Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 1 of 8 Page ID #:899
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`Present: The
`Honorable
`
`James V. Selna
`
`Karla J. Tunis
`Deputy Clerk
`Attorneys Present for Plaintiffs:
`Brian Ledahl
`
`Sharon Seffens
`Court Reporter
`Attorneys Present for Defendants:
`Thomas Veh
`
`Proceedings: DEFENDANT’S MOTION TO STAY CASE PENDING INTER
`PARTES REVIEW
`
`Cause called and counsel make their appearances. The Court’s tentative
`ruling is issued. The Court and counsel confer. The Court DENIES the
`defendant’s motion and rules in accordance with the tentative ruling as follows.
`
` The Court DIRECTS counsel to confer with counsel on the related actions, prepare
`and submit a stipulation and proposed order regarding adjusting the Markman /
`Claim Construction hearing and related dates as necessary in light of this ruling.
`
`Defendants Seoul Semiconductor Co., Ltd. (“SSC”) and Seoul Semiconductor, Inc.
`(“SSI”) (collectively, “Seoul”) move to stay all proceedings in this litigation pending
`inter partes review. (Case No. 8:17-cv-00981, Mot., Docket No. 57.)1 Defendants
`Everlight Electronics Co., Ltd., Everlight Americas, Inc., Lite-On, Inc., and Cree, Inc.,
`(collectively with Seoul, “Defendants”) have joined in Seoul’s motion. (Case No.
`2:17-cv-04273, Docket No. 65; Case No. 2:17-cv-06050, Docket No. 54; Case No.
`2:17-cv-04263, Docket No. 56.) Plaintiff Document Security Systems, Inc. (“DSS”) has
`
`1All references to the docket are to Case No. 8:17-cv-00981 unless otherwise noted.
`CIVIL MINUTES - GENERAL
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`Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 2 of 8 Page ID #:900
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`filed an opposition. (Opp’n, Docket No. 60.) Seoul has replied. (Reply, Docket No. 61.)
`
`I. BACKGROUND
`
`DSS filed this action against Seoul on June 7, 2017, and subsequently filed two
`amended complaints asserting infringement of U.S. Patent Nos. 6,949,771 (“the ’771
`Patent”), 7,256,486 (“the ’486 Patent”), and 7,524,087 (“the ’087 Patent”). (Compl.,
`Docket No. 1; Second Amended Complaint (“SAC”), Docket No. 40.) DSS filed an
`action against Everlight Electronics Co., Ltd. and Everlight Americas, Inc., on June 8,
`2017, and the SAC alleges infringement of the ’771 Patent, the ’486 Patent, the ’087
`Patent, and U.S. Patent No. 7,919,787 (“the ’787 Patent”). (Case No. 2:17-cv-04273,
`Docket Nos. 1, 50.) DSS filed an action against Cree, Inc. on June 8, 2017, and the SAC
`alleges infringement of the ’771 Patent, the ’486 Patent, the ’087 Patent, and the’787
`Patent. (Case No. 2:17-cv-04263, Docket Nos. 1, 46.) DSS filed an action against Lite-
`On, Inc. and Lite-On Technology Corporation on August 15, 2017, and the First
`Amended Complaint (“FAC”) alleges infringement of the ’771 Patent, the ’486 Patent,
`and the ’087 Patent.2 (Case No. 2:17-cv-06050, Docket Nos. 1, 36.)
`
`On October 31, 2017, the Court issued an order setting the case schedule in each
`action. (Order, Docket No. 37.) A Markman hearing is scheduled for July 30, 2018, fact
`discovery closes on November 23, 2018, expert discovery closes on March 5, 2019, and
`trial is tentatively scheduled to begin on June 18, 2019. (Id. at 1-3.)
`
`On December 3, 2017, Seoul filed a petition for inter partes review (“IPR”) before
`the Patent Trial and Appeal Board (“PTAB”) against the ’771 Patent (IPR2018-00265).
`(Mot., Docket No. 57-16, Ex. O.) Subsequently, on December 21, 2017, Seoul filed an
`
`2 The Court notes that only Lite-On, Inc. and not Lite-On Technology Corporation joined in
`Seoul’s motion to stay. (Case No. 2:17-cv-06050, Docket No. 54.)
`CIVIL MINUTES - GENERAL
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`Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 3 of 8 Page ID #:901
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`IPR petition against the ’486 Patent (IPR2018-00333). (Mot., Docket No. 57-17, Ex. P.)
`Next, on January 25, 2018, Seoul filed an IPR petition against the ’087 Patent (IPR2018-
`00522). (Mot., Docket No. 57-18, Ex. Q.) According to Seoul, the PTAB’s “institution
`decisions are due by June 13 for the ’771 patent, June 28 for the ’486 patent, and July 29
`for the ’087 patent.” (Mot., Docket No. 57 at 4 (citing 35 U.S.C. § 314(b)).)
`
`For the following reasons, the Court denies the motion to stay.
`
`II. LEGAL STANDARD
`
`“The District Court has broad discretion to stay proceedings as an incident to its
`power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706 (1997); see also
`Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). In deciding whether to
`stay an action pending IPR, a court’s discretion is typically guided by three factors: “(1)
`whether discovery is complete and whether a trial date has been set; (2) whether a stay
`will simplify the issues in question and trial of the case; and (3) whether a stay would
`unduly prejudice or present a clear tactical disadvantage to the nonmoving party.”
`Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d 1028, 1030-31
`(C.D. Cal. 2013) (quoting Aten Int’l Co., Ltd v. Emine Tech. Co., Ltd., No. SACV 09-
`0843 AG (MLGx), 2010 WL 1462110, at *6 (C.D. Cal. Apr. 12, 2010)). The inquiry,
`however, is not limited to these factors and “the totality of the circumstances governs.”
`Allergan Inc. v. Cayman Chem. Co., No. SACV 07-01316 JVS (RNBx), 2009 WL
`8591844, at *2 (C.D. Cal. Apr. 9, 2009) (citation omitted).
`
`A.
`
`Stage of Litigation
`
`III. DISCUSSION
`
`This case is in its early stages. A schedule was entered in October 2017 and fact
`CIVIL MINUTES - GENERAL
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`Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 4 of 8 Page ID #:902
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`discovery is not set to close until November 2018, more than eight months away. (Order,
`Docket No. 37.) DSS has produced only the patents and their file histories. (Mot.,
`Docket No. 57 at 4.) Seoul has produced the prior art cited in its invalidity contentions.
`(Id.) DSS served its first set of interrogatories and requests for production on January 24,
`and Seoul served its first set of discovery requests on DSS on February 2. (Id. at 4-5.)
`Neither party has noticed or taken any depositions. (Id. at 5.) The parties exchanged
`proposed claim terms for construction on March 21, 2018, but they have not submitted
`claim construction briefs, and the Markman hearing is not scheduled until July 30, 2018.
`(Order, Docket No. 37 at 2-3.) Additionally, though a tentative trial date has been set,
`trial is not due to begin until June 18, 2019. (Id. at 1.) This factor therefore weighs in
`favor of a stay. See Wonderland Nursery Goods Co. v. Baby Trend, Inc., No. EDCV
`14-01153 VAP, 2015 WL 1809309, at *3 (C.D. Cal. Apr. 20, 2015) (finding stage of
`litigation weighed in favor of stay where “fact discovery is not yet complete, expert
`discovery has not yet begun, and a trial date has not yet been set. Furthermore, although
`the parties have submitted claim construction briefs, the Markman hearing has not yet
`taken place and not claim terms have been construed by this Court.”).
`
`B.
`
`Undue Prejudice
`
`DSS argues that it would suffer undue prejudice as a result of a stay. (Opp’n,
`Docket No. 60 at 8-12.) First, DSS argues that a stay would inflict unfair tactical benefits
`to Seoul because claim construction proceedings in the related coordinated cases will go
`forward even if a stay is granted. (Id. at 8-9.) However, given that the Defendants in the
`related cases have joined in the motion to stay and the Court is considering whether a stay
`should be granted in all of the related cases, this argument carries no weight.
`
`Additionally, DSS argues that a stay would diminish its eventual recovery. (Id. at
`9.) However, DSS is a non-practicing entity and thus is not directly competing against
`Defendants in the marketplace. (Mot., Docket No. 57 at 13-14.) DSS therefore does not
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`Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 5 of 8 Page ID #:903
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`risk losing additional sales to allegedly infringing competitors while the case is stayed.
`See Wonderland, 2015 WL 1809309, at *5. While DSS argues that a stay would deprive
`it of the time value of its judgment (Opp’n, Docket No. 60 at 9), the Court is not
`persuaded that monetary damages would ultimately be inadequate to compensate DSS for
`harm suffered by the alleged infringement.
`
`Despite this, at least some prejudice would flow from the fact that (1) the PTAB
`has not yet instituted IPR and (2) not all Defendants in the related cases have agreed to be
`bound by the IPR statutory estoppel provisions.3 Although a non-practicing entity, DSS
`is still the owner by assignment of the ’771 Patent, the ’087 Patent, and the ’486 Patent,
`and is entitled to assert the property rights embodied by its patents. Staying the case
`before the IPRs are even instituted, particularly as to the Defendants who have not joined
`Seoul in the filing of the IPR petitions, could unfairly delay the adjudication of DSS’s
`patent rights.
`
`This factor is neutral as to Seoul and weighs slightly against a stay as to the
`remaining Defendants.
`
`C.
`
`Simplification of the Issues
`
`The PTAB has yet to decide whether to institute any of Seoul’s IPR petitions as to
`
`3 The Court notes that Lite-On, Inc.’s statement of non-opposition and joinder to the motion to
`stay includes a footnote that states: “[b]y this Statement of Non-Opposition to Seoul’s Motion to Stay,
`Lite-On does not intend to waive, and hereby expressly preserves, all invalidity arguments raised in its
`invalidity contentions served in this action.” (Case No. 2:17-cv-06050, Docket No. 54 at 1 n.1.)
`Additionally, Everlight Electronics Co., Ltd. and Everlight Americas, Inc.’s notice of joinder to the
`motion to stay and Cree, Inc.’s notice of joinder to the motion to stay are silent on whether they intend
`to preserve all invalidity arguments. (Case No. 2:17-cv-04273, Docket No. 65; Case No.
`2:17-cv-04263, Docket No. 56.)
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`Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 6 of 8 Page ID #:904
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`any claims. Because of this, simplification of the issues is speculative. If IPR is
`instituted as to all asserted claims of the patents, there could be significant simplification
`of the issues. But institution is not a foregone conclusion. The PTAB’s institution
`decisions are due between June and July 2018. (Mot., Docket No. 57 at 4.)
`
`Although courts in this District have acknowledged the speculative nature of
`simplification where, as here, the PTAB has not yet made an institution decision, many
`courts have ultimately been persuaded that the potential to save significant judicial
`resources sways the analysis in favor of stay. Moreover, they note that if institution is
`denied, a stay will be relatively short. See, e.g., Game & Tech. Co. v. Riot Games, Inc.,
`No. CV 16-06486-BRO (SKx), 2016 WL 9114147, at *3 (C.D. Cal. Nov. 4, 2016) (“The
`undecided status of the petition clouds the simplification inquiry and makes
`simplification more speculative. ‘However, if an IPR is not instituted, the stay will be
`relatively short and the action can continue with minimal delay.’” (citing Wonderland,
`2015 WL 1809309, at *3)); see also Universal Elecs., Inc. v. Universal Remote Control,
`Inc., 943 F. Supp. 2d 1028, 1033 (C.D. Cal. 2013) (noting “[t]he undecided status of the
`petitions clouds the simplification inquiry,” but finding simplification factor weighed in
`favor of stay).
`
`DSS argues that multiple courts in this District have concluded that any possible
`simplification from a not-yet-instituted IPR petition is too speculative to support a stay.
`(Opp’n, Docket No. 60 at 6-7.) However, this Court adopts the majority position that
`even if IPR is not instituted, the simplification factor may still weigh in favor of a stay.
`See, e.g., Core Optical Techs., LLC v. Fujitsu Network Commc’ns, Inc., No. SACV 16-
`00437 AG (JPRx), 2016 WL 7507760, at *2 (C.D. Cal. Sept. 12, 2016); Limestone v.
`Micron Tech., No. SACV 15-00278 DOC (RNBx), 2016 WL 3598109, at *4 (C.D. Cal.
`Jan. 12, 2016); Polymer Tech. Sys., Inc. v. Jant Pharmacal Corp., No. LACV 15-02585
`JAK (Ex), 2015 WL 12860482, at *4-5 (C.D. Cal. Aug. 20, 2015); but see Polaris
`Innovations Ltd. v. Kingston Tech. Co., Inc., No. SACV 16-00300 CJC (RAOx), 2016
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`Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 7 of 8 Page ID #:905
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`WL 7496740, at *2 (C.D. Cal. Nov. 17, 2016); Hologram USA, Inc v. Vntana, 3D, LLC,
`No. CV 14-09489 BRO (AGRx), 2015 WL 12791513, at *3 (C.D. Cal. Dec. 7, 2015).
`Ultimately, at least as to Seoul, this argument is unpersuasive.
`
`While Seoul would be bound by statutory estoppel if an IPR was instituted, as
`already noted, the Defendants in the related cases have not agreed to be bound by the
`statutory estoppel provisions. Particularly as to these other Defendants, there would not
`be simplification of the issues because they would be able to re-raise in this litigation any
`of the same invalidity arguments made by Seoul during the instituted IPR. See
`Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., No. SACV 12-21-JST JPRX,
`2012 WL 7170593, at *2 (C.D. Cal. Dec. 19, 2012) (The estoppel effect of inter partes
`review carries less weight when there are several defendants that are not parties to, and
`thus are not bound by, the estoppel effects of the proceeding.); cf., Nichia Corp. v. Vizio,
`Inc., No. SACV1600545SJOMRWX, 2017 WL 3485767, at *5 (C.D. Cal. Feb. 2, 2017)
`(concluding that “because [Plaintiff] is the only plaintiff in this litigation and is the only
`other party to [Defendant’s] IPR Petitions, the Court would give the estoppel effect of
`any inter partes review proceedings full weight.”). Moreover, while Seoul’s IPR
`petitions address all asserted claims of the ’771 Patent, the ’087 Patent, and the ’486
`Patent, two of the related cases involve the additional ’787 Patent against which no IPR
`petition has been filed.
`
`This factor thus weighs in favor of a stay as to Seoul and is neutral or weighs
`slightly against a stay as to the Defendants in the related cases.
`
`Having considered the totality of the circumstances, the Court declines to issue a
`stay. Although the factors may weigh in favor of granting a stay as to Seoul, they weigh
`against staying the case as to the Defendants in the related cases. However, it makes little
`sense to stay the case as to Seoul but not as to the other Defendants.
`
`CV-90 (06/04)
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`Case 2:17-cv-04263-JVS-JCG Document 58 Filed 03/26/18 Page 8 of 8 Page ID #:906
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Date March 26, 2018
`
`CIVIL MINUTES - GENERAL
`Case No. SACV 17-00981 JVS(JCGx)
`Related Cases:
`2:17-cv-04263-JVS-JCG
`2:17-cv-06050-JVS-JCG
`2:17-cv-04273-JVS-JCG
`Document Security Systems, Inc. v. Seoul Semiconductor Co., et al.
`Document Security Systems, Inc. v. Cree, Inc.,
`Document Security Systems, Inc. v. Lite-On, Inc., et al,
`Document Security Systems, Inc. v. Everlight Electronics Co., Ltd. et al.,
`
`Title
`
`IV. CONCLUSION
`
`For the foregoing reasons, the Court denies Seoul’s motion to stay without
`prejudice to the filing of a renewed motion to stay if the IPR petitions are granted.
`
`IT IS SO ORDERED.
`
`Initials of Preparer
`
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`
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`CV-90 (06/04)
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