IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF NORTH CAROLINA
`CHARLOTTE DIVISION
`
`LIFESCAN, INC., and
`LIFESCAN SCOTLAND LIMITED
`
`
`Plaintiffs,
`
`
`v.
`
`UNISTRIP TECHNOLOGIES, LLC
`
`
`Defendant.
`_____________________________________
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` Case No.: 3:14-CV-00274-RJC-DSC
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`BRIEF IN SUPPORT OF
`MOTION TO STAY
`
`
`
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`Defendant UniStrip Technologies, LLC (“Defendant”) hereby moves this Court to stay the above-
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`captioned case in its entirety in the interest of judicial efficiency and pending the outcome of a
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`patent invalidation appeal and a Markman claim construction hearing in another jurisdiction.
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`Plaintiffs LifeScan, Inc. and LifeScan Scotland Limited (“Plaintiffs”) allege that Defendant
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`infringes two patents, U.S. Patent No. 7,250,105 (“the ‘105 patent”) and U.S. Patent No. 6,241,862
`
`(“the ‘862 patent”), related to blood glucose meters and blood glucose strips, respectively. In their
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`Utility Patent Certificate of Initial Attorneys’ Conference, Plaintiffs have voluntarily consented to
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`stay this case with respect to the ‘105 patent, which was invalidated in an Inter Partes Review
`
`proceeding in the United States Patent and Trademark Office, pending appeal to the U.S. Court of
`
`Appeals for the Federal Circuit pursuant to 35 U.S.C. §319. They have not, however, voluntarily
`
`consented to stay the case with respect to the closely related ‘862 patent, which is now the subject
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`of the Markman claim construction hearing1. Given the significant overlap and intertwined nature
`
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`1 LifeScan Scotland, Ltd., et al. v. Shasta Technologies, LLC, et al., Case No. 11–CV–04494–WHO in the Northern
`District of California (“NDCA case”).
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`
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`1
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`of claims, defenses, counterclaims, facts, discovery, and issues for trial surrounding these two
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`patents, being asserted against Defendant’s one product, and the pendency of the Markman claim
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`construction hearing, judicial efficiency dictates that this case be stayed until the status of both
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`patents is clarified.
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`
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`BACKGROUND
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`Given the straightforward nature of this Motion, Defendant will dispense with providing lengthy
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`discussions of all of the proceedings involving the ‘105 patent and the ‘862 patent in the various
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`jurisdictions. However, Plaintiffs allege that Defendant infringes the ‘105 patent, related to
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`methods for measuring the concentration of a substance in a liquid using blood glucose meters and
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`blood glucose strips, and the ‘862 patent, related to the manufacture of blood glucose strips.
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`Defendant imports blood glucose strips that may be used by consumers in Plaintiffs’ blood glucose
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`meter(s).
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`
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`Concurrently, Plaintiffs have asserted the ‘105 patent and the ‘862 patent against Shasta
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`Technologies, LLC, Instacare Corp., Pharmatech Solutions, Inc., and Conductive Technologies,
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`Inc. (“Shasta Defendants”) in Case No. 11–CV–04494–WHO in the Northern District of California
`
`(“NDCA case”). Associated with these proceedings, the ‘105 patent has been found exhausted
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`when applied to blood glucose strip manufacturers. See LifeScan Scotland, Ltd. v. Shasta
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`Technologies, LLC, 734 F.3d 1361 (Fed. Cir. 2013)2. The ‘105 patent is currently stayed in the
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`NDCA case. Also, the NDCA case includes additional patents in addition to the ‘105 patent and
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`2 If the Federal Circuit reverses the invalidity of the ‘105 patent, Defendant anticipates a Motion to Dismiss based on
`this holding.
`
`
`
`2
`Case 3:14-cv-00274-RJC-DSC Document 19-1 Filed 09/17/14 Page 2 of 13
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`the ‘862 patent; the NDCA case is not stayed for the additional patents and the ‘862 patent. At
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`present, the ‘862 patent is awaiting a Markman ruling in the NDCA case.
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`
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`The present case is in its infancy, with only the initial Complaint and Answer filed. No Scheduling
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`Order has been issued yet. In their Utility Patent Certificate of Initial Attorneys’ Conference,
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`Plaintiffs have voluntarily consented to stay this case with respect to the ‘105 patent, which was
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`invalidated in an Inter Partes Review proceeding in the United States Patent and Trademark Office
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`(Patent Trial and Appeal Board Case IPR2013-00247), pending appeal to the Federal Circuit. The
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`‘105 patent has been found invalid, as part of the NDCA case, by the Patent Trial and Appeal
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`Board in an Order dated August 6, 2014 (attached as Exhibit A). The Plaintiffs have stated they
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`plan to appeal this Order to the U.S. Court of Appeals for the Federal Circuit3.
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`
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`Plaintiffs have not voluntarily consented to stay the case with respect to the closely related ‘862
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`patent, also the subject of the NDCA case, which is now awaiting Markman claim construction.
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`Of importance, Defendant has provided, in April 2014, Plaintiffs with samples of its blood glucose
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`strips and repeatedly indicated to Plaintiffs that these blood glucose strips clearly do not infringe
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`the ‘862 patent. Specifically, for example, the independent claims of the ‘862 patent all require
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`the presence of “an integrated reagent/blood separation layer disposed over the first conductive
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`element, said
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`integrated reagent/blood separation
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`layer comprising reagents for
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`the
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`electrochemical detection of the analyte dispersed in a non-conductive matrix effective to exclude
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`blood cells from the surface of the first conductive element while permitting access to the first
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`conductive element by soluble electroactive species.” This “integrated reagent/blood separation
`
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`3 Plaintiffs have 63 days from August 6, 2014 to file the Appeal pursuant to 37 CFR §90.3. Absent such an appeal,
`the ‘105 patent will be canceled by the United States Patent and Trademark Office.
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`
`
`3
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`layer” is simply not present in Defendant’s blood glucose strips, which are based on technology
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`that has offered for sale and sold for many years, prior to receiving approval to market and sell the
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`blood glucose strips for operations with Plaintiffs’ meters.
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`
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`Given the significant overlap and intertwined nature of claims, defenses, counterclaims, facts,
`
`discovery, and issues for trial surrounding these two patents, and the pendency of the Markman
`
`claim construction hearing related to the ‘862 patent, judicial efficiency dictates that this case be
`
`stayed until the status of both patents is clarified.
`
`
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`Of particular relevance, Defendant is a start-up company with a single product, namely blood
`
`glucose strips are manufactured solely in Taiwan. The engineers involved in and with knowledge
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`related to this manufacture will likely have to travel to the United States to testify regarding the
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`construction of the blood glucose strips and, specifically, their use in Plaintiffs’ blood glucose
`
`meters, as they relate to the claims of both the ‘105 patent and the ‘862 patent. Alternatively,
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`counsel in this case will have to travel to Taiwan to obtain this testimony. Such travel, the
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`associated document production, etc. will undoubtedly be very burdensome and expensive.
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`Further, the issues to be tried associated with these two patents will undoubtedly overlap
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`significantly since Defendant only imports and sells one product. With so many common issues,
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`it simply makes no sense to litigate one of these patents, and subsequently litigate the other of
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`these patents, especially given the uncertainty currently surrounding both.
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`4
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`APPLICABLE LEGAL PRINCIPLES
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`This Court has broad discretion in granting stays in the interest of judicial efficiency, especially in
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`patent cases.
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`
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`With respect to the stay related to the ‘105 patent, to which Plaintiffs have voluntarily consented,
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`District courts have inherent authority to stay patent litigation pending the conclusion of parallel
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`proceedings at the United States Patent and Trademark Office (or the U.S. Court of Appeals for
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`the Federal Circuit), for example. See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426–27
`
`(Fed.Cir.1988) (citing Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936)).
`
`The court's decision to grant or deny a stay is discretionary. NTP, Inc. v. Research In Motion, Ltd.,
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`397 F.Supp.2d 785, 787 (E.D.Va.2005). Courts typically weigh three factors when determining
`
`whether to grant a stay pending reexamination, for example: (1) “whether a stay would unduly
`
`prejudice the nonmoving party;” (2) “whether a stay would simplify [the] issues and the trial of
`
`the case;” and (3) “the stage of the proceedings,” including whether discovery is complete and a
`
`trial date has been set. Akzenta Paneele + Profile GmbH v. Unilin Flooring N.C. LLC, 464
`
`F.Supp.2d 481, 484 (D.Md.2006); see Biogaia AB v. Nature's Way Prods., Inc., No. 5:10–CV–
`
`449–FL, 2011 WL 3664350, at *1 (E.D.N.C. Aug.18, 2011) (unpublished). Pentair Water Pool
`
`& Spa, Inc. v. Hayward Indus., Inc., 5:11-CV-459-D, 2014 WL 351865 (E.D.N.C. Jan. 31, 2014).
`
` 
`
`Effective September 16, 2012, Congress replaced the Inter Partes Reexamination process with a
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`new Inter Partes Review process. See Leahy–Smith America Invents Act, Pub.L. No. 112–29, §
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`6(a), 125 Stat. 284, 299–304 (2011) (codified at 35 U.S.C. §§ 311–319). “The purpose of this
`
`reform was to convert inter partes reexamination from an examinational to an adjudicative
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`
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`5
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`proceeding.” Abbott Labs. v. Cordis Corp., 710 F.3d 1318, 1326 (Fed.Cir.2013). Unlike Inter
`
`Partes Reexaminations, Inter Partes Reviews are required by statute to be completed in one year.
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`35 U.S.C. § 316(a)(11).  Pentair Water Pool & Spa, Inc. v. Hayward Indus., Inc., 5:11-CV-459-
`
`D, 2014 WL 351865 (E.D.N.C. Jan. 31, 2014). 
`
` 
`
`“Any person at any time may file a request for reexamination by the [USPTO] of any claim of a
`
`patent on the basis of any prior art,” 35 U.S.C. § 302, and “[a] petitioner in an inter partes review
`
`may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be
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`raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed
`
`publications.” 35 U.S.C. § 311(b). A district court has the discretion to stay judicial proceedings
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`pending reexamination of a patent. See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426–27
`
`(Fed.Cir.1988). Courts consider three factors in determining whether to grant a stay pending
`
`reexamination: “(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
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`would unduly prejudice or present a clear tactical disadvantage to the non-moving party.” Telemac
`
`Corp. v. Teledigital, Inc., 450 F.Supp.2d 1107, 1111 (N.D.Cal.2006). There is a “liberal policy in
`
`favor 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
`
`(N.D.Cal.1994). Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., SACV 12-21-JST
`
`JPRX, 2012 WL 7170593 (C.D. Cal. Dec. 19, 2012). Note, in the present case, Defendants are
`
`seeking a stay after the USPTO has ruled the ‘105 patent invalid, pending a final disposition on
`
`appeal. 
`
` 
`
`
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`6
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`With respect to the stay related to the ‘862 patent, to which Plaintiffs have not voluntarily
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`consented, “[t]he power to stay proceedings is incidental to the power inherent in every court to
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`control the disposition of the cases on its docket with economy of time and effort for itself, for
`
`counsel, and for litigants.” International Nickel Co., Inc., v. Martin J. Barry, Inc., 204 F.2d 583,
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`586 (4th Cir.1953) (quoting Landis v. N. American Co., 299 U.S. 248, 254-55, 57 S.Ct. 163, 81
`
`L.Ed. 153 (1936)). Courts have broad discretion to manage their docket. Id. (citing Kerotest Mfg.
`
`Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183, 72 S.Ct. 219, 96 L.Ed. 200 (1952)). In
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`International Nickel, the Fourth Circuit Court of Appeals approved the trial court's stay of the
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`second of two related patent infringement actions and observed that the validity of the patent at
`
`issue would be tried in the case filed first. Id. The court emphasized that a patentee is “not entitled
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`as a matter of right to have two federal courts trying the same issue at the same time when court
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`dockets are crowded and other litigants have a right to a hearing.” Id. Adventus Americas, Inc. v.
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`Calgon Carbon Corp., 308CV-497-RJC-DCK, 2009 WL 2998094 (W.D.N.C. Sept. 15, 2009).
`
`
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`Similarly, it is common practice in this Court to stay a patent litigation with respect to all patents
`
`at issue when the status of one is still uncertain. See Taidoc Tech. Corp. v. Diagnostic Devices,
`
`Inc., Case No. 3:12-CV-00636-MOC-DSC (W.D.N.C. Aug. 5, 2013).
`
` 
`
`Again, “[t]he power to stay proceedings is incidental to the power inherent in every court to control
`
`the disposition of the cases on its docket with economy of time and effort for itself, for counsel,
`
`and for litigants, and [h]ow this can best be done calls for the exercise of judgment, which must
`
`weigh competing interests and maintain an even balance.” International Nickel Company, Inc. v.
`
`Martin J. Barry, Inc., 204 F.2d 583, 586 (4th Cir.1953), (quoting Landis v. North American
`
`
`
`7
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`Company, 299 U.S. 248, 254–55 (1936)). There is no “rigid mechanical solution,” rather the court
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`must apply “an ample degree of discretion” and give “regard to conservation of judicial resources
`
`and comprehensive disposition of litigation.” Id. quoting Kerotest Manufacturing Company v. C–
`
`O–Two Fire Equipment Company, 342 U.S. 180, 183 (1952). Santrade, Ltd. v. Gen. Elec. Co.,
`
`90-107-CIV-7-D, 1990 WL 312778 (E.D.N.C. Dec. 6, 1990). 
`
`
`
`ANALYSIS
`
`In this case, a stay related to the ‘862 patent would do little prejudice to the Plaintiffs, who have
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`already consented to a stay related to the ‘105 patent, this case is in the infancy, and a resolution
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`of the ‘105 patent may dispose of most of the issues in this case. The Plaintiffs have been
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`corresponding with Defendant since late 20134. Plaintiffs waited until May 28, 2014 to file the
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`Complaint, and immediately notified Defendant’s largest customer the day the Complaint was
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`filed. Plaintiffs waited two months to serve Defendant, and nothing has been done in the case
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`except an Initial Attorney’s Conference.
`
`
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`However, the denial of a stay related to the ‘862 patent would do much to prejudice Defendant,
`
`and would waste the limited resources of this Court, effectively requiring Defendant to litigate and
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`this Court to hear the same case twice.5
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`
`
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`4 Defendant has voluntarily provided answers to Plaintiffs’ requests including providing product samples.
`5 Defendant would welcome dismissal of the ‘105 patent and refiling if the Federal Circuit reverses the invalidity.
`However, the ‘105 patent is much broader than the ‘862 patent. The ‘862 patent has been affirmed in a
`Reexamination proceeding due to its narrow claim scope, and the Defendant clearly does not infringe the ‘862
`patent.
`
`
`
`8
`Case 3:14-cv-00274-RJC-DSC Document 19-1 Filed 09/17/14 Page 8 of 13
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`Again, Defendant’s blood glucose strips are manufactured solely in Taiwan. The engineers
`
`involved in and with knowledge related to this manufacture will likely have to travel to the United
`
`States to testify regarding the construction of the blood glucose strips and their use in Plaintiffs’
`
`blood glucose meters, as they relate to the claims of both the ‘105 patent and the ‘862 patent.
`
`Alternatively, counsel in this case will have to travel to Taiwan to obtain this testimony. Such
`
`travel, the associated document production, etc. will undoubtedly be very expensive. Further, the
`
`issues to be tried associated with these two patents will undoubtedly overlap significantly. With
`
`so many common issues, it simply makes no sense to litigate one of these patents, and subsequently
`
`litigate the other of these patents, especially given the uncertainty currently surrounding both.
`
`
`
`Further, the pendency of the NDCA case means that many of the issues that will be before this
`
`Court are currently being litigated in California. It makes no sense to litigate them in parallel in
`
`this Court now.
`
`
`
`With respect to the three factors described above, all three weigh heavily in Defendant’s favor as
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`follows:
`
`Three Factors
`
`Defendant Plaintiffs
`
`(1) “whether a stay would unduly prejudice the nonmoving party
`
`++++
`
`(2) “whether a stay would simplify [the] issues and the trial of the case ++++
`
`(3) “the stage of the proceedings,”
`
`++++
`
`
`
`
`
`
`
`
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`The Plaintiffs have not shown that they will move for a preliminary injunction. In the NDCA case,
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`the Plaintiffs only moved for a preliminary injunction on the ‘105 patent, which was overturned
`
`
`
`9
`Case 3:14-cv-00274-RJC-DSC Document 19-1 Filed 09/17/14 Page 9 of 13
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`by LifeScan Scotland, Ltd. at 734 F.3d 1361. That is not possible here since the ‘105 patent has
`
`been found invalid. Defendant does not infringe the ‘862 patent, and Plaintiffs have not moved
`
`for a preliminary injunction based on the ‘862 patent. Thus, there is no prejudice to the Plaintiffs
`
`in staying this case until resolution of the ‘105 patent.
`
`
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`Once the Federal Circuit rules on the ‘105 patent, the issues in this case will be greatly simplified.
`
`It is unclear whether the Plaintiffs will proceed solely based on the ‘862 patent if the ‘105 patent
`
`is canceled. Further, as discussed herein, there is simply no reason to conduct discovery related to
`
`the same product twice. Judicial efficiency dictates a stay, pending the appeal6.
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`
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`Finally, the stage of the proceedings could not be more in favor of an appeal given the fact no
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`Scheduling Order has been issued, and nothing has happened in this case except an Answer and
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`Initial Attorney’s Conference.
`
`
`
`Therefore, for all of the foregoing reasons, Defendant hereby moves this Court to stay the above-
`
`captioned case, in its entirety, pending the disposition of both the ‘105 and ‘862 patents.
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`Specifically, Defendant moves this Court to stay the above-captioned case, in its entirety, pending
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`the disposition of the ‘105 patent on invalidation appeal in the Federal Circuit.
`
`
`
`Dated: September 17, 2014
`
`CLEMENTS BERNARD PLLC
`
`By: /s/ Christopher L. Bernard
`Christopher L. Bernard
`N.C. State Bar No. 27713
`Lawrence A. Baratta, Jr.
`
`
`
`
`6 The median disposition time in the Court of Appeals for the Federal Circuit is about 10.5 months (Exhibit B)
`See http://www.cafc.uscourts.gov/images/stories/Statistics/med%20disp%20time%20merits_chart.pdf
`
`
`
`10
`Case 3:14-cv-00274-RJC-DSC Document 19-1 Filed 09/17/14 Page 10 of 13
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`

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`N.C. State Bar No. 37589
`1901 Roxborough Road, Suite 250
`Charlotte, NC 28211 USA
`Tel:
`704-790-3600
`Fax: 704-366-9744
`cbernard@worldpatents.com
`lbaratta@worldpatents.com
`
`ATTORNEYS FOR DEFENDANT
`AND COUNTERCLAIMANT
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`11
`Case 3:14-cv-00274-RJC-DSC Document 19-1 Filed 09/17/14 Page 11 of 13
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`CERTIFICATE OF COMPLIANCE
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` hereby certify that, pursuant to LCvR 7.1(b), Counsel for Defendants consulted with Counsel for
`
` I
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`Plaintiffs regarding this Motion. Both parties agree to stay the present action with respect to the
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`‘105 Patent until the appeal is resolved. Plaintiffs did not consent to staying the present action
`
`
`
`CLEMENTS BERNARD PLLC
`
`By: /s/ Christopher L. Bernard
`Christopher L. Bernard
`N.C. State Bar No. 27713
`Lawrence A. Baratta, Jr.
`N.C. State Bar No. 37589
`1901 Roxborough Road, Suite 250
`Charlotte, NC 28211 USA
`Tel:
`704-790-3600
`Fax: 704-366-9744
`cbernard@worldpatents.com
`lbaratta@worldpatents.com
`
`ATTORNEYS FOR DEFENDANT
`AND COUNTERCLAIMANT
`
`with respect to the ‘862 Patent.
`
`
`
`Dated: September 17, 2014
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`12
`Case 3:14-cv-00274-RJC-DSC Document 19-1 Filed 09/17/14 Page 12 of 13
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`CERTIFICATE OF SERVICE
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` hereby certify that on the date listed below, I electronically filed the foregoing with the Clerk of
`
` I
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`Court using the CM/ECF system, which will send notification of such filing to the following:
`
`Eugene M. Gelernter
`Anthony C. Decinque
`Patterson Belknap Webb & Tyler LLP
`1133 Avenue of the Americas
`New York, NY 10036
`Phone: (212) 336-2000
`Fax: (212) 336-2222
`emgelernter@pbwt.com
`adecinque@pbwt.com
`
`
`Dated: September 17, 2014
`
`
`
`
`
`David N. Allen
`Douglas Grimes
`Hedrick Gardner Kincheloe & Garofalo, LLP
`PO Box 30397
`Charlotte, NC 28230
`Phone: (704) 366-1101
`Fax: (704) 366-6181
`dallen@hedrickgardner.com
`dgrimes@hedrickgardner.com
`
`
`
`CLEMENTS BERNARD PLLC
`
`By: /s/ Christopher L. Bernard
`Christopher L. Bernard
`N.C. State Bar No. 27713
`Lawrence A. Baratta, Jr.
`N.C. State Bar No. 37589
`1901 Roxborough Road, Suite 250
`Charlotte, NC 28211 USA
`Tel:
`704-790-3600
`Fax: 704-366-9744
`cbernard@worldpatents.com
`lbaratta@worldpatents.com
`
`
`
`
`13
`Case 3:14-cv-00274-RJC-DSC Document 19-1 Filed 09/17/14 Page 13 of 13