`
`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`SMARTFLASH LLC, et al.,
`
`Plaintiffs,
`
`v.
`
`APPLE, INC. et al.,
`
`Defendants.
`
`SMARTFLASH LLC, et al.,
`
`Plaintiffs,
`
`v.
`
`SAMSUNG ELECTRONICS, INC. et al.,
`
`Defendants.
`
`SMARTFLASH LLC, et al.,
`
`Plaintiffs,
`
`v.
`
`GOOGLE, INC. et al.,
`
`Defendants.
`
`CASE NO. 6:13-cv-447-JRG
`
`JURY TRIAL DEMANDED
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
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`CASE NO. 6:13-cv-448-JRG-KNM
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`JURY TRIAL DEMANDED
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
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`§
`§
`§
`§
`§
`§
`§
`§
`§
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`CASE NO. 6:14-cv-435-JRG-KNM
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`JURY TRIAL DEMANDED
`
`Smartflash - Exhibit 2058
`Apple v. Smartflash
`CBM2015-00015
`
`
`
`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 2 of 49 PageID #: 30691
`
`SMARTFLASH LLC, et al.,
`
`Plaintiffs,
`
`v.
`
`AMAZON.COM, INC. et al.,
`
`Defendants.
`
`CASE NO. 6:14-cv-992-JRG-KNM
`
`§
`§
`§
`§
`§
`§
`JURY TRIAL DEMANDED
`§
`§
`§
`
`MEMORANDUM OPINION AND ORDER
`Before the Court are (1) the Motion To Stay Litigation Pending Covered Business
`
`Method Review filed by Defendant Apple, Inc. (Apple) (Dkt. No. 546 in 6:13-CV-447,
`
`hereinafter Apple Motion) and; (2) the Renewed Motion to Stay Litigation Pending Covered
`
`Business Method Review filed by HTC America, Inc., HTC Corporation, Samsung Electronics
`
`America, Inc., Samsung Electronics Co., Ltd., Samsung Telecommunications America, LLC’s
`(collectively, Samsung)1 (Dkt. No. 495 in 6:13-CV-448, hereinafter Samsung Motion).
`
`After receiving these motions, the Court ordered briefing in the related Google and
`
`Amazon cases on the issue of whether a stay is warranted. Accordingly, also before the Court are
`
`(3) Google, Inc.’s (Google) Response to the Court’s May 4, 2015 Order (Dkt. No. 164 in 6:14-
`
`CV-435) and Google’s Motion to Stay Litigation Pending Covered Business Method Review
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`(Dkt. No. 167 in 6:14-CV-435, hereinafter Google Motion); and (4) the Brief In Support of Stay
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`of Litigation Pending Review of the Asserted Patents filed by AMZN Mobile, LLC, Amazon
`
`Web Services, Inc., Amazon.Com, Inc., Amazon.com, LLC, Audible, Inc.’s (collectively,
`
`Amazon) (Dkt. No. 37 in 6:14-CV-992, hereinafter Amazon Motion).
`
`1 For ease of reference, the Court refers to the various Defendants in the Samsung litigation as
`“Samsung.”
`
`2
`
`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 3 of 49 PageID #: 30692
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`After considering the briefing, and for the reasons discussed below, the Apple Motion
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`and the Samsung Motion are DENIED, and the Google Motion is GRANTED. Further, the
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`Court ORDERS that the Amazon action is STAYED.
`
`BACKGROUND
`
`The first litigation related to all of the above-captioned cases began in this Court
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`approximately two years ago. Since that time, both the parties and the Court have expended
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`significant resources in these highly contentious cases.2
`
`The Apple and Samsung Litigations
`
`On May 29, 2013, Smartflash filed separate patent infringement suits against Apple and
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`other defendants (who have since been dismissed) (the -447 case) and Samsung (the -448 case).
`
`In both cases, Smartflash asserted the same six patents: U.S. Patent Nos. 7,334,720 (’720 Patent);
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`8,033,458 (’458 Patent); 8,061,598 (’598 Patent); 8,118,221 (’221 Patent); 8,336,772 (’772
`
`Patent); and 7,942,317 (’317 Patent).
`
`Between March 28 and April 3, 2014 (ten to eleven months after the case was filed),
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`Apple filed twelve separate petitions for covered business method (CBM) review—two for each
`
`of the patents-in-suit—on anticipation and obviousness grounds (§ 102 & § 103). On the same
`
`day it filed its last petition, Apple filed a motion to stay the -447 proceedings pending
`
`completion of the CBM reviews at the Patent Trial and Appeal Board (PTAB). A month and a
`
`half later, Samsung filed a motion to stay based on Apple’s petitions, requesting a stay the
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`in -448 case if the Court found good cause to stay the -447 case. The Court denied both motions
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`without prejudice on the grounds that the PTAB had not yet instituted any reviews, and as such,
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`the issue was speculative.
`
`
`2 For ease of reference, a timeline of events is included as Appendix A to this Opinion.
`
`
`
`3
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`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 4 of 49 PageID #: 30693
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`In late September 2014 (sixteen months after the case was filed), a few days before the
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`PTAB’s six-month deadline for a decision on Apple’s twelve § 102 & § 103 CBM review
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`petitions, Samsung filed ten of its own petitions for CBM review. As grounds for its petitions,
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`Samsung asserted anticipation, obviousness, and unpatentable subject matter (generally governed
`
`by 35 U.S.C. § 101). Four days later, the PTAB granted Apple’s CBM review petitions on
`
`several claims across four of the patents but denied review for the majority of challenged claims,
`
`including those ultimately asserted against Apple during trial. Apple did not re-file its motion to
`
`stay pending CBM review, and the case continued to proceed toward resolution.
`
`In late October 2014 (seventeen months after the case was filed), Apple and Samsung
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`filed motions for summary judgment in this Court, including a motion on § 101 grounds.
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`Beginning on October 30 and continuing until November 25, 2014 (eighteen months after the
`
`case was filed), Apple also filed six more petitions for CBM review before the PTAB, raising
`
`§ 101 grounds. Just over a month later, in December 2014, the Court held a joint hearing on
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`dispositive and Daubert motions in the -447 and -448 cases. At that hearing, the Court heard
`argument on twenty-two motions3 in addition to arguments that led to additional claim
`
`construction briefing. In the following weeks, the Court issued written rulings on all of the
`
`disputes raised in the hearing on dispositive and Daubert motions and issued a supplemental
`
`claim construction order.
`
`The Court held a joint pretrial conference in the -447 and -448 cases on January 6, 2015,
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`where it ruled on motions in limine. At this pretrial conference, for the first time, Defendants
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`raised a subject matter jurisdiction defense based on questions of patent ownership. The Court
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`ordered briefing on the question of patent ownership and issued a written ruling. A few days
`
`
`3 Several of the motions were identical and filed in both cases.
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`
`
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`4
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`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 5 of 49 PageID #: 30694
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`after the -447 and -448 cases were reassigned to the undersigned per General Order,4 the Court
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`set a date for trial in the -447 case and postponed setting a trial date in the -448 case until after
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`the conclusion of the -447 trial.
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`In mid-January 2015 (twenty months after the case was filed), Samsung filed an
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`additional CBM review petition challenging the ’772 Patent under § 101. Six days later,
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`Magistrate Judge Mitchell issued a Report and Recommendation that recommended denying
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`Apple’s and Samsung’s motions for summary judgment under § 101. After considering both
`
`defendants’ objections, the Court issued an Order adopting the Report and Recommendation and
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`denied both defendants’ motions for summary judgment under § 101.
`
`In the following weeks, the Court held a second and a third pretrial conference, the
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`parties elected their final claims and prior art references, and the -447 (Apple) case proceeded to
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`trial. On February 24, 2015—after a six-day jury trial—the jury returned a verdict in favor of
`
`Smartflash, finding that Apple infringed all of the asserted claims, that Apple willfully infringed
`
`the asserted claims, and that all of the asserted claims were valid.
`
`On April 10, 2015, the Court set a post-trial briefing schedule in the -447 case. The Court
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`ordered that the parties file their post-trial motions by May 1, 2015 and their responses by May
`
`26, 2015. These motions and responses are all currently pending before the Court. In addition,
`
`the Court set the post-trial motions for a hearing on July 1, 2015. Furthermore, after the
`
`conclusion of the -447 (Apple) case, the Court (on March 18, 2015) set August, 3, 2015 as the
`
`date for trial in the -448 (Samsung) case.
`
`In late March and early April 2015 (twenty-three months after the case was filed), the
`
`PTAB instituted CBM review in seven proceedings filed by Apple and Samsung. These reviews
`
`include § 101 grounds on at least one claim of each challenged patent, including five of the six
`
`4 General Order 14-20 issued December 19, 2014, and addressed the assignment of cases in the Eastern
`District of Texas in light of the confirmation of Judges Amos Mazzant and Robert Schroeder and the
`upcoming retirement of then Chief Judge Leonard Davis.
`
`
`
`5
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`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 6 of 49 PageID #: 30695
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`originally asserted patents.5 On May 28, 2015 (twenty-four months after the case was filed), the
`
`PTAB instituted review of the challenged claims of the sixth patent—the ’772 Patent. Final
`
`decisions on the instituted petitions from the PTAB are due within a year of institution. AIA
`
`§ 18(a)(1); 35 U.S.C. § 326(a)(11).
`
`Apple and Samsung filed the present motions to stay the litigation pending the CBM
`
`reviews on April 10, 2015, and April 23, 2015, respectively.
`
`The Google and Amazon Litigation
`
`In the Samsung litigation, Smartflash asserts that Google Play—installed on accused
`
`Samsung products—infringes its patents. Google agreed to defend Samsung in the -448
`
`litigation, and Google and Samsung share common counsel. On May 7, 2014, Smartflash filed a
`
`separate lawsuit against Google (-435 case). On December 23, 2014, Smartflash filed a lawsuit
`
`against Amazon (-992 case). In both cases, Smartflash asserts the same six patents originally
`
`asserted in the Apple and Samsung cases as well as a seventh patent that issued on August 5,
`
`2014—U.S. Patent No. 8,794,516 (’516 Patent). After receiving the motions to stay in the Apple
`
`and Samsung actions, the Court ordered briefing on the issue of a stay in the Google and
`
`Amazon actions. Two days after the Court ordered this briefing, on May 6, 2015 (a year after
`
`the -425 case was filed), Google filed the first of five petitions for CBM review (all based on
`
`§ 101 grounds). Additionally, the Markman hearing in the Google action was originally set for
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`May 14, 2015, but the Court postponed the hearing until June 4, 2015, to consider the briefing on
`
`the stay issue.
`
`Finally, from April 30 to May 16, 2015, Apple filed eleven additional petitions for CBM
`
`review that all also include § 101 grounds. In all, according to Docket Navigator, Apple,
`
`Samsung, and Google have filed a total of forty-eight petitions for CBM review against
`
`
`5 The ’221 Patent, the ’720 Patent, the ’458 Patent, the ’598 Patent, and the ’317 Patent.
`
`
`
`
`6
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`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 7 of 49 PageID #: 30696
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`Smartflash.6 This number continues to increase, as the latest CBM review filed by Apple
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`occurred on May 16, 2015. According to Smartflash, these CBM review petitions are the most
`
`petitions filed against a single entity in the AIA’s history.
`
`APPLICABLE LAW
`
`
`
`
`The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (September 16,
`
`2011) (AIA) provides in § 18(a)(1) for the creation of “a transitional post-grant review
`
`proceeding for review of the validity of covered business method patents.” Section 18(d)(1) of
`
`the AIA defines the term “covered business method patent” as follows:
`
`a patent that claims a method or corresponding apparatus for performing data
`processing or other operations used
`in
`the practice, administration, or
`management of a financial product or service, except that the term does not
`include patents for technological inventions.
`
`
`Section 18(b) codifies the request for a stay for such transactional proceedings of
`
`covered business method patents and states:
`
`(1) IN GENERAL.—If a party seeks a stay of a civil action alleging infringement
`of a patent under Section 281 of title 35, United States Code, relating to a
`transitional proceeding for that patent, the court shall decide whether to enter a
`stay based on—
`
`(A) whether a stay, or the denial thereof, will simplify the issues in question and
`streamline the trial;
`
`(B) whether discovery is complete and whether a trial date has been set;
`
`(C) whether a stay, or the denial thereof, would unduly prejudice the
`nonmoving party or present a clear tactical advantage for the moving party; and
`
`(D) whether a stay, or the denial thereof, will reduce the burden of litigation on
`the parties and on the court.
`
`(2) REVIEW.—A party may take an immediate interlocutory appeal from a
`district court’s decision under paragraph (1). The United States Court of
`
`6 DOCKET NAVIGATOR, https://www.docketnavigator.com/browse/results/3c238ab8-1476-abac-b2ba-
`be8660ab2141(last visited May 26, 2015) (running search for Document Type: PTAB Petition for
`Covered Business Method Patent Review; and Party: Smartflash)
`
`
`
`7
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`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 8 of 49 PageID #: 30697
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`Appeals for the Federal Circuit shall review the district court’s decision to ensure
`consistent application of established precedent, and such review may be de novo.
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`Traditionally, the district court has broad discretion to stay proceedings as an incident to
`
`its power to control its own docket. See Clinton v. Jones, 520 U.S. 681, 706 (1997) (citing Landis
`
`v. N. Am. Co., 299 U.S. 248, 254 (1936)). The recent decision in VirtualAgility Inc. v.
`
`Salesforce.com, Inc. is the first appellate decision addressing the proper application of the factors
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`of § 18(b) of the AIA. 759 F.3d 1307 (Fed. Cir. 2014). The Federal Circuit jointly addressed
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`“Factors (A) and (D): Simplification of Issues and Reduced Burden of Litigation.” VirtualAgility,
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`759 F.3d at 1310. Under these factors, the court found that, while parties may put forward similar
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`arguments for the simplification-of-issues factor and the burden-of-litigation factor, both
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`“factor[s] are listed separately in the statute [and] [t]hus, even when both factors point in the
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`same direction—in favor of or against the stay—they continue to be separate, individual factors
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`which must be weighed in the stay determination.” Id. at 1313. It is “improper [for a district court
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`to] review . . . whether the PTAB was correct in its determination that the claims of the . . . patent
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`were more likely than not invalid.” Id. at 1314. It “weighs heavily in favor of granting the stay” if
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`the PTAB grants CBM review on every claim of the asserted patents. Id. The court found that a
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`“simplification argument would be stronger if all of the prior art or relevant invalidity issues
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`were in the CBM review, as this would entirely eliminate the trial court’s need to consider
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`validity in the event that some claims survive CBM review.” Id.
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`“Under the [AIA’s] statutory scheme, district courts have no role in reviewing the
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`PTAB’s determinations regarding the patentability of claims that are subject to CBM
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`proceedings.” Id. at 1313. If the PTAB has issued a determination, a district court’s review
`
`would be “a challenge to the PTAB's ‘more likely than not’ determination [that] amounts to an
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`improper collateral attack on the PTAB’s decision to institute CBM review.” Id. “If the district
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`
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`8
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 9 of 49 PageID #: 30698
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`court were required to ‘review’ the merits of the PTAB’s decision to institute a CBM proceeding
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`as part of its stay determination, it would undermine the purpose of the stay.” Id.
`
`The Federal Circuit next addressed “Factor (B): Whether Discovery Is Complete and
`
`Whether a Trial Date Has Been Set.” Id. at 1315. It is “not error for the district court to wait until
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`the PTAB ma[kes] its decision to institute CBM review before it rule[s] on the motion.” Id.
`
`“While a motion to stay could be granted even before the PTAB rules on a post-grant review
`
`petition, . . . the case for a stay is stronger after post-grant review has been instituted.” Id. at
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`1316. “Generally, the time of the [filing of the] motion is the relevant time to measure the stage
`
`of litigation” for factor (B). Id. at 1317. There is “no error in also taking into account the stage of
`
`litigation as of the date that CBM review was granted.” Id. at 1317 n.6. “Similarly, the district
`
`court may consider evidence that develops after the date of the stay motion—for example, the
`
`fact that the PTAB granted the CBM petition, any claim amendments proposed or entered in the
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`post-grant proceeding, further evidence of competition, and so on—as it pertains to the other
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`three factors.” Id.
`
`Finally, the Federal Circuit addressed “Factor (C): Undue Prejudice or Tactical
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`Advantage.” Id. at 1326. “[C]ompetition between parties can weigh in favor of finding undue
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`prejudice.” Id. at 1318 (citation omitted). “[W]hether the patentee will be unduly prejudiced by a
`
`stay in the district court proceedings during the CBM review, like the irreparable harm-type
`
`inquiry, focuses on the patentee’s need for an expeditious resolution of its claim.” Id. “In some
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`circumstances, a defendant’s decision to save key pieces of prior art for district court litigation in
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`case its CBM challenge fails would weigh against a stay.” Id. at 1320. “Even though the
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`“splitting” of prior art is allowed by statute in the sense that litigation estoppel does not attach to
`
`art that could have been, but was not, raised in CBM review, such behavior can still give the
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`9
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 10 of 49 PageID #: 30699
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`movant a clear tactical advantage within the meaning of § 18.” Id. “Failure to advance irrelevant
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`or redundant prior art would not demonstrate a clear tactical advantage.” Id. at 1320 n.8.
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`All four Defendants request a stay in their respective cases. The Court analyzes each case
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`ANALYSIS
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`individually under the applicable statutory factors.
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`Apple Litigation (-447 case)
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`Apple argues that the first and fourth statutory factors weigh strongly in favor of a stay,
`
`and that the second and third factors also favor a stay. Smartflash argues the opposite.
`
`Factor (A): Whether a stay, or the denial thereof, will simplify the issues in question and
`streamline the trial
`
`The Parties’ Positions
`
`Apple argues that a stay will likely eliminate the issues in this case entirely because the
`
`PTAB instituted CBM review on two of the four asserted claims at trial (when the briefing took
`
`place) and has now instituted review on the remaining two claims. Apple acknowledges that all
`
`the asserted claims are only challenged on § 101 grounds. Further, Apple asserts that the PTAB
`
`will likely ultimately find all the asserted claims ineligible because, as of December 31, 2014, the
`
`PTAB has invalidated 100% of the claims where it instituted CBM review on § 101 grounds.
`
`(Id.) Apple also points out that questions arising under § 101 are questions of law. (Id.)
`
`According to Apple, the cancellation of asserted claims would completely eliminate the need for
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`further proceedings in the case. (Id.)
`
`Smartflash counters that a stay cannot streamline a trial that already occurred or simplify
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`an issue no longer in question. (Smartflash -447 Response at 2–3, Dkt. No. 553 in 6:13-CV-447).
`
`Smartflash argues that a stay will only allow “two separate tribunals to reach two separate
`
`conclusions regarding a single issue of law.” (Id. at 3). Smartflash asserts that the Court already
`
`determined the sole issue on which the PTAB granted CBM review for the asserted claims—
`
`
`
`10
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 11 of 49 PageID #: 30700
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`patent subject matter eligibility. (Id.) In Smartflash’s view, Apple seeks “a back-door
`
`interlocutory appeal of the Court’s § 101 Order.” (Id.) Smartflash argues that instead of trying to
`
`convince the Court that its § 101 Order meets the requirements of § 1292(b)—allowing the court
`
`to certify an order for interlocutory review—it “illogical[ly]” asks the Court to stay the case for a
`
`year while the PTAB decision on the same § 101 issue becomes appealable. (Id.) Smartflash
`
`contends that Apple’s attempt to stay post-trial proceedings for the PTAB to address an already-
`
`decided legal issue is exactly the type of extraordinary and extremely rare circumstance
`
`contemplated by Congress that warrants denying a stay. (Id. at 4).
`
`The Court’s Analysis
`
`As Judge Bryson7 has noted, “the most important factor bearing on whether to grant a
`
`stay” is the prospect that the PTAB proceeding “will result in simplification of the issues before
`
`the Court.” NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058, 2015 WL 1069111, at *4
`
`(E.D. Tex. Mar. 11, 2015) (Bryson, J.). “[B]oth CBM review and inter partes review, like
`
`reexamination, are designed to promote the same policy goals.” Id. at *5. A primary goal of all
`
`of these PTAB proceedings is to give “the expert agency that issued the patents in suit[] an
`
`opportunity to determine in the first instance whether the patents are valid in light of the cited
`
`prior art and to simplify district court infringement proceedings.” Id. As Judge Bryson further
`noted, this process can lead to simplification through a number of different benefits8: (1) “All
`
`prior art presented to the Court will have been first considered by the PTO, with its particular
`
`expertise. (2) Many discovery problems relating to prior art can be alleviated by the PTO
`
`
`7 Sitting by designation. Given the relatively young history of § 18(b), the Court notes that there are not
`many appellate decisions on motions to stay pending CBM review.
`
` While Judge Bryson was referring to the benefits of the reexamination process and how they “appl[y]
`equally to inter partes review,” (id. at *4), the Court finds these same type of benefits apply equally to
`covered business method review proceedings as well. In fact, Judge Bryson has already stated as much:
`“[B]oth CBM review and inter partes review, like reexamination, are designed to promote the same policy
`goals.” Id. at *5.
`
` 8
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`
`
`11
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`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 12 of 49 PageID #: 30701
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`examination. (3) In those cases resulting in effective invalidity of the patent, the suit will likely
`
`be dismissed. (4) The outcome of the [PTAB proceeding] may encourage a settlement without
`
`the further use of the Court. (5) The record of [the PTAB proceeding] would likely be entered at
`
`trial, thereby reducing the complexity and length of the litigation. (6) Issues, defenses, and
`
`evidence will be more easily limited in pre-trial conferences . . . . (7) The cost will likely be
`
`reduced both for the parties and the Court.” Id. at *4.
`
`In the present case, none of the policy goals and none of the benefits are furthered by a
`
`stay. First, Apple has already challenged the validity of the patents in this Court at the summary
`
`judgment stage on almost every potential issue: motions for summary judgment of invalidity
`
`under § 101, § 102, and § 103 and two motions for summary judgment of indefiniteness. The
`
`Court has already borne the burden of issuing reasoned rulings on the § 101 issues and denied
`
`summary judgment motions on § 102 and § 103 grounds. The jury has already passed judgment
`
`on § 102 and § 103 grounds as well. From the Court’s perspective, there is nothing left to
`
`simplify.
`
`Second, only § 101 issues have been raised at the PTAB concerning the claims asserted
`
`(and tried) against Apple. This greatly diminishes the role the PTAB will play in determining
`
`whether “the patents are valid in light of the cited prior art,” as no prior art is needed for the
`
`§ 101 analysis. It is a pure question of law. Even if trial had not occurred, this fact eliminates the
`
`first enumerated benefit that could lead to simplification—that “[a]ll prior art presented to the
`
`Court will have been first considered by the PTO, with its particular expertise.” NFC Tech., 2015
`
`WL 1069111, at *4.
`
`Third, none of the other benefits leading to simplification will manifest in the present
`
`case. For example, “discovery problems relating to prior art” cannot be alleviated as they have
`
`already taken place and been dealt with. The “complexity and length of the litigation” will not be
`
`
`
`12
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`
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 13 of 49 PageID #: 30702
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`reduced by the record of the PTAB proceeding because the trial has already taken place. “Issues,
`
`defenses, and evidence” will not be more easily limited in the pretrial conference; three separate
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`pretrial conferences have already taken place in preparation for the trial which has already
`
`occurred. Finally, the cost to the parties and the Court will not be reduced because the
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`overwhelming majority of those costs have already been incurred. As to the other two listed
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`benefits, both are speculative at this stage in the litigation: settlement is speculative given the
`
`jury verdict and PTAB cancellation is not guaranteed,9 despite Apple’s belief to the contrary.
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`Accordingly, a stay will neither simplify the issues in question (which have been decided) nor
`
`will it streamline a trial that has already taken place.
`
`Fourth, the Court fails to see how staying the case to allow the PTAB to reach a decision
`
`on a purely legal matter (§ 101) can simplify any issue either for this Court or the appellate court.
`
`The Court reached the § 101 decision in mid-January 2015. The simplest way for the § 101
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`issue—the sole issue that Apple relies upon for its stay—to reach the appellate court is to let this
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`nearly completed case move forward to appeal.10 Otherwise, the appellate court will wait a year
`
`for the PTAB to actually issue a final decision, and then wait for that decision to be appealed—
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`all the while further expense is incurred. On either path the appellate court will be reviewing the
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`same question of law on the same statutory grounds. Apple has only increased complexity with
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`the PTAB petitions, not reduced it.
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`This factor weighs against granting a stay.
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`(B) Whether discovery is complete and whether a trial date has been set
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`The Parties’ Positions
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`9 The Court “find[s] it significant that the PTAB granted CBM review on all asserted claims” of the
`asserted patents. VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1314 (Fed. Cir. 2014). This
`could result in “the ultimate simplification of issues” if PTAB decides to cancel all the claims. Id.
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`10 Post-trial briefing is nearly complete. Over 200 pages of post-trial briefing have already been filed, and
`only replies and sur-replies remain. Furthermore, the final post-trial conference is about a month away.
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`13
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 14 of 49 PageID #: 30703
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`Apple argues this factor favors a stay because significant post-trial activities remain, such
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`as briefing and oral argument on renewed motions for judgment as a matter of law, motions for a
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`new trial, motions for enhanced damages, and motions for pre- and post-judgment interest.
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`(Apple Motion at 10, Dkt. No. 546 in 6:13-CV-447). Apple contends that the Court still has
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`significant work to do post-trial, and the case is likely to continue on appeal and on remand. (Id.)
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`According to Apple, if the PTAB finds all of the asserted claims unpatentable, Smartflash’s
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`cause of action is eliminated and the Court must vacate any earlier judgment. (Id. (citing
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`Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1347 (Fed. Cir. 2013))).
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`Smartflash responds that discovery is complete, and the jury rendered a verdict months
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`ago. (Smartflash -447 Response at 6, Dkt. No. 553 in 6:13-CV-447). Smartflash contends that, at
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`this point, seeing the case to its conclusion maximizes judicial economy and party resources
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`because the remaining work to be done is “exceedingly small” compared to the resources already
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`expended. (Id. at 6 (quoting Markets-Alerts Pty, Ltd. v. Bloomberg Fin. LP, 922 F. Supp. 2d 486,
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`493 (D. Del. 2013) (“When confronted with a motion to stay in the later stages of a case, the
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`court and the parties have already expended significant resources on the litigation, and the
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`principle of maximizing the use of judicial and litigant resources is best served by seeing the case
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`through to its conclusion”)). According to Smartflash, the Court must compare the work left to
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`do with the work that has been done. (Id. at 7). Smartflash argues PTAB decisions will unlikely
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`come during post-trial proceedings because decisions on two instituted claims (from the ’720 and
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`’221 Patents) are not due until April 2016, (id.), and review of two claims (from the ’772 Patent)
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`was instituted only a day ago.
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`The Court’s Analysis
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`Apple stretches the bounds of reasonableness by arguing that this factor favors a stay.
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`The plain language of the statute states that “the court shall decide whether to enter a stay based
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`14
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 15 of 49 PageID #: 30704
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`on . . . whether discovery is complete and whether a trial date has been set.” AIA § 18(b). Not
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`only has a trial date been set, the trial is over and a jury rendered a verdict on February 24, 2015.
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`Discovery was complete in September of 2014. Apple’s Motion to stay was filed months after
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`the milestones named in the statute were passed. The vast majority of resources and work have
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`already been expended by both the Court and the parties in this litigation.
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`Another consideration that bears on this factor is whether Apple acted with reasonable
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`diligence in filing its petitions for CBM review and after the petitions were granted, in filing its
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`motions to stay. NFC Tech, 2015 WL 1069111, *3. The Court concludes that Apple did not. This
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`case (-447 case) was filed in May of 2013. Nearly a year later, on March 28 and April 3 of 2014,
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`Apple filed twelve CBM petitions which did not even raise § 101 grounds. In fact, Apple did not
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`file any petitions for CBM review on § 101 grounds until seventeen months after Smartflash
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`filed suit, just two months before pretrial, and approximately three months before trial
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`commenced.11 This delay is especially unreasonable given Apple’s own statement that “[a]fter
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`Apple became aware of the patents on May 29, 2013, when this case was filed, Apple has had
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`good-faith belief in its strong invalidity and non-infringement defenses [including § 101], as
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`expressed in its discovery responses, contentions, and expert reports.” (Apple’s Motion for
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`Summary Judgment of No Willful Infringement and No Indirect Infringement at 5, Dkt. No. 267
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`in 6:13-CV-447). Apple even raised the § 101 defense in its answer filed on July 24, 2013, which
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`is fifteen months before Samsung filed its first CBM petitions on § 101 grounds, sixteen months
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`before Apple filed its first CBM petition on § 101 grounds, and eighteen months before Samsung
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`filed its last petition on § 101 grounds, finally encompassing all the asserted claims in the Apple
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`case. (Apple’s Answer, Dkt. No. 29 in 6:13-cv-447). Even though Apple’s Motion is based on
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`institution decisions on Samsung’s petitions, the timing of all parties petitions effectively
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`11 After a petition for CBM review is filed, the patent owner has three months to file a preliminary
`response, and the PTAB will determine whether to institute review within three months of the response.
`77 Fed. Reg. 48680, 48692 (Aug. 14, 2012).
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`15
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`Case 6:13-cv-00447-JRG Document 558 Filed 05/29/15 Page 16 of 49 PageID #: 30705
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`guaranteed no institution decision would be issued before the completion of trial. This Court is
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`hard-pressed to find that Apple acted with reasonable diligence in filing petitions raising its
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`§ 101 invalidity defense—the only ground that the PTAB instituted review on for the asserted
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