Case 1:22-cv-00058-ADA Document 128 Filed 06/29/23 Page 1 of 5
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
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`IDENTITY SECURITY LLC,
` Plaintiff,
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`v.
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`APPLE INC.,
` Defendant.
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`CASE NO. 1:22-CV-00058-ADA
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`JURY TRIAL DEMANDED
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`ORDER DENYING MOTION TO STAY
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`Before the Court is Defendant Apple Inc.’s Motion to Stay Pending Ex Parte
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`Reexaminations, filed April 21, 2023, and all related briefing. ECF Nos. 104, 114, 116. The Court
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`orally DENIED Apple’s motion to stay in the hearing held June 16, 2023. ECF No. 125. This
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`order memorializes that ruling.
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`I. BACKGROUND
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`Identity Security sues Apple for patent infringement, alleging that Apple’s “Secure
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`Enclave” system, which provides security and authentication measures in various Apple products,
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`infringes United States Patent No. 7,493,497, United States Patent No. 8,020,008, United States
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`Patent No. 8,489,895, and United States Patent No. 9,507,948 (collectively, the Asserted Patents).
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`ECF No. 91. The Patents-in-Suit share a common specification and describe a “digital identity
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`device” that uses digital identity data and a microprocessor with a unique identifier to secure digital
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`transactions. Id.
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`This case was transferred to the Austin Division on January 20, 2022. ECF No. 55.
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`Following briefing, a tutorial, and a Markman hearing, the Court rendered a claims-construction
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`order on November 2, 2022. ECF No. 77. The Court rendered a Scheduling Order on January 20,
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`2023 that opened fact discovery and set the case for jury trial. ECF No. 82. Trial in this case will
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`be set in April of 2023. ECF No. 125 at 14:7–11.
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`Apple filed requests for ex parte reexaminations of the Asserted Patents in January of 2023
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`and in April of 2023. ECF No. 104 at 1. The United States Patent Office (PTO) granted four of
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`Apple’s requests for reexamination on April 3, 2023. Id. Apple moved to stay this action pending
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`resolution of these reexaminations on April 21, 2023. Id.
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`II. LEGAL STANDARD
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`A district court has the inherent power to control its own docket, including the power to
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`stay proceedings before it. Clinton v. Jones, 520 U.S. 681, 706 (1997). The court has discretion in
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`deciding whether to stay a case in PTO proceedings, including ex parte reexaminations. TC Tech.
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`LLC v. T-Mobile USA, Inc., No. 6:20-CV-00899, 2021 WL 8083373, at *1 (W.D. Tex. Dec. 7,
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`2021). A stay is particularly justified when “the outcome of a PTO proceeding is likely to assist
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`the court in determining patent validity or eliminate the need to try infringement issues.” NFC
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`Tech. LLC v. HTC Am., Inc., No. 2:13-CV-01058, 2015 WL 1069111, at *1 (E.D. Tex. Mar. 11,
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`2015) (citing Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983)); see also
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`Evolutionary Intelligence, LLC v. Millennial Media, Inc., No. 5:13-CV-04206, 2014 WL 2738501,
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`at *2 (N.D. Cal. June 11, 2014). However, “there is no per se rule that patent cases should be
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`stayed pending PTO proceedings, because such a rule would invite parties to unilaterally derail
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`litigation.” Realtime Data, LLC v. Rackspace US, Inc., No. 6:16-CV-00961 RWS-JDL, 2017 U.S.
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`Dist. LEXIS 27421, at *6 (E.D. Tex. Feb. 27, 2017) (quotation and citation omitted).
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`To determine whether a stay is proper, the district court considers three factors: (1) whether
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`the stay will unduly prejudice the nonmoving party, (2) whether the proceedings before the court
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`have reached an advanced stage, including whether discovery is complete and a trial date has been
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`set, and (3) whether the stay will likely result in simplifying the case before the court. TC Tech.,
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`2021 WL 8083373, at *2 (quoting Kirsch Rsch. & Dev., LLC v. IKO Indus., Inc., No. 6:20-CV-
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`00317, 2021 WL 4555610, at *1 (W.D. Tex. Oct. 4, 2021)). “Essentially, courts determine whether
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`the benefits of a stay outweigh the inherent costs based on these factors.” EchoStar Techs. Corp.
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`v. TiVo, Inc., No. 5:05-CV-00081, 2006 WL 2501494, at *1 (E.D. Tex. July 14, 2006).
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`III. ANALYSIS
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`A.
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`Undue Prejudice
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`The first factor this Court considers is whether the stay will unduly prejudice Identity
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`Security. Apple asserts that Identity Security cannot be prejudiced by a stay because it does not
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`practice the Asserted Patents, does not compete with Apple, and can seek only monetary damages.
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`ECF No. 104 at 4–5. Identity Security argues that a stay pending ex parte reexaminations would
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`likely last over two years and such delay would prejudice Identity Security’s interest in the timely
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`enforcement of its patent rights. ECF No. 114 at 8–9.
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` The Court agrees with Identity Security. As a patent holder, Identity Security has an
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`inherent interest in the timely enforcement of its patent rights. See MiMedx Grp., Inc. v. Tissue
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`Transplant Tech. Ltd., No. SA-14-CA-719, 2015 WL 11573771, at *2 (W.D. Tex. Jan. 5, 2015).
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`The parties contend that an average ex parte reexamination pends before the PTO for 25.8 months
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`from filing. ECF No. 114 at 9. Considering that this litigation has already been pending for over
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`two years, the Court finds that Identity Security would be unduly prejudiced by a stay. The Court
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`concludes that the first factor weighs against a stay.
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`B.
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`Stage of Proceedings
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`The second factor this Court considers is whether the litigation has reached an advanced
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`stage. Apple contends that the litigation is still in its “early stages” because fact discovery began
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`on January 20, 2023. ECF No. 104 at 5. Apple agues that “the bulk of discovery and litigation
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`activities” are still to be completed. Id. at 7. In response, Identity Security notes that the parties
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`have already served numerous interrogatories and requests for production, with Apple having
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`already produced about 7111,000 pages of discovery and Identity Security having produced about
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`24,000 pages of discovery. ECF No. 114 at 10. The Court agrees with Identity Security that
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`discovery has progressed beyond any “early stage” of litigation.
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`Further, the Court has also “expended significant resources” on this case, which likewise
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`weighs against a stay. See CANVS Corp. v. U.S., 118 Fed. Cl. 587, 595–96 (2014) (quoting
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`Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d 1028, 1031–32 (C.D.
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`Cal. 2013) (“The Court’s expenditure of resources is an important factor in evaluating the stage of
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`the proceedings.”)); SenoRx, Inc. v. Hologic, Inc., No. 12-173-LPS-CJB, 2013 WL 144255, at *5–
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`6 (D. Del. Jan. 11, 2013) (“[Once] the Court and the parties have already expended significant
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`resources . . . the principle of maximizing the use of judicial and litigant resources is best served
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`by seeing the case through to its conclusion.”). The Court has held a Markman Hearing, issued a
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`claims-construction order, and scheduled the case for fact discovery and trial. ECF Nos. 66, 77,
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`82, 125. Apple waited 20 months from the beginning of this lawsuit to file requests for ex parte
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`reexaminations—a significant period that has imposed large costs on the parties and the Court.
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`ECF No. 114 at 1. Considering the effort that the parties have already expended in this litigation,
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`along with the parties’ use of the Court’s resources, the Court finds that the proceedings have
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`reached an advanced stage. The Court concludes that this factor weighs heavily against a stay.
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`C.
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`Simplification of Issues
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`The third and final factor this Court considers is whether a stay would likely result in a
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`simplification of issues before the court. See NFC Tech., 2015 WL 1069111, at *4, *5 (citing In
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`re Etter, 756 F.2d 852, 857 (Fed. Cir. 1985) (“When [a] patent is concurrently involved in
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`litigation, an auxiliary function is to free the court from any need to consider prior art without the
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`benefit of the PTO’s initial consideration”)). Apple argues that the reexaminations will cancel at
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`least some of the asserted claims and will also “provide valuable guidance regarding the scope of
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`the claims.” ECF No. 104 at 8. Identity Security contends that ex parte reexaminations are “the
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`form of reexamination less likely to simplify issues” and, even if the PTO cancels some of the
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`asserted claims, the Court will nonetheless have to deal with the same “core infringement and
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`invalidity disputes.” ECF No. 114 at 4–5.
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`The Court again agrees with Identity Security and finds that the ex parte reexaminations
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`will not meaningfully simplify the issues in this case. Considering the average length of PTO
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`reexaminations, the upcoming trial date in April of 2024 (ECF No. 125 at 14:7–11), and the low
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`probability that the reexaminations will meaningfully simplify the remaining issues, the Court
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`concludes that this factor weighs against a stay.
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`IV. CONCLUSION
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`Having considered each of the three factors, the Court concludes that a stay is not
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`appropriate in this case. As noted in the June 16, 2023 hearing before the Court, Defendant Apple
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`Inc.’s Motion to Stay Pending Ex Parte Reexaminations (ECF No. 104) is DENIED. See ECF No.
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`125 at 7:5–6).
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`SIGNED this 29th day of June, 2023.
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