Case 3:17-cv-02403-CAB-MDD Document 177 Filed 08/29/18 PageID.4297 Page 1 of 6
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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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`QUALCOMM INCORPORATED,
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`v.
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`APPLE INCORPORATED,
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`Plaintiff,
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`Defendant.
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` Case No.: 3:17-cv-2403-CAB-MDD
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`ORDER ON MOTION TO STAY
`[Doc. No. 160]
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`Defendant Apple, Inc., has filed a motion to stay litigation while the patents at issue
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`are under petition for Inter Partes Review (“IPR”) by the U.S. Patent Trial and Appeal
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`Board (“PTAB”) of the U.S. Patent and Trademark Office (“PTO”). The Court finds the
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`motion suitable for determination on the papers submitted and without oral argument in
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`accordance with Civil Local Rule 7.1(d)(1). For the reasons set forth below, the motion
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`is granted.
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`I.
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`Background
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`On November 29, 2017, plaintiff Qualcomm Inc., filed a complaint against Apple,
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`asserting infringement of United States Patents Nos. 8,683,362 (“the ‘362 patent”);
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`8,497,928 (“the ‘928 patent”); 8,665,239 (“the ‘239 patent”); 9,203,940 (“the ‘940
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`patent”); and 7,844,037 (“the ‘037 patent”). [Doc. No. 1.] Following a joint motion to
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`extend Apple’s time to file a responsive pleading, Apple answered on January 22, 2018.
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`Case 3:17-cv-02403-CAB-MDD Document 177 Filed 08/29/18 PageID.4298 Page 2 of 6
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`[Doc No. 51.] The Court held a case management conference on February 7, 2018, at
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`which time Apple represented it intended to seek IPR on all of the asserted patents and
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`indicated an expectation of filing the applications with the PTAB within the next two
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`months. [Doc No. 64.]
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`The parties were directed to proceed with the exchange of infringement and
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`invalidity contentions pursuant to this District’s Local Patent Rules. Dates were set for the
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`filing of claim construction briefs, and a tutorial and claim construction hearing was
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`scheduled for October 10 and 11, 2018. On July 31, 2018, however, Apple filed the instant
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`motion [Doc. No. 160] for a stay based on its filed applications for IPR of all the patents
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`asserted in the litigation. Qualcomm filed an opposition to the motion to stay on August
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`21, 2018. [Doc. No. 168.] Apple filed a reply on August 28, 2018. [Doc. No. 176.]
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`Apple has petitioned for review of all the asserted claims of the five patents at issue
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`in this case with the exception of two asserted claims in the ‘928 patent. The PTAB’s
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`decisions whether to institute will not issue until approximately January 2019 and may not
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`result in institution of IPR as to any of the patents. Nevertheless, the Court finds it a prudent
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`exercise of resources to temporarily stay this matter until the PTAB decides whether to
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`institute IPR.
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`II. Legal Standard
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`Courts have inherent power to manage their dockets and stay proceedings. The party
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`seeking a stay bears the burden of showing that such a course is appropriate. See Landis
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`v. N. Am. Co., 299 U.S. 248, 255 (1936). A stay pending an administrative proceeding is
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`not automatic; rather, it must be based upon the circumstances of the case before the court.
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`See Comcast Cable Commc’ns Corp. LLC v. Finisar Corp., No. 06-cv-04206-WHA, 2007
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`WL 1052883, at *1 (N.D. Cal. Apr. 5, 2007) (“From a case management perspective, the
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`possible benefits must be weighted in each instance against the possible drawbacks.”).
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`Courts generally consider three factors to determine whether to impose a stay
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`pending parallel proceedings in the PTAB: (1) whether a stay will simplify the issues in
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`question and trial of the case; (2) whether discovery is complete and a trial date set; and
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`Case 3:17-cv-02403-CAB-MDD Document 177 Filed 08/29/18 PageID.4299 Page 3 of 6
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`(3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the
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`nonmoving party. TAS Energy, Inc. v. San Diego Gas & Elec. Co., No. 12-cv-2777-GPC-
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`BGS, 2014 WL 794215, at *3 (S.D. Cal. Feb. 26, 2014) (citing Telemac Corp. v.
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`Teledigital, Inc., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006)). Judicial consideration is
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`not limited to these factors, but rather can include a review of totality of the circumstances.
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`A court’s consideration of a motion to stay should be guided by “the liberal policy in favor
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`of granting motions to stay proceedings pending the outcome of USPTO reexamination or
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`reissuance proceedings.” ASCII Corp. v. STD Entm’t USA, Inc., 844 F. Supp. 1378, 1381
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`(N.D. Cal. 1994).
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`III. Discussion
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`A. Simplification of Issues and Trial
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`Apple has petitioned for review of all the asserted claims of the patents at issue, with
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`the previously noted exception of two claims of the ‘928 patent. Decisions whether to
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`institute on each of these petitions will necessarily impact the scope of the issues for
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`litigation and trial. Should the PTAB institute on any one or more of the petitions, those
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`patents and all their asserted claims will be subject to review “in accordance with or in
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`conformance to the petition.” SAS Inst., Inc. v. Iancu, 138 S.Ct. 1348, 1355 (2018)
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`(whether to institute an inter partes review is a binary choice – “either institute review or
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`don’t”). As a result, for any petition on which the PTAB institutes IPR, each of the
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`challenged claims will either (1) be confirmed, estopping Apple from asserting invalidity
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`challenges in this case that it raised or could reasonably have raised in the IPR, or (2) be
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`invalidated, reducing the number of issues before the Court.
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` This factor weighs in favor of a limited stay of proceedings until the PTAB issues
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`its decisions on whether to institute IPR. See e.g., Wi-Lan Inc. v. LG Elecs. Inc., No. 3:17-
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`cv-00358-BEN-MDD, 2018 WL 2392161, at*2 (S.D. Cal May 22, 2018) (while review is
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`not guaranteed and, therefore, the benefits of review are only speculative at this juncture,
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`in light of the Supreme Court’s mandate to review all contested claims upon a grant of IPR
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`and the complexity of this case the Court finds this factor weighs in favor of a limited stay);
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`Nichia Corp. v. Vizio, Inc., SA CV 18-00362 AG (KESx), 2018 WL 2448098, at *2-3 (C.D.
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`Cal. May 21, 2018) (Vizio filed IPR petitions on all the asserted claims, and although the
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`potential for simplification was speculative at the time, the Court determined the stay
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`would be relatively short and the action could continue with minimal delay if institution
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`was denied); Am. GNC Corp. v. LG Elecs. Inc., No. 3:17-cv-1090-BAS-BLM, 2018 WL
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`1250876, at *3 (S.D. Cal. March 12, 2018) (if the court were to wait for the PTAB to accept
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`the IPR petitions before staying the case, the court risks wasting resources; the limited
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`nature of a stay outweighs the risk of unnecessary expenditure of resources before the
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`determination to institute or not).
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`In this case with five patents and numerous claims at issue, the PTAB’s decisions
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`whether to institute will impact the contours of the case. If the PTAB institutes and cancels
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`all the asserted claims of any patent, it will remove that patent from the case, thereby
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`significantly reducing the scope of this litigation. Alternatively, if the PTAB declines to
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`institute or institutes and confirms any patent, statutory estoppel may simplify the assertion
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`of invalidity defenses. This factor favors a temporary stay.
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`B. Timing
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`Regarding the stage of the proceedings, courts consider timing issues such as
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`whether discovery is complete, the status of claim construction, and whether a trial date
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`has been set. Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d
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`1028, 1030-31 (C.D. Cal. 2013). Since the case management conference in February 2018,
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`the parties have engaged in motion practice regarding the pleadings, including a motion for
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`judgment on the pleadings challenging the patentability of the ‘362 and ‘239 patents, under
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`35 U.S.C. § 101, which the Court denied without prejudice. [Doc. No. 143]. They have
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`exchanged infringement and invalidity contentions, provided discovery responses, and
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`submitted briefing for the claim construction hearing. The Court is cognizant of the
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`resources expended by the parties to prepare for the scheduled claim construction hearing,
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`but the hearing has not occurred yet and the Court has not construed the claims. Moreover,
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`Qualcomm’s submissions to the PTAB in response to Apple’s IPR petitions may inform
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`the construction of disputed claim terms. See Core Optical Techs, LLC v. Fujitsu Network
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`Commc’ns, Inc., No. SA CV 16-00437-AG (JPRx), 2016 WL 7507760, at *2 (C.D. Cal.
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`Sept. 12, 2016) (even if no patent claim is eliminated, the intrinsic record developed during
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`the IPR may inform on issues like claim construction).
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`Significant fact and expert discovery and dispositive motion practice are still ahead.
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`A pretrial conference is presently scheduled for June 2019, but no trial date has been set.
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`[Doc. No. 102.] Trial is not imminent and the majority of fact and expert discovery is still
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`to be completed. The stage of the proceedings does not weigh against issuing a temporary
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`stay. See, e.g., TAS Energy, Inc., 2014 WL 794215, at *3 (“While the case is not in its
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`early stages, it is in the midst of discovery and no trial date has been set. Moreover,
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`significant amount of work still remains such as expert discovery, summary judgment
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`motions and trial.”); PersonalWeb Techs, LLC, v. Facebook, Inc., Case Nos. 5:13-CV-
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`01356-EJD; 5:13-CV-01358-EJD; 5:13-CV-01359-EJD, 2014 WL 116340, at *4 (N.D.
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`Cal Jan. 13, 2014) (stating that case was not so far advanced that a stay would be improper
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`where parties had not yet engaged in significant costly work of expert discovery and
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`summary judgment motions, and the pretrial conference was still six months away); Am.
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`GNC Corp., 2018 WL 1250876, at *2 (that the parties have completed certain benchmarks
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`under the Patent Local Rules does not mean the case has progressed so significantly that a
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`stay would be improper).
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`This factor favors a temporary stay.
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`C. Undue Prejudice or Clear Tactical Advantage
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`Despite the fact that the petitions were not filed as expeditiously as anticipated in
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`Apple’s case management statement [Doc. No. 64], based on the number of patents and
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`claims involved, the Court does not conclude that the additional time taken to prepare and
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`file the applications was the result of tactical delay. Moreover, a delay inherent in the
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`reexamination process does not constitute undue prejudice. AT&T Intellectual Prop. I v.
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`Tivo, Inc., 774 F. Supp. 2d 1049, 1054 (N.D. Cal 2011); Research in Motion Ltd., v. Visto
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`Corp., 545 F. Supp. 2d 1011, 1012 (N.D. Cal. 2008) (mere delay in the litigation does not
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`establish undue prejudice). Finally, because Apple and Qualcomm are not direct
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`competitors, any harm from a stay can be addressed through damages. PersonalWeb
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`Techs, LLC, 2014 WL 116340, at *5.
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`This factor favors a temporary stay.
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`IV. Conclusion
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` The Court finds Apple’s motion for stay timely and that staying this case will not
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`cause Qualcomm undue prejudice. Further PTAB’s decisions to institute IPR may simplify
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`the case and may further inform the Court on matters of claim construction. Apple’s
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`motion for a stay is therefore GRANTED pending the PTAB’s decisions whether to
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`institute IPR.
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` As the Court has previously noted, the patents in this case are diverse. They are from
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`unrelated families and cover divergent technologies. The PTAB may decide to institute
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`IPR as to all, some, or none of these patents. The litigation is hereby stayed until those
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`determinations are made. As the patents do not overlap and are independent of each other,
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`litigation will commence again immediately for any patents on which IPR is not instituted,
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`and the Court will promptly reschedule the claim construction hearing as to those patents.
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`The parties shall jointly notify the Court immediately of the PTAB’s decisions whether to
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`institute as to each patent as the decisions are individually received.
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`It is SO ORDERED.
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`Dated: August 29, 2018
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