9/27/2019
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`Measuring The Success Of Motions To Stay Pending IPR - Law360
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`Measuring The Success Of Motions To Stay Pending
`IPR
`
`By Jim Warriner (June 6, 2017, 11:39 AM EDT)
`Inter partes reviews have rapidly become a preferred procedure for
`challenging the validity of patents since the establishment of the proceeding in
`September 2012. One of the reasons Congress established IPRs was to provide
`a “faster, less costly alternative[] to civil litigation to challenge patents.”[1]
`When compared to district court litigation, the possibility of invalidating
`patents while being subject to only limited discovery is an attractive
`proposition for many accused infringers. A stay of district court litigation
`pending IPR is not a given, however. Being subject to parallel proceedings at
`the Patent Trial and Appeal Board and the district court, and the cost of
`retaining both litigation and IPR counsel, is a prospect that may dissuade some
`would-be IPR filers.
`
`This article evaluates motions to stay litigation pending IPRs and provides
`guidance into the factors that lead district courts to grant or deny stay motions. The analysis includes
`142 orders on contested motions to stay pending IPR from three popular patent litigation districts —
`Northern District of California, District of Delaware, and Eastern District of Texas — from July 2014 to
`April 2017.
`District Stats Comparison
`
`Jim Warriner
`
`https://www.law360.com/articles/928654/print?section=california
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`1/5
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`Petitioner Apple Inc. - Exhibit 1059, p. 1
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`Stay Factors
`
`For motions to stay pending IPRs, district courts apply the same three-factor test that had been used
`for re-examinations: (1) whether a stay will simplify the issues in question and trial of the case; (2)
`whether the stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving
`party; and (3) whether discovery is complete and whether a trial date has been set.[2]
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`https://www.law360.com/articles/928654/print?section=california
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`2/5
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`Petitioner Apple Inc. - Exhibit 1059, p. 2
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`Simplify Issues
`
`To determine whether a stay will simplify issues, courts primarily look to whether IPR petitions have
`been instituted and whether all asserted claims are challenged. Courts typically treat the possibility
`of issue simplification as speculative prior to institution and frequently deny pre-institution motions to
`stay without prejudice. In the reviewed set of stay orders, only 24 percent of pre-institution stay
`motions were granted, while 60 percent were denied without prejudice. Movants having IPRs
`instituted on all asserted claims have a strong argument that the PTAB may invalidate all claims and
`obviate the need for a trial, greatly simplifying issues for the court. As such, courts granted 76
`percent of motions to stay in these situations. On the other hand, 62 percent of stay motions were
`denied if the instituted IPRs did not cover one or more asserted claims.
`
`An additional consideration that may arise in weighing issue simplification is agreement to be bound
`by estoppel. Upon issuance of a final written decision in an IPR, § 315(e)(2) automatically bars
`petitioners from asserting in district court litigation any prior art that was raised or could have been
`raised in the IPR proceeding (although the Federal Circuit has narrowly interpreted the estoppel
`statute).[3] This statutory estoppel favors issue simplification by reducing the universe of prior art
`that the petitioner may assert after a stay expires. But statutory estoppel does not apply to accused
`infringers who do not participate in the IPR proceeding. A nonpetitioning defendant (who may or may
`not join the motion to stay) may therefore assert the same set of prior art references that were at
`issue in the instituted IPR.
`
`Courts apply different approaches to motions to stay where one or more defendants are not subject
`to statutory estoppel. Some courts, including the District of Delaware and Eastern District of Texas,
`will typically not grant a stay unless the nonpetitioning defendants stipulate to the full extent of
`estoppel that applies to IPR petitioners.[4] Other courts require agreement to be bound by only
`limited estoppel[5] or require no agreement to be estopped at all.[6] The Northern District of
`California has variously applied all three estoppel approaches in deciding motions to stay.[7]
`Undue Prejudice or Clear Tactical Disadvantage
`
`A finding that the stay would unduly prejudice or present a clear tactical disadvantage to the patent
`owner will weigh against a stay. Some of the facts that courts evaluate are the timing of the request
`for stay and the relationship between the parties.
`
`Section 315(b) allows an IPR petition to be filed up to one year after the petitioner is served with the
`complaint. But when a petitioner files its IPR petition and subsequent motion to stay close to the one
`year deadline, the court is likely to find that the movant seeks a tactical advantage by disrupting the
`district court proceedings. For example, a motion to stay filed less than two months after the
`complaint’s filing weighed in favor of a stay,[8] but IPRs filed on the one-year deadline, without
`explanation for the delay in filing, weighed against a stay.[9] Although this factor typically focuses on
`the movant’s diligence, at least one court has found that the patent owner’s own delay in filing suit
`weighed in favor of a stay.[10] The Northern District of California has held that waiting until
`infringement contentions are received to analyze the asserted claims before filing an IPR petition
`does not create undue prejudice,[11] but other courts may not account for the timing of the
`infringement contentions.
`
`The relationship between the patent owner and movant may weigh against a stay. Courts are more
`likely to grant a stay where the parties are not competitors, because monetary damages are
`adequate to compensate for the infringement where the patent owner does not face lost market
`share. For cases involving competitors, stays were granted in 35 percent of the reviewed cases; the
`grant rate increased to 55 percent where the parties were not competitors. In situations where there
`are multiple competitors in the market, there is less undue prejudice than cases where the parties
`are the sole competitors.[12] Further, the failure of the patentee to seek a preliminary injunction
`lessens the extent to which it will suffer undue prejudice on account of a stay.[13] Finally, some
`courts have suggested that nonpracticing entities cannot suffer undue prejudice from a stay, but
`other courts have rejected this position.[14]
`Discovery Complete and Trial Date Set
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`https://www.law360.com/articles/928654/print?section=california
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`3/5
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`Petitioner Apple Inc. - Exhibit 1059, p. 3
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`The third factor considered by courts is whether discovery is complete and a trial date is set. This
`factor considers the status of the litigation at the time the motion to stay was filed.[15] The stage of
`litigation favors a stay if a significant amount of work remains for the parties and the court.[16] In
`addition to completion of discovery and a set trial date, courts also typically look to whether claim
`construction briefing is complete and a Markman order has issued.[17] As discussed with respect to
`timing for the undue prejudice factor, petitioners benefit from early filing of the IPR petitions and stay
`motion.
`Takeaways
`
`Having IPRs instituted on all asserted claims is a key factor favoring a stay. Petitioners are thus
`advised to challenge all asserted claims and include multiple invalidity grounds in their petitions to
`maximize the possibility of a full institution. When there are co-defendants in the district court
`litigation who will not join the IPR petitions, potential stay movants should research the court’s
`position on estoppel and, if necessary, persuade the co-defendants to stipulate to estoppel.
`
`Courts frequently deny motions to stay that are filed in a relatively late stage in the litigation or close
`to the one-year deadline. Accused infringers should therefore initiate a prior art search and evaluate
`the potential filing of an IPR shortly after service of the complaint. When litigating in a district known
`for quick times to trial and compressed case schedules, e.g., Eastern District of Texas, early filing of
`the IPR petition and motion to stay is especially important. To ensure that the motion to stay is filed
`at an early stage, such as before claim construction briefing, identification of key prior art references
`and evaluation of expert witnesses should begin even before the set of asserted claims are received
`via infringement contentions.
`
`The motion to stay — which can be drafted in parallel with the IPR petitions — should be filed
`immediately after filing the IPR petitions. As mentioned above, it is likely that the pre-institution
`motion to stay will be denied without prejudice. However, the movant can file a second motion to
`stay after institution, and the motion will be accorded the filing date of the original motion to stay.
`
`Jim Warriner is an associate in the Austin, Texas, office of Norton Rose Fulbright LLP.
`
`The opinions expressed are those of the author(s) and do not necessarily reflect the views of the
`firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for
`general information purposes and is not intended to be and should not be taken as legal advice.
`
`[1] 157 Cong. Rec. S952 (daily ed. Feb. 28, 2011) (statement of Sen. Chuck Grassley).
`
`[2] Telemac Corp. v. Teledigital, Inc., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006); First Am. Title
`Ins. Co. v. McLaren LLC, No. 10-363-GMS, 2012 WL 769601, at *4 (D. Del. Mar. 9, 2012); Soverain
`Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005).
`
`[3] See Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016)
`(declining to apply estoppel to prior art grounds raised in the IPR petition but not instituted).
`
`[4] Dkt. No. 38, Message Notification Techs. LLC v. Microsoft Corp., No. 13-1881, at *4 n.4 (D. Del.
`Feb. 24, 2015); Intellectual Ventures II LLC v. Kemper Corp., No. 6:16-cv-0081, 2016 WL 7634422,
`at *3 (E.D. Tex. Nov. 7, 2016) (noting that “the limited estoppel proposed by Defendants may not
`actually simplify the issues at all”).
`
`[5] See, e.g., E.Digital Corp. v. Arcsoft, Inc., No. 15-cv-56, 2016 WL 452152, *2 (S.D. Cal. Feb. 3,
`2016).
`
`[6] See, e.g., Intellectual Ventures II LLC v. SunTrust Banks, Inc., No. 1:13-cv-02454, 2014 WL
`5019911, at *3 (N.D. Ga. Oct. 7, 2014); Intellectual Ventures II LLC v. Huntington Bancshares Inc.,
`No. 2:13-cv-00785, 2014 WL 2589420, *4 (S.D. Ohio June 10, 2014).
`
`[7] “Courts in [the Northern District of California] have varied in their approach as to what level of
`estoppel a non-party to the IPR must agree to before imposing a stay based on a pending IPR
`https://www.law360.com/articles/928654/print?section=california
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`4/5
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`Petitioner Apple Inc. - Exhibit 1059, p. 4
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`petition, with their requirements ranging from no agreement to be estopped to an agreement to be
`estopped from arguing invalidity on any ground that the petitioner raised or reasonably could have
`raised, i.e., full statutory estoppel.” Dkt. No. 80, Rothschild Storage Retrieval Innovations, LLC v.
`Sony Mobile Commc’ns (USA), Inc., No. 15-cv-00234, at *8 (N.D. Cal. May 6, 2015) (comparing
`cases).
`
`[8] Toshiba Samsung Storage Tech. Korea Corp. v. LG Elecs., Inc., 193 F. Supp. 3d 345, 351 (D. Del.
`2016).
`
`[9] Parthenon Unified Memory Architecture LLC v. HTC Corp., No. 2:14-CV-00690, 2016 WL 3365855,
`at *2 (E.D. Tex. June 17, 2016).
`
`[10] See Personal Audio LLC v. Google, Inc., No. 1:15-cv-350, at *2 (E.D. Tex. Nov. 3, 2015).
`
`[11] Cypress Semiconductor Corp. v. GSI Tech., Inc., No. 13-cv-02013, 2014 WL 5021100, at *4
`(N.D. Cal. Oct. 7, 2014).
`
`[12] See, e.g., Toshiba Samsung v. LG Elecs., 193 F. Supp. 3d at 352; Dkt. No. 138, Karl Storz
`Endoscopy-Am., Inc. v. Stryker Corp., No. 14-cv-00876, at *7 (N.D. Cal. Mar. 30, 2015).
`
`[13] See, e.g., Karl Storz v. Stryker, No. 14-cv-00876, at *7.
`
`[14] Compare Longitude Licensing Ltd. v. Apple Inc., No. 14-CV-04275, 2015 WL 12778777, at *6
`(N.D. Cal. Oct. 29, 2015) (noting that several cases have found that there was no undue prejudice to
`a non-practicing entity) with Rembrandt Wireless Techs., LP v. Samsung Elecs. Co., No. 2:13-cv-213,
`2015 WL 627887, at *2 (E.D. Tex. Jan. 29, 2015) (“The mere fact that [plaintiff] is not currently
`practicing the patents does not mean that, as a matter of law, it is not prejudiced by a substantial
`delay of an imminent trial date.”)
`
`[15] See, e.g., Toshiba Samsung v. LG Elecs., 193 F. Supp. 3d at 350.
`
`[16] See Norman IP Holdings, LLC v. TP-Link Techs., Co., No. 6:13-CV-384, 2014 WL 5035718, at *3
`(E.D. Tex. Oct. 8, 2014).
`
`[17] Realtime Data LLC v. Actian Corp., No. 6:15-CV-463, 2016 WL 3277259, at *3 (E.D. Tex. June
`14, 2016); Copy Prot. LLC v. Netflix, Inc., No. CV 14-365, 2015 WL 3799363, at *1 (D. Del. June 17,
`2015).
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`https://www.law360.com/articles/928654/print?section=california
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`5/5
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`Petitioner Apple Inc. - Exhibit 1059, p. 5
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