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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`UNM RAINFOREST INNOVATIONS,
` Plaintiff,
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`v.
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`ZYXEL COMMUNICATIONS CORPORATION,
` Defendant.
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`6:20-CV-00522-ADA
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`ORDER GRANTING PLAINTIFF’S MOTION TO LIFT STAY
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`Before the Court is Plaintiff UNM Rainforest Innovations’ (“UNMRI” or “Plaintiff”)
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`Opposed Motion to Lift Stay filed on November 1, 2022. ECF No. 93. Defendant ZyXEL
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`Communications Corporation (“ZyXEL” or “Defendant”) filed a response to UNMRI’s Motion
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`on November 8, 2022. ECF No. 94. UNMRI filed a reply on November 15, 2022. ECF No. 95.
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`The Court held a hearing on this Motion on December 6, 2022. ECF No. 100. The Court granted
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`the Motion. This order memorializes the Court’s ruling.
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`I. BACKGROUND
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`Plaintiff UNMRI maintains the present case and three related cases before this Court: UNM
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`Rainforest Innovations v. TP-Link Techs. Co., Ltd., No. 6:19-CV-00262-ADA (W.D. Tex.); UNM
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`Rainforest Innovations v. ASUSTeK Comput., Inc., No. 6:20-CV-00142-ADA (W.D. Tex.); and
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`UNM Rainforest Innovations v. D-Link Corp., No. 6:20-CV-00143-ADA (W.D. Tex.). In each
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`case, UNMRI alleges infringement of U.S. Patent Nos. 8,249,204 (the “’204 Patent”), 8,565,326
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`(the “’326 Patent”), and 8,265,096 (the “’096 Patent”). ECF No. 1.
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 2 of 10
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`The Court first stayed the present action on July 28, 2021, pending resolution of UNM
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`Rainforest Innovations v. Industrial Technology Rsch. Inst., et al., No. D-2020-CV-2021-02803
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`(N.M. Dist. Ct.) (the “New Mexico Action”). ECF No. 93 at 3. The New Mexico Action has since
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`been dismissed without resolution of the patent ownership issue. Id. at 3. The Court continued the
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`stay on June 27, 2022, pending resolution of inter partes review (“IPR”) proceedings before the
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`Patent Trial and Appeal Board (“PTAB”). ECF No. 81.
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`The Patent Trial and Appeal Board (“PTAB”) instituted IPR of claims 1–4 and 6–8 of the
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`’096 Patent. ECF No. 93 at 3. The PTAB issued a Final Written Decision on July 15, 2022, finding
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`only claim 8 to be patentable. Id. Petitioner filed a Notice of Appeal to the Federal Circuit on
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`September 12, 2022, challenging the patentability of claim 8, and UNMRI filed a Notice of Cross-
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`Appeal on September 16, 2022. Id. The PTAB allowed substitute claims 44–47, 49, and 50 of the
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`’096 Patent. Id. The Patent and Trademark Office (“PTO”) will not issue a certificate on the
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`substitute claims until the Federal Circuit appeal has terminated. 37 C.F.R. § 42.80.
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`The PTAB instituted IPR of claims 1, 2, and 11–13 of the ’204 Patent. ECF No. 93 at 3−4.
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`The PTAB issued a Final Written Decision on July 15, 2022, finding each asserted claim
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`unpatentable. Id. The PTAB instituted IPR of claims 1–5 of the ’326 Patent. Id. at 4. The PTAB
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`issued a Final Written Decision on August 15, 2022, finding each claim unpatentable. Id. The
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`PTAB allowed substitute claims 6, 7, 9, and 10, but denied substitute claim 8. Id. The PTO will
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`not issue a certificate on the substitute claims until after “the time for appeal has expired or any
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`appeal has been terminated” with respect to the IPR decision. 37 C.F.R. § 42.80.
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`Of all asserted claims, the PTAB found only claim 8 of the ’096 Patent patentable. ECF
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`No. 93 at 4. UNMRI intends to reduce its infringement contentions to the sole surviving claim. Id.
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 3 of 10
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`UNMRI requests that the Court allow it to add substitute claims once the PTO issues its
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`certificates. 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 District Court has
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`broad discretion to stay proceedings as an incident to its power to control its own docket.”). “In
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`particular, the question whether to stay proceedings pending inter partes review of a patent is a
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`matter committed to the district court's discretion.” Multimedia Content Mgmt. LLC v. Dish
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`Network L.L.C., No. 6:18-CV-00207-ADA, 2019 WL 11706231, at *1 (W.D. Tex. May 30, 2019)
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`(citing Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426−27 (Fed. Cir. 1988)). However, stays are
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`justified if “the outcome of a PTO proceeding is likely to assist the court in determining patent
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`validity or eliminate the need to try infringement issues.” Videoshare, LLC v. Meta Platforms Inc.,
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`No. 6:21-CV-00254-ADA, 2022 WL 3142622, at *1 (W.D. Tex. Aug. 5, 2022) (citing Gould v.
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`Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983)); see also Evolutionary Intel., LLC v.
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`Millennial Media, Inc., No. 5:13-CV-04206-EJD, 2014 WL 2738501, at *2 (N.D. Cal. June 11,
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`2014). Nevertheless, “there is no per se rule that patent cases should be stayed pending PTO
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`proceedings, because such a rule ‘would invite parties to unilaterally derail litigation.’” Realtime
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`Data, L.L.C. v. Rackspace US, Inc., No. 6:16-CV-00961-RWS-JDL, 2017 WL 772654, at *2 (E.D.
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`Tex. Feb. 27, 2017) (quoting Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660,
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`662 (E.D. Tex. 2005)).
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` “District courts typically consider three factors when determining whether to stay a case
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`pending inter partes review of a patent in suit: (1) whether the stay will unduly prejudice the
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`nonmoving party, (2) whether the proceedings before the court have reached an advanced stage,
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 4 of 10
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`including whether discovery is complete and a trial date has been set, and (3) whether the stay will
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`likely result in simplifying the case before the court.” NFC Tech. LLC v. HTC Am., Inc., No. 2:13-
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`CV-1058-WCB, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015) (citations omitted); see also
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`CyWee Grp. Ltd. v. Samsung Elecs. Co., No. 2:17-CV-00140-WCB-RSP, 2019 WL 11023976, at
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`*2 (E.D. Tex. Feb. 14, 2019). “Essentially, courts determine whether the benefits of a stay
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`outweigh the inherent costs based on these factors.” EchoStar Techs. Corp. v. TiVo, Inc., No. 5:05-
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`CV-81-DF, 2006 WL 2501494, at *1 (E.D. Tex. July 14, 2006).
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`III. DISCUSSION
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`In this case, the Court considers two issues (1) whether the Court should lift the stay
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`because the New Mexico Action has been dismissed and (2) whether the Court should lift the stay
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`because the PTAB has issued final written decisions for the three IPR proceedings challenging the
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`asserted patents. Each is discussed in more detail below.
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`A.
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`The New Mexico Action
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`UNMRI argues that the stay should be lifted because the New Mexico Action has been
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`dismissed. ECF No. 93 at 4−5. UNMRI argues that “[t]o the extend that any dispute regarding
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`standing and/or ownership remains, it is appropriately adjudicated by this Court.” Id. at 5. ZyXEL
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`argues that the foundational issue of patent ownership still needs to be resolved. ECF No. 94 at 8.
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`ZyXEL further argues that the only court that has adjudicated the ownership issue is a Taiwanese
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`court that adjudicated the issue with respect to Industrial Technology Research Institute’s (“ITRI”)
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`ownership of the Taiwanese patents. Id. at 9. ZyXEL argues that the Court should stay the
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`proceedings pending resolution of an appeal in the case in Taiwan. Id. at 10. In its reply, UNMRI
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`argues that there is no justification for continuing the stay pending the Taiwanese litigation because
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`no court in Taiwan possesses jurisdiction over UNMRI. ECF No. 95 at 4.
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`4
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 5 of 10
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`The Court agrees with UNMRI that the New Mexico Action no longer warrants staying
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`this case. The New Mexico Action has been resolved. The Court also believes that the stay should
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`not continue because of the Taiwanese litigation. The Taiwanese case involves the original
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`patentee, ITRI, not UNMRI. Thus, while issues before the Taiwanese court may touch on the
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`patent ownership issue, the Taiwanese court will not resolve the issue of whether UNMRI owns
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`the asserted patents. Thus, a stay pending the appeal in the Taiwanese litigation would not simplify
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`the issues before this Court.
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`If ZyXEL seeks to renew its challenge to UNMRI’s standing in this case, the Court is
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`willing to consider a motion for reconsideration of the Court’s order denying ZyXEL’s Motion to
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`Dismiss for Lack of Standing.
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`B.
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`The IPR Proceedings
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`For stays pending IPR proceedings, the Court considers three factors when considering
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`motions to grant or lift a stay: (A) whether the stay will unduly prejudice the party opposing the
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`stay; (B) whether the proceedings before the Court are at an advanced stage; and (C) whether the
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`stay will likely result in simplifying the case before the Court. NFC Tech., 2015 WL 1069111, at
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`*2.
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`1.
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`Undue Prejudice to Plaintiff
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`Continuing the stay would unduly prejudice UNMRI for at least two reasons. First, a stay
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`risks the “loss of evidence as witnesses become unavailable and memories fade.” Allvoice Devs.
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`US, LLC v. Microsoft Corp., No. 6:09-CV-366, 2010 WL 11469800, at *4 (E.D. Tex. June 4,
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`2010). Second, “[a] patent holder has an interest in the timely enforcement of its patent right,”
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`even when the patent owner has only sought monetary relief. 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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`(quoting Lennon Image Techs., LLC v. Macy’s Retail Holdings, Inc., No. 2:13-CV-00235-JRG,
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 6 of 10
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`2014 WL 4652117, at *2 (E.D. Tex. Sept. 18, 2014)). However, a plaintiff seeking only monetary
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`relief can diminish this prejudice. Crossroads Sys., Inc. v. Dot Hill Sys. Corp., No. A-13-CA-1025-
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`SS, 2015 WL 3773014, at *2 (W.D. Tex. June 16, 2015) (“[M]ere delay in collecting [monetary]
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`damages does not constitute undue prejudice”) (emphasis added). “[W]hen granting a stay pending
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`resolution of another case, the court must consider the time expected for resolution of that case.
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`The resultant stay must not be of immoderate or indefinite duration.” Kerr Mach. Co. v. Vulcan
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`Indus. Holdings, LLC, No. 6-20-CV-00200-ADA, 2021 WL 1298932, at *1 (W.D. Tex. Apr. 7,
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`2021) (quoting Clark v. Southwest Airlines Co., No. 1:16-CV-190-RP, 2017 WL 1435762, at *2
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`(W.D. Tex. Apr. 21, 2017)).
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`A stay may prejudice UNMRI by causing a loss of evidence as witnesses become
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`unavailable and their memories fade. Allvoice Devs. US, LLC, 2010 WL 11469800, at *4. In this
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`case, the PTAB’s finding of patentability on claim 8 of the ’096 Patent is on appeal at the Federal
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`Circuit. ECF No. 93 at 3. Once the Federal Circuit has ruled on the appeal, the PTO will issue the
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`certificates on the substitute claims submitted for the ’096 Patent and ’326 Patent. Id. at 3−4; 37
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`C.F.R. § 42.80 (stating that the PTO will issue a certificate on the substitute claims once “the time
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`for appeal has expired or any appeal has terminated”). The Federal Circuit appeal “will take at
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`least a year.” IOENGINE, LLC v. PayPal Holdings, Inc., No. 18-452-WCB, 2020 WL 6270776,
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`at *7 (D. Del. Oct. 26, 2020) (lifting a stay pending Federal Circuit appeal). In that time frame,
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`documentary and testimonial evidence may be lost. Allvoice Devs. US, LLC, 2010 WL 11469800,
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`at *4.
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`Furthermore, UNMRI has an “interest in the timely enforcement of its patent right.”
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`MiMedx Group, Inc., 2015 WL 11573771, at *2. The Federal Circuit has long held that
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`“[r]ecognition must be given to the strong public policy favoring expeditious resolution of
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 7 of 10
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`litigation.” Kahn v. GMC, 889 F.2d 1078, 1080 (Fed. Cir. 1989); see also United States ex rel.
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`Gonzalez v. Fresenius Med. Care N. Am., 571 F. Supp. 2d 758, 763 (W.D. Tex. 2008) (“[T]he
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`compensation and remedy due a civil plaintiff should not be delayed.”) (quoting Gordon v. FDIC,
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`427 F.2d 578, 580 (D.C. Cir. 1970)). Because UNMRI only seeks monetary relief, the prejudice it
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`faces if the case is stayed is diminished. Crossroads Systems, Inc., 2015 WL 3773014, at *2. But
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`if the Court were to grant the stay, the Federal Circuit may ultimately affirm the PTAB’s findings,
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`unnecessarily delaying the case and prejudicing UNMRI. Given the approximate length of the
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`Federal Circuit appeal, this factor weighs in favor of lifting the stay.
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`2.
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`Stage of the Proceedings
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`When “[l]ittle-to-no judicial resources have been expended,” this factor favors continuing
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`the stay. Xylon Licensing LLC v. Lone Star Nat'l Bancshares-Tex., Inc., No. 6:21-CV-00302-ADA,
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`2022 WL 2078030, at *3 (W.D. Tex. June 8, 2022). Courts consider “whether the litigation has
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`reached an advanced stage, including whether discovery is complete and a trial date has been set.”
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`Id. at *2. Here, the case has not reached its Markman hearing. Given the early stage of this case,
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`this factor favors continuing the stay. See Xylon Licensing LLC, 2022 WL 2078030, at *3 (finding
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`this factor favors a stay before a Markman hearing).
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`3.
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`Simplification of Issues
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`“[T]he most important factor bearing on whether to grant a stay . . . is the prospect that the
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`inter partes review proceeding will result in simplification of the issues.” NFC Tech., 2015 WL
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`1069111, at *4. Under this factor, the Court will typically weigh “the scope of estoppel the movant
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`is bound by; and the strength of the relevant IPR petition in the context of the asserted claims.”
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`Sonrai Memory Ltd. v. LG Elecs. Inc., No. 6:21-CV-00168-ADA, 2022 WL 2307475, at *3 (W.D.
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`Tex. June 27, 2022).
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 8 of 10
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`The Court finds this factor weighs in favor of lifting the stay. First, the Federal Circuit
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`appeal will likely not materially change the claims that will be at issue at trial. Second, upon a
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`favorable finding by the Federal Circuit or the PTAB’s IPR rehearing, the Plaintiff may seek leave
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`to add additional claims to this case. But, adding claims will require permission from the Court—
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`which it may or may not grant.
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`a)
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`Strength of the IPR Appeal
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`Currently, the validity of claim 8 in the ’096 Patent is on appeal before the Federal Circuit.
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`ECF No. 93 at 3. Plaintiff argues that it is highly unlikely that the Federal Circuit’s decision will
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`simplify the issues at trial in this case. ECF No. 93 at 6−7. Defendant argues that this Court should
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`continue to stay its proceedings because the Federal Circuit could eliminate all asserted claims in
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`this case. ECF. No. 94 at 6−7.
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`The Court finds that the Federal Circuit appeal will likely not simplify the issues before
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`this Court. “[T]he Court believes that allowing this case to proceed to completion will provide a
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`more complete resolution of the issues including infringement, all potential grounds of invalidity,
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`and damages.” Kerr Mach. Co., 2021 WL 1298932, at *1 (denying a stay pending the PTAB’s
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`Post-Grant-Review). In IOENGINE, the court found that “the case law concerning motions to
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`extend stays pending Federal Circuit review of a PTAB decision in an IPR proceeding substantially
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`favors lifting the stay.” IOENGINE, LLC, 2020 WL 6270776, at *4–5 (quoting Dermafocus LLC
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`v. Ulthera, Inc., No. 15-654, No. 15-654, 2018 WL 5113960, at *2 (D. Del. Oct. 19, 2019)) (stating
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`that “the mere possibility . . . that the asserted claims could be invalidated [after an] appeal and
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`[that this would] result in simplification is too speculative to be given much weight.”). It is
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`speculative whether the Federal Circuit’s decision will simplify the issues in this case because
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`records show that the Federal Circuit issues a “full affirmance in more than 75% of appeals from
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 9 of 10
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`the PTAB.” Id. at *3; The Compendium of Federal Circuit Decisions, U. IOWA (last visited Feb.
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`28, 2023), https://fedcircuit.shinyapps.io/federalcompendium/. The speculative strength of the IPR
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`appeal weighs against granting a stay.
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`b)
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`Substitute Claims
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`Plaintiff stated that it intended to reduce its infringement contentions to the sole surviving
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`claim—claim 8 of the ’096 Patent. ECF No. 93 at 4. However, Plaintiff requests that the Court
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`allow it to add claims once the PTO issues its certificates on the substitute claims. Id. Once the
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`Federal Circuit appeal has terminated, the PTO will issue its certificates on substitute claims 44–
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`47, 49, and 50 of the ’096 Patent and claims 6, 7, 9, and 10 of the ’326 Patent. Id. at 3−4. Defendant
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`argues that a stay will preserve resources by allowing the Court to go to trial on all the claims that
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`the Plaintiff will assert. ECF No. 94 at 6. Plaintiff responds that the Court’s scheduling order will
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`impose a deadline for adding additional claims. ECF No. 95 at 3.
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`The Court finds that the possibility of substitute claims does not weigh against nor in favor
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`of lifting the stay. While the PTO may issue certificates for the substitute claims at a later date, the
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`Standing Order Governing Procedures (OGP) 4.2—Patent Cases states that “[a]ny amendment to
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`add patent claims requires leave of court.” OGP v. 4.2 at 12 n.12. The Court will consider the
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`permissibility of substitute claims if, at some future date, the Plaintiff moves to add substitute
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`claims. “Some of the claims may change in this case, but the Court is of the opinion that the
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`interests of justice will be better served by dealing with that contingency when and if it occurs,
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`rather than putting this case indefinitely on hold.” Soverain Software LLC, 356 F. Supp. 2d at 663
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`(denying a motion to stay pending the PTO’s ex parte reexamination). At first glance, the
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`possibility of additional claims may seem to warrant a stay, but this is an uncertain outcome that
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`depends on the Federal Circuit appeal and the Court’s willingness to allow additional claims.
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`Case 6:20-cv-00522-ADA Document 105 Filed 03/29/23 Page 10 of 10
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`In short, the Federal Circuit will likely affirm the PTAB’s finding, creating no
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`simplification of issues for this Court. However, it is possible that the Federal Circuit declares
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`claim 8 of the ’096 Patent invalid, eliminating the sole surviving claim and simplifying the issues
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`before this Court. After the Federal Circuit renders its decision, the PTAB will issue its certificates
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`on the substitute claims in the ’096 Patent and ’326 Patent. Staying proceedings before the PTO
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`issues its certificates could possibly simplify the issues in front of this Court. However, even if the
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`PTO issues certificates for the substitute claims, this Court must grant the Plaintiff leave to bring
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`additional claims. Thus, because the Federal Circuit appeal is unlikely to simplify the issues in this
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`case, the Court finds that this factor weighs in favor of lifting the stay.
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`IV. CONCLUSION
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`Because the New Mexico Action has been dismissed, it no longer warrants a stay in this
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`case. With respect to the pending IPR appeal, one factor, the stage of the proceedings, weighs
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`against lifting the stay. Two factors, undue prejudice to UNMRI and the simplification of the
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`issues, weigh in favor of lifting the stay. This Court decides this motion on the importance of the
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`relevant factors and its judicial discretion. See Multimedia Content Mgmt. LLC, 2019 WL
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`11706231, at *1. Because two of the factors weigh in favor of lifting the stay, the Court GRANTS
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`Plaintiff’s Motion to Lift the Stay.
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`SIGNED this 29th day of March, 2023.
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`ALAN D ALBRIGHT
`UNITED STATES DISTRICT JUDGE
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`10
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