Case 4:17-cv-03745-PJH Document 50 Filed 11/07/17 Page 1 of 5
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`FISHER-PRICE, INC., et al.,
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`Plaintiffs,
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`v.
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`DYNACRAFT BSC, INC.,
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`Defendant.
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`Case No. 17-cv-3745-PJH
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`ORDER GRANTING MOTION TO STAY
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`Plaintiffs Fisher-Price, Inc. (“Fisher-Price”) and Mattel, Inc. (“Mattel”) filed this
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`action on January 17, 2017, alleging that defendant Dynacraft BSC, Inc. ("Dynacraft")
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`infringed U.S. Patent Nos. 7,222,684 ("the '684 patent"), 7,487,850 ("the '850 patent"),
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`7,621,543 ("the '543 patent"), 7,950,978 ("the '978 patent"). Mattel is the owner of the
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`patents-in-suit by way of assignment, and has granted Fisher-Price exclusive licenses to
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`make, use, and sell the inventions claimed by the four patents. See Cplt ¶¶ 8-16.
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`Northern District of California
`United States District Court
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`The case was originally filed in the District of Delaware, and was ordered
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`transferred to the Northern District of California on June 26, 2017, for improper venue.
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`On October 9, 2017, Dynacraft filed petitions for inter-partes review (“IPR”) of the
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`asserted claims in the patents-in-suit. Now before the court is Dynacraft’s motion for an
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`order staying the above-entitled action pending the IPR. Plaintiffs oppose the motion.
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`Having read the parties’ papers and carefully considered their arguments and the
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`relevant legal authority, the court hereby GRANTS the motion as follows.
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`"Courts have inherent power to manage their dockets and stay proceedings,
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`including the authority to order a stay pending conclusion of a PTO reexamination."
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`Case 4:17-cv-03745-PJH Document 50 Filed 11/07/17 Page 2 of 5
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`Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citations omitted).
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`In determining whether to grant a stay pending IPR, courts consider "(1) whether
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`discovery is complete and whether a trial date has been set; (2) whether a stay will
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`simplify the issues in question and trial of the case; and (3) whether a stay would unduly
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`prejudice or present a clear tactical disadvantage to the non-moving party." Evolutionary
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`Intelligence, LLC v. Facebook, Inc., 2014 WL 261837 at *1 (N.D. Cal. Jan. 23, 2014);
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`Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d 1028, 1030-31
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`(C.D. Cal. 2013).
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`The court finds that the first factor (stage of the litigation) favors a stay, because
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`the parties have not engaged in discovery, the claims have not been construed, and no
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`pretrial or trial dates have been set. While it is true that the motion to transfer venue
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`(necessitated in part by the U.S. Supreme Court’s ruling in TC Heartland LLC v. Kraft
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`Foods Group Brands LLC, 137 S.Ct. 1514 (2017)), resulted in some delay in the progress
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`of the case, it also appears from the entries on the docket that other factors entered into
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`creating the delay. There is certainly no indication that Dynacraft was solely responsible
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`for any delay.
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`The second factor (simplification of issues and trial) favors a stay or is at least
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`neutral. Plaintiffs argue that because the Patent Trial and Appeal Board (“PTAB”) has
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`not yet determined whether to institute the IPRs, it is not possible to determine whether a
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`stay will simplify the issues and the trial, and thus, assert that this factor favors denying
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`the stay. The court notes, however, that the scope of the litigation will likely be
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`significantly simplified and narrowed should the PTAB institute the IPRs and cancel or
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`narrow any of the asserted claims. Accordingly, the court finds that a stay is appropriate
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`at least until the PTAB has determined whether to institute the IPRs.
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`The third factor (prejudice to the nonmoving party) also favors a stay. Plaintiffs
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`seem to be arguing that a delay in adjudicating their patent infringement claims will cause
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`them prejudice, but courts have generally found that granting a stay does not cause the
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`nonmoving party undue prejudice where the party has not invested substantial time and
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`Northern District of California
`United States District Court
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`Case 4:17-cv-03745-PJH Document 50 Filed 11/07/17 Page 3 of 5
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`expense in the litigation. See, e.g., KLA-Tencor Corp. v. Nanometrics, Inc., 2006 WL
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`708661, at *3 (N.D. Cal. Mar. 16, 2006) (citing Rohm and Haas Co. v. Brotech Corp., 24
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`U.S.P.Q. 2d 1369, 1372 (D. Del. 1992)); see also Longitude Licensing Ltd. v. Apple Inc.,
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`2015 WL 12778777 at *6 (N.D. Cal. Oct. 29, 2015) (delay alone does not constitute
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`undue prejudice because "parties having protection under the patent statutory framework
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`may not 'complain of the rights afforded to others by that same statutory framework")
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`(citations omitted).
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`The District of Delaware evaluates prejudice to the plaintiff and potential undue
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`tactical advantage to the defendant by considering "(1) the timing of the reexamination
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`request; (2) the timing of the request for stay; (3) the status of reexamination
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`proceedings; and (4) the relationship of the parties.” Ever Win Int'l Corp. v. Radioshack
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`Corp., 902 F.Supp. 2d 503, 508 (D. Del. 2012).
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`With regard to the timing of the reexamination request, Dynacraft filed its IPR
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`petitions within the one-year statutory limit set in 35 U.S.C. § 315(b). Providing an
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`accused infringer is diligent, delay due to preparing an IPR petition, ascertaining the
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`plaintiff's theories of infringement, or otherwise researching the patents, does not unduly
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`prejudice the patent holder. See Asatek Holdings, Inc. v. Cooler Master Co., Ltd., 2014
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`WL 1350813 at *5 (N.D. Cal. Apr. 3, 2014). Given (as it appears from the docket) that
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`plaintiffs did not serve Dynacraft with the summons and complaint until April 14, 2017,
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`and given the necessity for Dynacraft to move for a change of venue, the court finds that
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`Dynacraft did not delay unduly in filing the IPR petitions.
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` With regard to the timing of the stay request, the request for the stay was filed
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`one day after the IPR petitions were filed. Plaintiffs cannot claim that the timing of the
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`request caused them any prejudice.
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`With regard to the status of reexamination proceedings, plaintiffs assert that
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`because they have three months to file their preliminary response, and because the
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`PTAB has three months from that date to decide whether to institute the IPRs, and a
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`further 12 months to issue a decision as to any IPRs it accepts for review (plus a possible
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`Northern District of California
`United States District Court
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`Case 4:17-cv-03745-PJH Document 50 Filed 11/07/17 Page 4 of 5
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`6-month extension), it could well be two years before there is any resolution, and
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`Dynacraft would be able to continue its alleged infringement for the entire commercial
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`life-cycle of the accused products. However, as explained below, the initial term of the
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`stay will extend only to the date the PTAB determines whether to institute the IPRs,
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`which, according to plaintiffs’ calculations, should occur within approximately five months
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`from the date of this order.
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`With regard to the relationship of the parties, it is true that Dynacraft and plaintiffs
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`are competitors, and that competition between parties can weigh in favor of finding undue
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`prejudice, see VirtualAgility, Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1318 (Fed. Cir.
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`2014), but plaintiffs have not provided compelling evidence that they would suffer
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`competitive injury as a result of a stay. Moreover, Dynacraft has argued persuasively
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`that any competitive injury could be remedied by monetary relief. Plaintiffs note that they
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`are also seeking injunctive relief in addition to monetary relief, but the fact that the prayer
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`for relief in the complaint seeks an order permanently enjoining Dynacraft from
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`committing further acts of infringement of the patents-in-suit is not in itself evidence of
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`irreparable harm.
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`The only one of these factors (for evaluating prejudice) that weighs against a stay
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`is the third one – the status of re-examination proceedings. However, there appears to
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`be some tension between the first two factors (the timing of the reexamination request
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`and the timing of the stay request) and the third factor (the status of the IPR
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`proceedings). That is, if a defendant waits until the PTAB has accepted review before
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`filing the request for a stay, the defendant might be deemed to have waited too long to
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`file the stay request, because at that point, the litigation of the case might be well
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`advanced.
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`In any event, the court finds that a stay would be beneficial, at least until PTAB
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`decides whether or not to institute the IPRs, and indeed has previously issued pre-
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`institution stays. See Advanced Connection Tech., Inc. v. Toshiba Am. Info. Sys., Inc.,
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`2013 WL 6335882 at *5 (N.D. Cal. Nov. 27, 2013); see also Polaris Innovations Ltd. v.
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`Northern District of California
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`Case 4:17-cv-03745-PJH Document 50 Filed 11/07/17 Page 5 of 5
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`Dell Inc., Case No. 16-7005 (Dkt. 83, June 15, 2017); Cyber Switching Patents, LLC v.
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`Schneider Elec., Case No. 14-2692 (Dkt. 49, Feb. 20, 2015).
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`There is certainly a potential for gamesmanship arising from the availability of
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`parallel proceedings for resolving the same dispute. However, “when a claim is
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`cancelled” in any such parallel proceeding, “the patentee loses any cause of action based
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`on that claim, and any pending litigation in which the claims are asserted becomes moot.”
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`Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1340 (Fed. Cir. 2013); see also
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`Pragmatus AV LLC v. Facebook, Inc., 2011 WL 4802958 at *3 (N.D. Cal. Oct. 11, 2011)
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`(benefits of granting a stay pending reexamination include potentially narrowing the
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`issues, reducing the complexity and length of trial, alleviating discovery problems relating
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`to prior art, and encouraging settlement or even dismissal if the patent is declared
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`invalid).
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`Thus, given the potential for this litigation to become moot, and given the fact that
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`this case is still at an extremely early stage, the court GRANTS the motion for a stay,
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`pending the PTAB’s decision regarding institution of the IPRs. The parties shall advise
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`the court as soon as the PTAB has made its determination. The court will reconsider the
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`advisability of the stay at that point, and is likely to continue the stay if the IPRs have
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`been instituted. If the petitions are denied, the court will lift the stay, and will schedule a
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`case management conference. The date for the hearing on this motion, previously set
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`for November 15, 2017, is VACATED.
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`Northern District of California
`United States District Court
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`IT IS SO ORDERED.
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`Dated: November 7, 2017.
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`__________________________________
`PHYLLIS J. HAMILTON
`United States District Judge
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