaintiffs take issue with the fact that “there is little that can be
accurately predicted about the eventual outcome of an IPR or any
simplification that might result.” (Pls’ Opp. at 13). While that is certainly true,
it is also the case in every instance when IPR is initiated, as it is impossible to
predict with certainty the result. What is more persuasive to the Court,
however, is the fact that a panel of three technically-trained judges of the
USPTO’s Patent Trial and Appeal Board found a “reasonable likelihood” that
every claim of the Patents-in-Suit is invalid. Moreover, as the defendants
point out, as of February 2015, the USPTO reported that all reviewed claims
were found unpatentable in 63 percent of its final decisions, and that some
of the claims were found unpatentable in another 21 percent of the final
decisions, such that some or all reviewed claims were held unpatentable 84
percent of the time. (Defs’ Opening Br. at 2 n.3) (citing USPTO, PATENT
PUBLIC ADVISORY COMMITTEE QUARTERLY MEETING,PTAB UPDATE
at 15, http://www.uspto.gov/sites/default/files/documents/20150219_PPAC_
PTAB_Update.pdf (Feb. 19, 2015)). Given these considerations, the likelihood
of simplification of at least some of the issues in this case is high, and
certainly cannot be described as merely speculative.

Page 13 of 21

For all these reasons, the Court finds that there is a significant
possibility that the IPR will simplify the infringement issues for trial. Thus,
the second factor weighs heavily in favor of granting a stay.
3.3

Undue Prejudice or Clear Tactical Disadvantage

The last factor to be considered is whether a stay would unduly
prejudice or present a clear tactical disadvantage to the nonmoving party.
Advanced Micro Devices, Inc. v. LG Elec., Inc., No. 14-CV-01012-SI, 2015 WL
545534, at *4 (N.D. Cal. Feb. 9, 2015).
3.3.1

Prejudice

First, in addressing the question of prejudice, “‘delay inherent in the
reexamination process does not constitute, by itself, undue prejudice.’” ESCO
Corp. v. Berkeley Forge & Tool, Inc., No. C 09–1635 SBA, 2009 WL 3078463, at
*3 (N.D. Cal. Sept. 28, 2009) (quoting SKF Condition Monitoring, Inc. v. SAT
Corp., 2008 WL 706851, at *6 (S.D. Cal. Feb. 27, 2008)); accord Telemac Corp. v.
Teledigital, Inc., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006) (“[T]he likely
length of reexamination is not, in itself, evidence of undue prejudice….”).
Thus, the Court recognizes that granting a stay will delay the plaintiffs’ cases;
however, this factor alone is insufficient to meet the prejudice standard.7
The heart of the plaintiffs’ prejudice argument is that a stay will
prejudice them because they are direct competitors with the defendants. (Pls’
Opp. at 15). “It is well-established that courts are generally reluctant to stay
proceedings where the parties are direct competitors.” ImageVision.Net, Inc.
v. Internet Payment Exch., No. 12-CV- 054, 2013 WL 663535, at *6 (D. Del. Feb.

7

The Court notes that contrary to the plaintiffs’ assertion, granting a stay
will not “amount to an indefinite denial of [the plaintiffs’] access to the courts,”
which is hyperbole, to say the least. (See Pls’ Opp. at 14).

Page 14 of 21

25, 2013) (internal quotation marks omitted); see also Davol, Inc. v. Atrium Med.
Corp., No. 12-958-GMS, 2013 WL 3013343, at *3 (D. Del. June 17, 2013) (“An
important factor in determining if a stay will prejudice the plaintiff is
whether the parties are direct competitors.”); Boston Scientific Corp. v. Cordis
Corp., 777 F. Supp. 2d 783, 789 (D. Del. 2011) (recognizing the “particular
importance” of the fact that the parties are “direct competitors”). The
plaintiffs argue that they are direct competitors with the defendants, and that
defendants have “taken, and continue[] to take, market share away” from
them by infringing on their patents. (Pls’ Opp. at 17). The plaintiffs further
argue that because the parties are direct competitors, the fact that the
plaintiffs chose not to seek a preliminary injunction does not mean a stay is
harmless. See Davol, Inc., 2013 WL 3013343, at *4 (“[W]here the question of
direct competition remains unanswered, courts have sometimes considered
whether the plaintiff sought a preliminary injunction.” (internal quotation
marks and edits omitted)); SenoRx, Inc., 2013 WL 144255, at *8 (“[W]ith the
fact of direct competition not in serious dispute, the Court does not find
SenoRx’s litigation posture, including its decision not to file for a preliminary
injunction, to be particularly telling.”).
The defendants passingly suggest, in a footnote, that the parties may
not be direct competitors, stating, “the accused products are sold by third
party entities who are not named as defendants in this action.” (Defs’ Reply
at 12 n.5).
The defendants further argue that regardless of whether the parties
are competitors, the fact that the plaintiffs did not seek a preliminary
injunction in any of the Related Cases undermines any sense of urgency.
(Defs’ Reply at 12). In VirtualAgility, Inc. v. Salesforce.com, Inc., 759 F.3d 1307
Page 15 of 21

(Fed. Cir. 2014), where the parties were direct competitors, the Federal
Circuit found that a patentee’s failure to seek “preliminary injunctive relief
belie[s] its claims that it will be unduly prejudiced by a stay.” Id. at 1320. The
court recognized that the patentee’s arguments for not moving for a
preliminary judgment—that it was a small business with limited resources
and that the litigation process would move fast enough to make it
unnecessary—as valid, however, nonetheless found that the fact that it “was
not worth the expense” to ask for a preliminary injunction contradicted the
patentee’s assertion that it needed injunctive relief as soon as possible. Id. at
1319. The court ultimately found that, at best, the prejudice factor weighed
slightly against a stay. Id. at 1318.
To be sure, the record is far from clear on the issue of whether the
parties are in fact “direct competitors.” The plaintiffs, for their part, simply
assert that they are direct competitors, but provide no factual support for this
assertion. (Pls’ Opp. at 15-18). The defendants, however, do little to dispute
that they are in fact direct competitors—noting only that they do not actually
sell the products. (Defs’ Reply at 12 n.5). Considering the defendants’ lack
of any significant dispute, the Court can only assume that the parties are
direct competitors for purposes of its analysis;8 thus, the Court finds this
consideration to weigh in favor of denying a stay.

8

The Court notes that there is no evidence in the record as to number of
competitors in the parties’ market, which may affect the prejudice analysis. Air
Vent, Inc. v. Owens Corning Corp., No. 10-CV-1699, 2012 WL 1607145, at *3 (W.D. Pa.
May 8, 2012) (“the fact that there are other competitors in the market undermines
[the] assertion of undue prejudice because of loss of market value.” ); Nests Oil OBJ
v. Dynamic Fuels, LLC, No. 12-1744-GMS, 2013 WL 3353984 *3 (D. Del. July 2,
2013)(“The presence of multiple active firms in the relevant market…may decrease
the likelihood of such harm befalling the plaintiff”).

Page 16 of 21

On the other hand, as in VirtualAgility, the plaintiffs’ failure to file for
a preliminary injunction at least partially “belie[s]” their claim that they will
be unduly prejudiced by a stay. 759 F.3d at 1320. To be honest, that failure is
more egregious in this case: unlike in VirtualAgility, there is nothing in the
record, here, as to why the plaintiffs did not seek a preliminary injunction.
The best the plaintiffs can do is vaguely assert that the decision “could be
made for a number of reasons having nothing to do with irreparable harm.”
(Pls’ Opp. at 18).
Moreover, the Court has some doubt regarding the plaintiffs’ true
urgency in resolving this matter; indeed, the plaintiffs may have been aware
of at least some of the defendants’ alleged infringement as early as 2011,
when they sent a letter to Chervon offering a license and providing “a
complete list of all patents and pending applications in the li-ion field owned
by the TTI Group worldwide.” (Defs’ Ex. 5, 10/31/2011 TTI Letter). When
Chervon asked why it “require[d] a license for any specific patent(s) or
patent application(s),” the plaintiffs never responded, and instead remained
silent for nearly three years until they filed suit. (Defs’ Ex. 6, 12/21/2011
Chervon Letter.).
In sum, the Court finds that, at best, the prejudice factor weighs only
slightly in favor of denying a stay.
3.3.2

Clear Tactical Advantage

The Court finds that neither the timing of the request for IPR, nor the
timing of the stay request, indicate that the defendants seek an unfair tactical
advantage. The defendants requested IPR on January 21, 2015, approximately
three months after the plaintiffs initiated the Related Cases. (Defs’ Exs. 12-14,
January 2015 Petitions). The plaintiffs argue that the defendants “could have

Page 17 of 21

filed IPR petitions when the process first became available in September
2012.” (Pl. Opp. at 15); however, the plaintiffs cite no authority that a
defendant must or should seek IPR before litigation. Although it may have
been helpful to file the IPR petitions earlier, the Court cannot say that a threemonth delay suggests the defendants sought an unfair tactical advantage.
See, e.g., VirtaulAgility, 759 F.3d at 1319 (upholding the district court’s finding
of no “‘dilatory motive’” when defendant filed its CMB petition less than
four months after initiation of suit); Destination Maternity Corp. v. Target Corp.,
12 F. Supp. 3d 762, 766–68 (E.D. Pa. 2014) (finding four-month delay not
unreasonable); Software Rights Archive, LLC v. Facebook, Inc., No. 12–3970, 2013
WL 5225522, at *6 (N.D. Cal. Sept. 17, 2013) (finding timing reasonable where
petitions for IPR were filed almost a year after litigation began, but only four
months after the plaintiff had identified the asserted claims).
As to the timing of the stay request, the parties do not appear to
dispute that the defendants filed the motions to stay within a reasonable
time. The USPTO granted the petitions for IPR on July 31, 2015, and the
defendants promptly filed their current motion to stay on August 5, 2015.9
The plaintiffs speculate that future waves of IPR applications and motions to
stay may further delay the litigation. (Pls’ Opp. at 14). However, the Court
can only rule based on the present record before it, and does not find that

9

The defendants filed their first motion to stay prior to the January 29, 2015
scheduling conference, when the case was indeed in its infancy. The Court denied
the motion to stay, among other reasons, because the USPTO had not reached a
decision on whether to grant or deny the petitions for IPR. On February 10, 2015,
the defendants filed a petition for writ of mandamus requesting that the United
States Court of Appeals for the Federal Circuit vacate this Court’s order denying
Defendants’ motions to stay. On February 19, 2015, the Federal Circuit, issued an
order denying Petitioners' petition for a writ of mandamus and denying the motion.

Page 18 of 21

anything in the records suggests that the defendants seek an unfair tactical
advantage.
In light of the foregoing, the Court finds that the third factor weighs,
at best, only slightly against granting a stay.
3.4

Other Considerations

The plaintiffs raise various other issues in regards to their argument
to deny a stay, which the Court will briefly address. To begin, the plaintiffs’
opposition brief begins with a pull-at-the-heartstrings type argument,
asserting that the Court should deny the motions to stay, in short, because
they have proof that Chervon willfully infringed the plaintiffs’ patents. (See
Opp. at 1-3). The parties hotly contest the significance of certain emails as to
the question of infringement. However, the plaintiffs cite no authority, nor
is the Court aware of any, that supports the proposition that the merits of a
case should be considered in deciding a motion to stay a patent case pending
IPR. As such, the Court need not address this line of argument.
Finally, the Court will address the plaintiffs’ argument as related to
the Seventh Amendment guaranteeing the plaintiffs a jury trial on its
intellectual property rights. The plaintiffs argue that: (1) a stay would
interfere with the exclusive jurisdiction of this Court to adjudicate their
patent rights; and (2) that a stay would effectively deprive the plaintiffs of
their Seventh Amendment right to a jury trial. (Pls’ Opp. at 19-22). The
plaintiffs are essentially asking this Court to find the IPR process itself to be
unconstitutional; arguing that “the authority to adjudicate the validity of a
patent is vested solely in Article III courts,” and that the validity of a patent
must be adjudicated by a jury rather than an administrative body.” (See
Pls’ Opp. at 19–22). However, at this juncture, the Court finds it neither
the time nor the place for the plaintiffs’ argument, because they have
failed to exhaust their administrative remedies. See Cooper v. Lee, No.
Page 19 of 21

1:14–CV–00672–GBL–JFA, 2015 WL 686041, at *4 (E.D. Va. Feb. 18, 2015)
(citing McKart v. United States, 395 U.S. 185, 194 (1969)). If Plaintiffs truly
believe that IPR is unconstitutional, they can appeal the USPTO’s final
written decisions directly to the Federal Circuit. Id. at *4.
4.

CONCLUSION
In sum, the Court finds that the first factor weighs in favor of granting

a stay, the second factor weighs heavily in favor of granting a stay, and the
third factor weighs only slightly against granting a stay. After considering
and weighing these factors, the Court concludes that staying the case to await
the USPTO’s final decision is the preferable course. As such, the Court will
grant the defendants’ motions to stay the Related Cases until completion of
the instituted IPR proceedings, Nos. IPR IPR2015-00595,IPR2015-00596, and
IPR2015-00597. The parties shall report back to this Court within ten (10)
days of the issuance of Final Written Decisions by the USPTO in these
proceedings. Finally, in light of the stay, the Court finds it prudent to deny
the pending motions in the Related Cases, all without prejudice, and the
parties will be free to re-file such motions upon a lifting of the stay.
Accordingly,
IT IS ORDERED that the defendants’ motions to stay:
14-CV-1288, Docket #44;
14-CV-1289, Docket #64;
14-CV-1295, Docket #52; and
14-CV-1296, Docket #35,
be and the same are hereby GRANTED; the Court will grant a stay in the
Related Cases until completion of the instituted IPR proceedings, Nos. IPR
IPR2015-00595, IPR2015-00596, and IPR2015-00597;

Page 20 of 21

IT IS FURTHER ORDERED that the parties shall report back to this
Court within ten (10) days of the issuance of Final Written Decisions by the
USPTO in these proceedings;
IT IS FURTHER ORDERED that the pending motions:
14-CV-1288, Docket #35, #40, #59, #70;
14-CV-1289 Docket #55, #59 #69, #76, #92, #107, #110;
14-CV-1295, Docket #42, #47; and
14-CV-1296, Docket #26, #31, #39, #42, #74, #78, #81,
be and the same are DENIED without prejudice; and
IT IS FURTHER ORDERED that the parties’ motions to restrict
documents to case participants only:
14-CV-1288, Docket #34, #39, #48, #57, #61, #65, #69;
14-CV-1289, Docket #54, #56, #68, #73, #80, #83, #95, #99, #103, #109;
14-CV-1295, Docket #41, #46, #58, #62, #70, #74; and
14-CV-1296, Docket #27, #30, #38, #41, #44, #47, #50, #53, #56, #62, #66,
#70, #75, #80,
be and the same are hereby GRANTED.
Dated at Milwaukee, Wisconsin, this 2nd day of October, 2015.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

Page 21 of 21