`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`
`SOUTHERN DISTRICT OF CALIFORNIA
`
`QUALCOMM INCORPORATED,
`
`v.
`
`APPLE INCORPORATED,
`
`Plaintiff,
`
`Defendant.
`
`
`
` Case No.: 3:17-cv-2402-CAB-MDD
`
`ORDER ON MOTION TO STAY
`[Doc. No. 172]
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Defendant Apple, Inc., has filed a motion to stay litigation while the patents at issue
`
`are under petition for Inter Partes Review (“IPR”) by the U.S. Patent Trial and Appeal
`
`Board (“PTAB”) of the U.S. Patent and Trademark Office (“PTO”). The Court finds the
`
`motion suitable for determination on the papers submitted and without oral argument in
`
`accordance with Civil Local Rule 7.1(d)(1). For the reasons set forth below, the motion
`
`is granted.
`
`I.
`
`Background
`
`On November 29, 2017, plaintiff Qualcomm Inc., filed a complaint against Apple,
`
`asserting infringement of United States Patents Nos. 7,834,591 (“the ‘591 patent”);
`
`8,229,043 (“the ‘043 patent”); 8,447,132 (“the ‘132 patent”); 8,768,865 (“the ‘865
`
`patent”); 8,971,861 (“the ‘861 patent”); and 9,024,418 (“the ‘418 patent”). [Doc. No. 1.]
`
`Following a joint motion to extend Apple’s time to file a responsive pleading, Apple
`
`1
`
`3:17-cv-2402-CAB-MDD
`
`
`
`Case 3:17-cv-02402-CAB-MDD Document 188 Filed 08/29/18 PageID.3594 Page 2 of 7
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`answered on January 22, 2018. [Doc No. 47.] The Court held a case management
`
`conference on February 7, 2018, at which time Apple represented it intended to seek IPR
`
`on all of the asserted patents and indicated an expectation of filing the applications with
`
`the PTAB within the next two months. [Doc No. 60.]
`
`The parties were directed to proceed with the exchange of infringement and
`
`invalidity contentions pursuant to this District’s Local Patent Rules. Dates were set for the
`
`filing of claim construction briefs, and a tutorial and claim construction hearing was
`
`scheduled for September 12 and 13, 2018. On July 31, 2018, however, Apple filed the
`
`instant motion [Doc. No. 172] for a stay based on its filed applications for IPR of all the
`
`10
`
`patents asserted in the litigation.1 Qualcomm filed an opposition to the motion to stay on
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`August 21, 2018. [Doc. No. 178.] Apple filed a reply on August 28, 2018. [Doc. No. 187.]
`
`Apple has petitioned for review of all the asserted claims of the six patents at issue
`
`in this case with the exception of three asserted claims in the ‘132 patent. The PTAB’s
`
`decisions whether to institute will not issue until February 2019 and may not result in
`
`institution of IPR as to any of the patents. Nevertheless, the Court finds it a prudent exercise
`
`of resources to temporarily stay this matter until the PTAB decides whether to institute
`
`17
`
`IPR.
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`II. Legal Standard
`
`Courts have inherent power to manage their dockets and stay proceedings. The party
`
`seeking a stay bears the burden of showing that such a course is appropriate. See Landis
`
`v. N. Am. Co., 299 U.S. 248, 255 (1936). A stay pending an administrative proceeding is
`
`not automatic; rather, it must be based upon the circumstances of the case before the court.
`
`See Comcast Cable Commc’ns Corp. LLC v. Finisar Corp., No. 06-cv-04206-WHA, 2007
`
`
`
`1 Regarding the ‘043 patent, the petition for IPR was filed by Intel Corporation, identifying Apple as
`another real-party-interest to the challenge. Consequently, Apple is subject to estoppel under 35 U.S.C. §
`315 (e) as to any invalidity challenges raised, or that reasonably could have been raised, in Intel’s IPR.
`The Court therefore does not consider Apple’s representation that it has petitioned for the review of the
`‘043 patent as incorrect.
`
`2
`
`3:17-cv-2402-CAB-MDD
`
`
`
`Case 3:17-cv-02402-CAB-MDD Document 188 Filed 08/29/18 PageID.3595 Page 3 of 7
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`WL 1052883, at *1 (N.D. Cal. Apr. 5, 2007) (“From a case management perspective, the
`
`possible benefits must be weighted in each instance against the possible drawbacks.”).
`
`Courts generally consider three factors to determine whether to impose a stay
`
`pending parallel proceedings in the PTAB: (1) whether a stay will simplify the issues in
`
`question and trial of the case; (2) whether discovery is complete and a trial date set; and
`
`(3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the
`
`nonmoving party. TAS Energy, Inc. v. San Diego Gas & Elec. Co., No. 12-cv-2777-GPC-
`
`BGS, 2014 WL 794215, at *3 (S.D. Cal. Feb. 26, 2014) (citing Telemac Corp. v.
`
`Teledigital, Inc., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006)). Judicial consideration is
`
`not limited to these factors, but rather can include a review of totality of the circumstances.
`
`A court’s consideration of a motion to stay should be guided by “the liberal policy in favor
`
`of granting motions to stay proceedings pending the outcome of USPTO reexamination or
`
`reissuance proceedings.” ASCII Corp. v. STD Entm’t USA, Inc., 844 F. Supp. 1378, 1381
`
`14
`
`(N.D. Cal. 1994).
`
`III. Discussion
`
`A. Simplification of Issues and Trial
`
`Apple has petitioned for review of all the asserted claims of the patents at issue, with
`
`the previously noted exception of three claims of the ‘132 patent. Decisions whether to
`
`institute on each of these petitions will necessarily impact the scope of the issues for
`
`litigation and trial. Should the PTAB institute on any one or more of the petitions, those
`
`patents and all their asserted claims will be subject to review “in accordance with or in
`
`conformance to the petition.” SAS Inst., Inc. v. Iancu, 138 S.Ct. 1348, 1355 (2018)
`
`(whether to institute an inter partes review is a binary choice – “either institute review or
`
`don’t”). As a result, for any petition on which the PTAB institutes IPR, each of the
`
`challenged claims will either (1) be confirmed, estopping Apple from asserting invalidity
`
`challenges in this case that it raised or could reasonably have raised in the IPR, or (2) be
`
`invalidated, reducing the number of issues before the Court.
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`3
`
`3:17-cv-2402-CAB-MDD
`
`
`
`Case 3:17-cv-02402-CAB-MDD Document 188 Filed 08/29/18 PageID.3596 Page 4 of 7
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
` This factor weighs in favor of a limited stay of proceedings until the PTAB issues
`
`its decisions on whether to institute IPR. See e.g., Wi-Lan Inc. v. LG Elecs. Inc., No. 3:17-
`
`cv-00358-BEN-MDD, 2018 WL 2392161, at*2 (S.D. Cal May 22, 2018) (while review is
`
`not guaranteed and, therefore, the benefits of review are only speculative at this juncture,
`
`in light of the Supreme Court’s mandate to review all contested claims upon a grant of IPR
`
`and the complexity of this case the Court finds this factor weighs in favor of a limited stay);
`
`Nichia Corp. v. Vizio, Inc., SA CV 18-00362 AG (KESx), 2018 WL 2448098, at *2-3 (C.D.
`
`Cal. May 21, 2018) (Vizio filed IPR petitions on all the asserted claims, and although the
`
`potential for simplification was speculative at the time, the Court determined the stay
`
`would be relatively short and the action could continue with minimal delay if institution
`
`was denied); Am. GNC Corp. v. LG Elecs. Inc., No. 3:17-cv-1090-BAS-BLM, 2018 WL
`
`1250876, at *3 (S.D. Cal. March 12, 2018) (if the court were to wait for the PTAB to accept
`
`the IPR petitions before staying the case, the court risks wasting resources; the limited
`
`nature of a stay outweighs the risk of unnecessary expenditure of resources before the
`
`15
`
`determination to institute or not).
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`In this case with six patents and numerous claims at issue, the PTAB’s decisions
`
`whether to institute will impact the contours of the case. If the PTAB institutes and cancels
`
`all the asserted claims of any patent, it will remove that patent from the case, thereby
`
`significantly reducing the scope of this litigation. Alternatively, if the PTAB declines to
`
`institute or institutes and confirms any patent, statutory estoppel may simplify the assertion
`
`of invalidity defenses. This factor favors a temporary stay.
`
`B. Timing
`
`Regarding the stage of the proceedings, courts consider timing issues such as
`
`whether discovery is complete, the status of claim construction, and whether a trial date
`
`has been set. Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d
`
`1028, 1030-31 (C.D. Cal. 2013). Since the case management conference in February 2018,
`
`the parties have engaged in motion practice regarding the pleadings, exchanged
`
`infringement and invalidity contentions, provided discovery responses, and submitted
`
`4
`
`3:17-cv-2402-CAB-MDD
`
`
`
`Case 3:17-cv-02402-CAB-MDD Document 188 Filed 08/29/18 PageID.3597 Page 5 of 7
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`briefing for the claim construction hearing. The Court is cognizant of the resources
`
`expended by the parties to prepare for the scheduled claim construction hearing, but the
`
`hearing has not occurred yet and the Court has not construed the claims. Moreover,
`
`Qualcomm’s submissions to the PTAB in response to Apple’s IPR petitions may inform
`
`the construction of disputed claim terms. See Core Optical Techs, LLC v. Fujitsu Network
`
`Commc’ns, Inc., No. SA CV 16-00437-AG (JPRx), 2016 WL 7507760, at *2 (C.D. Cal.
`
`Sept. 12, 2016) (even if no patent claim is eliminated, the intrinsic record developed during
`
`the IPR may inform on issues like claim construction).
`
`Significant fact and expert discovery and dispositive motion practice are still ahead.
`
`A pretrial conference is presently scheduled for June 2019, but no trial date has been set.
`
`[Doc. No. 108.] Trial is not imminent and the majority of fact and expert discovery is still
`
`to be completed. The stage of the proceedings does not weigh against issuing a temporary
`
`stay. See, e.g., TAS Energy, Inc., 2014 WL 794215, at *3 (“While the case is not in its
`
`early stages, it is in the midst of discovery and no trial date has been set. Moreover,
`
`significant amount of work still remains such as expert discovery, summary judgment
`
`motions and trial.”); PersonalWeb Techs, LLC, v. Facebook, Inc., Case Nos. 5:13-CV-
`
`01356-EJD; 5:13-CV-01358-EJD; 5:13-CV-01359-EJD, 2014 WL 116340, at *4 (N.D.
`
`Cal Jan. 13, 2014) (stating that case was not so far advanced that a stay would be improper
`
`where parties had not yet engaged in significant costly work of expert discovery and
`
`summary judgment motions, and the pretrial conference was still six months away); Am.
`
`GNC Corp., 2018 WL 1250876, at *2 (that the parties have completed certain benchmarks
`
`under the Patent Local Rules does not mean the case has progressed so significantly that a
`
`23
`
`stay would be improper).
`
`24
`
`25
`
`26
`
`27
`
`28
`
`This factor favors a temporary stay.
`
`C. Undue Prejudice or Clear Tactical Advantage
`
`Despite the fact that the petitions were not filed as expeditiously as anticipated in
`
`Apple’s case management statement [Doc. No. 60], based on the number of patents and
`
`claims involved, the Court does not conclude that the additional time taken to prepare and
`
`5
`
`3:17-cv-2402-CAB-MDD
`
`
`
`Case 3:17-cv-02402-CAB-MDD Document 188 Filed 08/29/18 PageID.3598 Page 6 of 7
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`file the applications was the result of tactical delay. Moreover, a delay inherent in the
`
`reexamination process does not constitute undue prejudice. AT&T Intellectual Prop. I v.
`
`Tivo, Inc., 774 F. Supp. 2d 1049, 1054 (N.D. Cal 2011); Research in Motion Ltd., v. Visto
`
`Corp., 545 F. Supp. 2d 1011, 1012 (N.D. Cal. 2008) (mere delay in the litigation does not
`
`establish undue prejudice). Finally, because Apple and Qualcomm are not direct
`
`competitors, any harm from a stay can be addressed through damages. PersonalWeb
`
`Techs, LLC, 2014 WL 116340, at *5.
`
`The Court notes that with regard to at least the ‘043 patent, Qualcomm contends that
`
`transceiver integrated circuits allegedly covered by the ‘043 patent are provided to Apple
`
`by Intel in competition with Qualcomm. It argues that for purposes of evaluating prejudice,
`
`Apple and Qualcomm are therefore competing in the same market to some degree. [Doc.
`
`No. 178, at 24-25.] The Court is not persuaded that competition between Intel and
`
`Qualcomm for Apple as a customer makes Apple and Qualcomm indirect competitors.
`
`This fact pattern is similar to the relationship between the patentee and alleged
`
`infringer in Nichia Corp. v. Vizio, Inc., SA CV 16-00545 SJO (MRWx), 2017 WL
`
`3485767, at *6 (C.D. Cal. Feb. 2, 2017). Nichia was one of the largest LED manufacturers
`
`in the world. Vizio sold televisions that contained LEDs alleged to infringe Nichia’s
`
`patents, but it did not manufacture the accused LEDs. Therefore, Vizio was a downstream
`
`customer of LEDs rather than a direct competitor in the market for LEDs. The court found
`
`that there was no risk of Vizio acquiring market share or customers from Nichia during a
`
`stay and that monetary damages would adequately compensate Nichia for any
`
`infringement. Id. Similarly, the Court finds no risk of Apple acquiring Qualcomm’s
`
`market share or customers for transceiver integrated circuits.
`
`This factor favors a temporary stay.
`
`IV. Conclusion
`
` The Court finds Apple’s motion for stay timely and that staying this case will not
`
`cause Qualcomm undue prejudice. Further PTAB’s decisions to institute IPR may simplify
`
`the case and may further inform the Court on matters of claim construction. Apple’s
`
`6
`
`3:17-cv-2402-CAB-MDD
`
`
`
`Case 3:17-cv-02402-CAB-MDD Document 188 Filed 08/29/18 PageID.3599 Page 7 of 7
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`motion for a stay is therefore GRANTED pending the PTAB’s decisions whether to
`
`institute IPR.
`
` As the Court has previously noted, the patents in this case are diverse. They are from
`
`unrelated families and cover divergent technologies. The PTAB may decide to institute
`
`IPR as to all, some, or none of these patents. The litigation is hereby stayed until those
`
`determinations are made. As the patents do not overlap and are independent of each other,
`
`litigation will commence again immediately for any patents on which IPR is not instituted,
`
`and the Court will promptly reschedule the claim construction hearing as to those patents.
`
`The parties shall jointly notify the Court immediately of the PTAB’s decisions whether to
`
`institute as to each patent as the decisions are individually received.
`
`It is SO ORDERED.
`
`12
`
`Dated: August 29, 2018
`
`
`
`
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`7
`
`3:17-cv-2402-CAB-MDD
`
`