Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page1 of 20
`
`COOLEY LLP
`WAYNE O. STACY (pro hac vice)
`SARAH J. GUSKE (SBN 232467)
`MATTHEW J. LEARY (pro hac vice)
`380 Interlocken Crescent, Suite 900
`Broomfield, CO 80021
`Telephone:
`(720) 566-4000
`Facsimile:
`(720) 566-4099
`
`Attorneys for Defendant
`CISCO SYSTEMS, INC.
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`SAN FRANCISCO DIVISION
`
`CAPELLA PHOTONICS, INC.,
`
`Case No. C 14-03348-EMC
`
`Plaintiff,
`
`v.
`
`CISCO SYSTEMS, INC.,
`
`Defendant
`
`CISCO’S RENEWED MOTION AND
`MEMORANDUM IN SUPPORT
`OF MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS
`OF VALIDITY
`BY THE PATENT OFFICE
`
`Hearing Date: March 26, 2015
`Time: 1:30 p.m.
`Place: Courtroom 5, 17th Floor
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`COOLEY LLP
`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
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`Case No. C 14-03348-EMC
`
`Capella 2004
`Fujitsu v. Capella
`IPR2015-00727
`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
`
`

`
`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page2 of 20
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`TABLE OF CONTENTS
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`I.
`II.
`
`III.
`IV.
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`V.
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`Page
`INTRODUCTION .............................................................................................................. 1
`FACTUAL AND PROCEDURAL BACKGROUND........................................................ 3
`A.
`The Patent Office has instituted review of every challenged claim of the
`’368 patent – including each of those claims that Capella asserts in this
`case.......................................................................................................................... 3
`Inter partes review resolves validity disputes quickly and efficiently: The
`Patent Office’s final decision is binding on this court after appeal, will
`occur within 12 months of institution, and is very likely to mirror the initial
`decision ................................................................................................................... 4
`The PTAB is likely to institute IPR of the very similar ’678 patent....................... 5
`C.
`Capella is a non-practicing entity............................................................................ 5
`D.
`The lawsuit is in its early stages.............................................................................. 5
`E.
`Cisco has been diligent in filing its IPRs and its requests to stay the case ............. 6
`F.
`LEGAL STANDARD......................................................................................................... 7
`ARGUMENT ...................................................................................................................... 8
`A.
`The early stage of this case favors a post-institution stay because
`substantive discovery has not begun, and there is no trial date .............................. 8
`Capella will not be prejudiced by staying the case ................................................. 9
`1.
`Sub-factor (a) – timing of the IPR request – Cisco promptly filed its
`IPR petitions................................................................................................ 9
`Sub-factor (b) – timing of the stay request – Cisco promptly filed
`both its pre- and post-institution stay motions ............................................ 9
`Sub-factor (c) – the status of the Patent Office proceedings weighs
`in favor of a stay........................................................................................ 10
`Sub-factor (d) – the relationship of the parties weighs in favor of a
`stay ............................................................................................................ 10
`Capella has not provided any reason to deny a stay.................................. 11
`5.
`A stay pending the Patent Office’s final decision will streamline the case
`because the IPR provides courts with insight on validity, claim
`construction and damages ..................................................................................... 12
`Staying the case now prevents what could otherwise be a tremendous waste
`of resources ........................................................................................................... 13
`CONCLUSION................................................................................................................. 16
`
`2.
`
`3.
`
`4.
`
`B.
`
`B.
`
`C.
`
`D.
`
`COOLEY LLP
`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
`
`Case No. C 14-03348-EMC
`
`i.
`
`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
`
`

`
`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page3 of 20
`
`TABLE OF AUTHORITIES
`
`Page
`
`Cases
`
`Advanced Micro Sys., Inc. v. LG Elecs., Inc.,
`No. 14-cv-01012-SJ, slip op. (N.D. Cal. Feb. 9, 2015) ........................................................ 2, 8
`
`Apple Inc. v. Samsung Elecs. Co.,
`678 F.3d. 1314 (Fed. Cir. 2012).............................................................................................. 16
`
`Coho Licensing LLC v. Glam Media,
`C 14-01576 JSW, slip op. (N.D. Cal. Sept. 17, 2014) ............................................................ 13
`
`Convergence Techs. (USA), LLC v. Microloops Corp.,
`5:10-CV-02051 EJD, 2012 WL 1232187 (N.D. Cal. Apr. 12, 2012) ..................................... 11
`
`In re Cygnus Telecommunications Tech., LLC, Patent Litig.,
`385 F. Supp. 2d 1022 (N.D. Cal. 2005) .............................................................................. 7, 14
`
`ePlus, Inc. v. Lawson Software, Inc.,
`760 F.3d 1350 (Fed. Cir. 2014)............................................................................................... 13
`
`Ethicon, Inc. v. Quigg,
`849 F.2d 1422 (Fed. Cir. 1988)................................................................................................. 7
`
`Evolutionary Intelligence, LLC v. Facebook, Inc.,
`2014 WL 261837 (N.D. Cal. Jan. 23, 2014) ............................................................................. 2
`
`Evolutionary Intelligence LLC v. Yelp Inc.,
`C-13-03587 DMR, 2013 WL 6672451 (N.D. Cal. Dec. 18, 2013).................................. passim
`
`Fresenius USA, Inc. v. Baxter Int’l, Inc.,
`721 F.3d 1330 (Fed. Cir. 2013)............................................................................... 4, 10, 13, 14
`
`Georgia-Pacific Corp. v. United States Plywood Corp.,
`318 F. Supp. 1116 (S.D.N.Y. 1970).................................................................................. 13, 15
`
`Locata LBS LLC v. Paypal Inc.,
`No. C 14-01864 JSW, slip op. (N.D. Cal. Dec. 4, 2014).......................................................... 9
`
`Neste Oil OYJ v. Dynamic Fuels, LLC,
`No. 1:12-CV-01744-GMS, 2013 WL 3353984 (D. Del. July 2, 2013) .............................. 8, 11
`
`ResQNet.com, Inc. v. Lansa, Inc.,
`594 F.3d 860 (Fed. Cir. 2010)................................................................................................. 15
`
`Rite–Hite Corp. v. Kelley Co.,
`56 F.3d 1538 (Fed.Cir.1995)................................................................................................... 11
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`COOLEY LLP
`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
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`Case No. C 14-03348-EMC
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`ii.
`
`CISCO’S MOTION FOR STAYS PENDING FINAL
`DETERMINATIONS OF VALIDITY
`
`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page4 of 20
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page
`
`Robert Bosch Healthcare Sys., v. Cardiocom, LLC,
`C–14–1575 EMC, 2014 WL 3107447 (N.D. Cal. Jul. 3, 2014)....................................... passim
`
`SynQor, Inc. v. Artesyn Techs., Inc.,
`709 F.3d 1365 (Fed. Cir. 2013)............................................................................................... 15
`
`In re TLI Comm’ns LLC Patent Litig.,
`MDL No. 1:14md2534, slip op. (E.D. Va. Aug. 11, 2014) .................................................... 15
`
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F. 3d 1292 (Fed. Cir. 2011).............................................................................................. 15
`
`Verinata Health, Inc., v. Ariosa Diagnostics, Inc.,
`12-cv-05501-SI, slip op. (N.D. Cal. Feb. 2, 2015).................................................................... 9
`
`Versata Software, Inc. v. Callidus Software, Inc.,
`771 F.3d 1368 (Fed. Cir. 2014)................................................................................................. 8
`
`Statutes
`
`35 U.S.C.,
`§ 6.............................................................................................................................................. 4
`§ 102.......................................................................................................................................... 4
`§ 103.......................................................................................................................................... 4
`§ 141(c) ..................................................................................................................................... 4
`§ 311.......................................................................................................................................... 4
`§ 314(a) ..................................................................................................................................... 5
`§ 315(e) ..................................................................................................................................... 4
`§ 315(e)(2)............................................................................................................................... 12
`§ 316.......................................................................................................................................... 4
`§ 316(a)(11)............................................................................................................................... 4
`§ 318(b) ..................................................................................................................................... 4
`
`Other Authorities
`
`Brian Mahoney, Software Patent Ruling a Major Judicial Failure, Rader Says, Law360.com
`(Oct. 25, 2013, 6:36 PM) .......................................................................................................... 5
`
`L.R.,
`3-2 ............................................................................................................................................. 6
`3-4 ............................................................................................................................................. 6
`4-3 ......................................................................................................................................... 6, 8
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`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
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`Case No. C 14-03348-EMC
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`iii.
`
`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
`
`

`
`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page5 of 20
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`Defendant Cisco notices this Motion for hearing on March 26, 2015, at 1:30 p.m.
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`Cisco renews its Motion for Stay pending a final decision on validity of the Patents-in-
`
`Suit by the Patent Office. This renewed motion is based on the Patent Office’s January 30, 2015,
`
`institution of inter partes review (“IPR”) on every one of the asserted claims of U.S. Patent
`
`No. RE42,368.
`
`I.
`
`INTRODUCTION
`This Court indicated that it would consider a renewed motion to stay once the Patent
`
`Office instituted IPR proceedings with respect to either of the Patents-in-Suit. (Dkt. 131 at 3
`
`(denying Cisco’s pre-institution Motion to Stay Pending Initial and Final Determinations of
`
`Validity).) The Patent Trial and Appeal Board (PTAB) instituted IPR proceedings for the ’368
`
`patent on January 30, 2015. The PTAB determined that, for every claim for which Cisco
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`requested review, “there
`
`is a reasonable
`
`likelihood
`
`that Petitioner would prevail
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`in
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`showing…unpatentability.” (Leary Decl. Ex. A at 2.) The PTAB dismissed Capella’s main
`
`argument for validity, and characterized another of Capella’s arguments as a misrepresentation.
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`(Id. at 13, 16.) Cisco thus renews its motion to stay the litigation pending a final determination of
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`validity by the Patent Office. Because the challenged claims of the other Patent-in-Suit
`
`(RE42,678) are very similar to the instituted claims of the ‘368, there is a high probability that the
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`Patent Office will also institute IPR proceedings on the ’678 patent. That decision should issue
`
`by February 24—before this motion is fully briefed and before the case management conference
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`scheduled for March 10.
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`As this Court has noted, Congress designed the IPR process to “establish a more efficient
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`and streamlined patent system that will improve patent quality and limit unnecessary and
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`counterproductive litigation costs.” Robert Bosch Healthcare Sys., v. Cardiocom, LLC, C–14–
`
`1575 EMC, 2014 WL 3107447 at *2 (N.D. Cal. Jul. 3, 2014) (Chen, J.) These goals will be
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`achieved through a stay pending the Patent Office’s final decisions. The Court should grant these
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`stays based on both the traditional three stay factors and on the unique character of the Patents-in-
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`SAN FRA N CI S CO
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`Case No. C 14-03348-EMC
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`1.
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`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
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`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page6 of 20
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`Suit.1 Those factors weigh even more in favor of a stay now that the Patent Office has instituted
`Cisco’s first IPR.
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`Courts in this District apply a three-factor test to stay requests pending IPR. See, e.g.,
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`Evolutionary Intelligence, LLC v. Facebook, Inc., 2014 WL 261837, *1 (N.D. Cal. Jan. 23, 2014).
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`Each of these three factors weighs in favor a stay pending resolution of the IPRs.
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`As to the first factor—the stage of litigation—no significant activity has taken place, and
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`there is no trial date. Courts in this District have recently stayed cases that are in an almost
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`identical stage as the instant case. Advanced Micro Sys., Inc. v. LG Elecs., Inc., No. 14-cv-01012-
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`SJ, slip op. at 4 (N.D. Cal. Feb. 9, 2015) (granting motion to stay pending IPR where parties had
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`exchanged claim constructions and filed Patent L.R. 4-3 joint claim construction disclosures, but
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`had not briefed claim construction) (Ex. I). Next to nothing has happened in this case since
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`Cisco’s pre-institution motion to stay. In the interim time, the Court allowed only Markman-
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`related discovery and deferred claim construction until after the PTAB’s expected rulings. (Dkt.
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`131 at 3.) None of the parties served any additional discovery.
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`As to the second factor—simplification of the case—the Patent Office’s decision will
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`simplify issues and trial. The PTAB decision on the ’368 means that at the very least almost half
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`of the asserted claims in this case are likely to be found invalid. (See Leary Decl. Ex. A at 2.)
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`And it is likely that all of the asserted claims will be instituted. Even in the unlikely event that the
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`PTAB institutes on none of the highly similar claims of the ’678 patent, the ’368 IPR is likely to
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`greatly simplify the case.
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`As to the third factor—prejudice—the Plaintiff faces no meaningful prejudice from the
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`stay, as Capella is a non-practicing entity. The lack of prejudice is especially apparent under the
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`four sub-factors this Court uses for evaluating prejudice. Those sub-factors are: (a) the timing of
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`the IPR request; (b) the timing of the request for a stay; (c) the status of Patent Office
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`proceedings; and (d) the relationship of the parties. Bosch, 2014 WL 3107447 at *5. Here, Cisco
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`1 Defendants in the cases consolidated with Cisco’s case—Fujitsu Network Communications,
`Inc., Ciena Corporation, Tellabs Operations, Inc., and Coriant (USA) Inc. —do not oppose
`Cisco's motion to stay. The consolidated cases should be stayed for the same reasons Cisco’s
`case should be stayed.
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`COOLEY LLP
`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
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`Case No. C 14-03348-EMC
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`2.
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`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
`
`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page7 of 20
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`promptly filed its IPRs, requested a stay, the Patent Office’s institution decision on the ’678
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`patent is imminent and its final decision on the ’368 IPR will come in less than a year, and the
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`parties are not competitors.
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`The third factor weighs even more in favor of a stay now that the Patent Office has
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`instituted the ’368 IPR. Staying the case will prevent what is now an even higher likelihood that
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`Capella would expend its allegedly-dwindling resources on a case whose patents are likely to be
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`invalidated by this time next year. Whatever small prejudice Capella might have alleged from a
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`pre-institution stay is now even smaller.
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`II.
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`FACTUAL AND PROCEDURAL BACKGROUND
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`A.
`
`The Patent Office has instituted review of every challenged claim of the ’368
`patent – including each of those claims that Capella asserts in this case
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`Capella identified the claims that it was asserting against Cisco on April 18, 2014. (Dkt.
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`No. 25 at 2.) Cisco’s two IPRs challenge each of those claims.
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`(Leary Decl. Ex. C, IPR2014-
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`01166 at 1; Ex. D; IPR2014-01276 at 1.) The ’368 patent has 22 claims, 19 of which Capella
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`asserts against Cisco. (Leary Decl. Ex. E, Capella’s infringement contentions.) The Patent Office
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`instituted review on all 19 claims. (Leary Decl. Ex. A at 20.) The ’678 patent has 67 claims, 24
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`of which Capella asserts against Cisco. (Leary Decl. Ex. E, Capella’s infringement contentions.)
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`Not only did the PTAB institute IPR on all claims of the ’368, the PTAB also dismissed
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`the cornerstone argument for validity that Capella made before this Court. In its opposition to
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`Cisco’s motion for a pre-institution stay, Capella argued that one of the prior art references Cisco
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`asserted in the IPRs—the Smith patent—was not prior art. (Dkt. 124 at 1-4.) The PTAB
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`disagreed and indicated that Capella’s argument had “no bearing” on whether Smith was prior art.
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`(Leary Decl. Ex. A at 13-14.) The PTAB also noted that Cisco’s expert helped confirm that
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`Smith was prior art. (Id.)
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`Case No. C 14-03348-EMC
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`3.
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`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
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`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page8 of 20
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`B.
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`Inter partes review resolves validity disputes quickly and efficiently: The
`Patent Office’s final decision is binding on this court after appeal, will occur
`within 12 months of institution, and is very likely to mirror the initial decision
`The PTAB will make its final written decision on the validity of the instituted ‘368 claims
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`within a year of institution. And that final decision is highly likely to reflect the initial decision
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`that the patents are likely invalid.
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`The IPR process provides a full and binding adversarial challenge to a patent’s validity
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`based on prior art publications and patents under 35 U.S.C. §§ 102 and 103. It includes an oral
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`hearing and discovery. 35 U.S.C. §§ 311, 316. By statute, the District Court is bound by the final
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`decision from the Patent Office. 35 U.S.C. § 141(c), 318(b). Specifically, validity decisions by
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`the District Court and the jury are trumped by any final, non-appealable IPR decision. Fresenius
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`USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1343 (Fed. Cir. 2013). And the petitioner is bound
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`by the applicable estoppel provisions immediately upon issuance of the final decision, even before
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`any appeal of that decision. 35 U.S.C. § 315(e).
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`The timing of the final decision is set by statute. The Patent Office must issue its final
`validity decision within an additional 12 months2 after institution—by January 30, 2016 for the
`’368 patent. 35 U.S.C. § 316(a)(11).
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`The Patent Office’s initial decision to institute an IPR is a good barometer of what claims
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`the Patent Office will find ultimately invalid. That barometer has not changed in the few months
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`since Cisco’s pre-institution motion to stay. The Patent Office’s final decision on validity still
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`closely matches its initial decision. For over 70% of claims, the initial decision regarding
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`invalidity is confirmed by the final decision. (Leary Decl. Ex. G. at 4.) This match makes logical
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`sense for two reasons. First, both the initial and final decisions apply the same evidentiary
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`standard, and the same three-judge panel is issuing the ruling both times and using the same legal
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`standard both times. In contrast to the now-discontinued inter partes reexamination proceeding—
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`which was conducted by a single patent examiner—an IPR is heard by a three-member panel
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`composed of administrative law judges. 35 U.S.C. §§ 6, 311. Second, the institution of an IPR is
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`2 The Patent Office may, for good cause shown, extend the review period for not more than an
`additional 6 months. 35 U.S.C. § 316(a)(11).
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`Case No. C 14-03348-EMC
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`4.
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`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
`
`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page9 of 20
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`also more meaningful than the institution of a reexamination. IPRs use a higher “reasonable
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`likelihood” to prevail standard than the “substantial new question of patentability” that reexams
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`use. 35 U.S.C. § 314(a); Evolutionary Intelligence LLC v. Yelp Inc., C-13-03587 DMR, 2013 WL
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`6672451, at *3 (N.D. Cal. Dec. 18, 2013) For these reasons, there is a high likelihood here that
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`the instituted claims will be invalidated or disclaimed as a result of the IPR proceedings.
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`The PTAB is likely to institute IPR of the very similar ’678 patent
`C.
`Capella also asserts the ’678 patent, which is very similar to the ’368 patent. The ’368
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`and ’678 are both reissue patents which share the same specification and are continuations of the
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`same root patent. Capella relies on the same primary argument for validity for both patents—the
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`alleged non-prior art status of the Smith patent. And as discussed in § II.A, above, the PTAB
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`dismissed that argument. For that reason, the PTAB is likely to institute on (and ultimately find
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`invalid) the ’678 patent claims. Cisco expects the institution decision for the ’678 patent by
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`February 24.
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`Capella is a non-practicing entity
`D.
`Capella sold its operations to Alcatel-Lucent in late 2012 and no longer manufactures
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`products. (Dkt. No. 35-1, Lucas Decl.) As the Florida Court found, Capella is now a non-
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`practicing entity. (Transfer Order, Dkt. No. 77 at 4.)
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`The lawsuit is in its early stages
`E.
`The filing date of this case in the Southern District of Florida might suggest the case is
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`further along than it is. In fact, the case has not progressed. Although Capella filed its initial
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`Complaint on February 12, 2014, (Dkt. No. 1), court activity for most of the year since its filing
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`focused on transferring the case back to where it always belonged: the home court for both
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`Capella and Cisco in the Northern District of California.
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`Capella’s choice of Florida was entirely improper. As Cisco pointed out in its motion to
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`transfer, to avoid its home forum, San Jose-based Capella flew 3,000 miles to sue another San
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`Jose-based company, Cisco. The headquarters for Capella and Cisco are 16 miles apart and both
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`are within 10 miles of the Federal courthouse in San Jose. The Florida Court agreed. In its
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`July 23, 2014, transfer Order the Florida Court did not identify a single tie the case had to Florida.
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`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
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`Case No. C 14-03348-EMC
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`5.
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`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
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`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page10 of 20
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`(Dkt. No. 76.)
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`Even while the case was pending in the Southern District of Florida, it never progressed.
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`Discovery never started. The Florida Court held a case management conference on July 10, 2014,
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`but during that Conference, the Court only addressed pending motions, including Cisco’s motion
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`to transfer. (Dkt. No. 74.) The Florida court did not issue a scheduling order. (Id.)
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`Very little has happened in the case since it arrived in California. The only documents
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`that the Court has ordered to be produced are those associated with Patent L.R. 3-2 and 3-4. The
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`parties produced their Patent L.R. 4-3 joint statement on January 12. Claim construction briefing
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`has not started. The Markman hearing is not scheduled until April 13, a month and a half away.
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`(Dkt. No. 152.) There is no schedule for the case beyond claim construction, let alone any trial
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`date. (Dkt. Nos. 110, 144.) There has been no production of (nor requests for) ESI. No
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`depositions have been taken or scheduled. The case management conference is not set until
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`March 10. (Dkt. No. 159.)
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`Cisco has been diligent in filing its IPRs and its requests to stay the case
`F.
`Cisco began filing its petitions for inter partes review just three months after answering
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`Capella’s Complaint. Cisco answered the Complaint on April 4, 2014. Cisco filed its IPR
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`petition for the ’368 patent on July 15, 2014. (Leary Decl. Ex. C, IPR2014-01166.)
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`Cisco was also timely in bringing the case to an appropriate venue and in filing its request
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`to stay. Cisco filed its motion to transfer venue to the Northern District of California on the same
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`day it answered the Florida Complaint: April 4, 2014. (Dkt. Nos. 17, 19.) Cisco also acted to
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`keep the case and the parties’ expenditures in Florida from getting ahead of the IPRs.
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`Specifically, Cisco filed a motion to stay the case pending transfer on June 17, 2014. (Dkt.
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`No. 51.) Once the case was transferred, Cisco informed the Court of the pending IPR petitions
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`and that Cisco intended to file a motion to stay. Cisco made this known at the very first
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`hearing—the case management conference on September 18. (Dkt. No. 107, Joint Case
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`Management Statement at 12.)
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`Cisco filed its motion for a pre-institution stay on September 25, 2014. (Dkt. No. 113.)
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`This Court denied the motion without prejudice on October 14, ruling that a stay was premature
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`COOLEY LLP
`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
`
`Case No. C 14-03348-EMC
`
`6.
`
`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
`
`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page11 of 20
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`because the Patent Office had not yet ruled on Cisco’s petitions for IPR. (Dkt. No. 131.) The
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`Court noted that should Cisco’s IPR petitions “be granted, the Court could stay [] remaining
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`deadlines, saving the Court and the parties significant effort and expense.” (Id. at 2.)
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`Cisco is also timely in bringing this post-institution motion to stay. Cisco notified Capella
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`of Cisco’s intent to renew its motion to stay the case less than one business day after the PTAB’s
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`institution decision. (Leary Decl. Ex. B at 4.) At that time, Cisco asked if Capella would stipulate
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`to a stay to prevent a waste of resources on another briefing cycle. (Id.) After repeated requests
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`from Cisco for a definitive response from Capella, and after almost two weeks of delays from
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`Capella, Cisco was forced to bring this opposed motion. (Id. at 1.) Cisco brings this motion just
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`two weeks after the Patent Office made its initial decision on the validity of the ’368 patent.
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`III.
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`LEGAL STANDARD
`Courts have the inherent power to manage their dockets and stay proceedings, including
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`the authority to order a stay pending conclusion of a Patent Office administrative proceeding.
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`Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426–27 (Fed. Cir. 1988). When determining whether a
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`stay is warranted in a particular case, courts consider three factors: (1) whether a stay will unduly
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`prejudice or present a clear tactical disadvantage to the nonmoving party, (2) whether a stay will
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`simplify the issues in question; and (3) whether discovery is complete and a trial date has been
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`set. In re Cygnus Telecommunications Tech., LLC, Patent Litig., 385 F. Supp. 2d 1022, 1023
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`(N.D. Cal. 2005); Evolutionary Intelligence v. Yelp, 2013 WL 6672451, at *4 (applying factors
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`used for stays pending reexamination to stays pending inter partes review).
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`IV.
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`ARGUMENT
`All three of the stay factors warrant a stay to await the Patent Office’s final decision on
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`the ’368 patent’s validity. Cisco addresses below how each of these factors supports each
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`requested stay.
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`A.
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`The early stage of this case favors a post-institution stay because substantive
`discovery has not begun, and there is no trial date
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`Factor (3)—the stage of the case—weighs strongly in favor of post-institution stay. This
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`case has advanced little beyond the initial pleading and responsive motions. The Court has held a
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`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
`
`Case No. C 14-03348-EMC
`
`7.
`
`CISCO’S RENEWED MOTION FOR STAYS PENDING
`FINAL DETERMINATIONS OF VALIDITY
`
`

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`Case3:14-cv-03348-EMC Document161 Filed02/12/15 Page12 of 20
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`scheduling conference but has not set a trial date. Claim construction issues have not been
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`briefed, and the Markman hearing is not for another two months. “Staying a case in its early
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`stages ‘can be said to advance judicial efficiency and maximize the likelihood that neither the
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`Court nor the parties expend their assets addressing invalidity claims.’” Neste Oil OYJ v.
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`Dynamic Fuels, LLC, No. 1:12-CV-01744-GMS, 2013 WL 3353984 at *5 (D. Del. July 2, 2013).
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`The Patent Office has instituted the ’368 petition, and it is highly probable that the Patent
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`Office will institute the ’678 petition. This means that having the parties litigate the case for a
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`year is especially likely to be a waste of time and resources, and a stay should be granted.
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`Courts grant stays pending the Patent Office’s IPR decisions even where the case is not in
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`its infancy. Courts do so because of the statutory limit on how long the Patent Office can take to
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`determine invalidity and because of the simplification that decision brings to the case. The
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`Federal Circuit recently reversed a trial court’s denial of a stay pending covered business method
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`review where “the parties exchanged discovery requests, issued third-party subpoenas, and
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`produced documents, including source code.” Versata Software, Inc. v. Callidus Software, Inc.,
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`771 F.3d 1368, 1373 (Fed. Cir. 2014). A court in this District granted a stay in a case at a very
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`similar stage to this one, where the parties had filed their Patent Local Rule 4-3 statement.
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`Advanced Micro Sys., slip op. at 4.
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`“Waiting for the outcome of the reexamination could eliminate the need for trial if the
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`claims are cancelled or, if the claims survive, facilitate trial by providing the court with expert
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`opinion of the [Patent Office] and clarifying the scope of the claims.” Verinata Health, Inc., v.
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`Ariosa Diagnostics, Inc., 12-cv-05501-SI, slip op. at 4 (N.D. Cal. Feb. 2, 2015) (granting third
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`motion to stay where the parties had produced substantial discovery and the court had construed
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`the claims pending instituted inter partes reviews and a Federal Circuit appeal of a Patent Office
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`decision); “[B]ecause the [Patent Office] review impacts all claims at issue in this case, granting a
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`stay will likely prevent the parties and the Court from having to expend substantial resources as
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`the case moves forward.” Locata LBS LLC v. Paypal Inc., No. C 14-01864 JSW, slip op. at 4
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`(N.D. Cal. Dec. 4, 2014) (granting stay where IPR instituted).
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`COOLEY LLP
`ATTO RN EY S AT LAW
`SAN FRA N CI S CO
`
`Case No. C 14-03348-EMC
`
`8.
`
`CISCO’S RENEWED MOTION FOR STA