Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 1 of 30 PageID# 7312
`
`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
`
`
`Plaintiffs and
`Counterclaim Defendants,
`
`v.
`
`
`
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.
`
`Defendants and
`Counterclaim Plaintiffs.
`
`Civil Action No. 1:20-cv-393
`
`REDACTED
`
`
`
`
`
`MEMORANDUM IN SUPPORT OF DEFENDANTS’
`PARTIAL MOTION TO STAY PLAINTIFFS’ CLAIMS
`REGARDING U.S. PATENT NOS. 9,814,268 AND 10,492,542
`
`
`
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`
`

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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 2 of 30 PageID# 7313
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`TABLE OF CONTENTS
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`
`INTRODUCTION .............................................................................................................. 1
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`Page
`
`FACTUAL BACKGROUND ............................................................................................. 3
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`I.
`
`II.
`
`
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`
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`The PTAB Petitions At Issue (For The ’268 and ’542 Patents) ............................. 4
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`This Case Is At An Early Stage .............................................................................. 7
`
`III.
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`STATEMENT OF LAW..................................................................................................... 9
`
`IV.
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`ARGUMENT .................................................................................................................... 10
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`
`
`
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`Defendants Are Seeking A Stay Because The PTAB Will Not Institute Its
`Review Of Defendants’ Diligently Filed, Meritorious Petitions Without
`One ........................................................................................................................ 10
`
`All Four Non-Exclusive Factors Weigh Towards A Stay In This Case ............... 13
`
`
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`
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`A Stay Will Simplify The Issues In Question And Streamline The
`Trial ........................................................................................................... 13
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`Discovery Is Not Complete And A Trial Date Has Not Been Set ............ 16
`
`A Stay Will Not Unduly Prejudice The Nonmoving Party Or
`Present A Clear Tactical Advantage For The Moving Party .................... 17
`
`A Stay Will Reduce The Burden Of Litigation On The Parties And
`On The Court ............................................................................................ 21
`
`
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`If the PTAB Declines Review, The Stay Will Be Very Short .............................. 23
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`V.
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`CONCLUSION ................................................................................................................. 24
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`
`
`i
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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 3 of 30 PageID# 7314
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`
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Ancora Techs. v. TCT Mobile (US), Inc.,
`No. SACV 19-2192, slip. op (C.D. Cal. Nov. 12, 2020) .......................................................... 13
`
`Apple Inc. v. Fintiv, Inc.,
`IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) ............................................................... 5, 10
`
`Apple Inc. v. Maxell, Ltd.,
`IPR2020-00204, Paper 11 (June 19, 2020) ................................................................................. 5
`
`Apple Inc. v. Seven Networks,
`IPR2020-00506, Paper 11 (Sept. 1, 2020) .................................................................................. 5
`
`Audio MPEG, Inc. v. Hewlett-Packard Co.,
`No. 2:15cv73, 2015 WL 5567085 (E.D. Va. Sept. 21, 2015) ............................................ passim
`
`Bushnell Hawthorne, LLC v. Cisco Sys., Inc.,
`No. 1-18-cv-760 (E.D. Va. Apr. 22, 2019) ............................................................................... 15
`
`buySAFE, Inc. v. Google, Inc.,
`No. 3:13-cv-00781, 2014 WL 2714137 (E.D. Va. June 16, 2014) ........................................... 17
`
`Centripetal Networks, Inc. v. Cisco Sys., Inc.,
`No. 2:18cv94, 2019 WL 8888193 (E.D. Va. Feb. 25, 2019) ............................................. passim
`
`Cobalt Boats, LLC v. Sea Ray Boats, Inc.,
`No. 2:15CV21, 2015 WL 7272199 (E.D. Va. Nov. 16, 2015) .......................................... passim
`
`Continental Auto. Sys. Inc. v. Hamaton Auto. Tech. Co., Memorandum Order,
`No. 2-16-cv-00226 (E.D. Va. Feb. 7, 2017) ............................................................................. 15
`
`Health Diagnostic Lab., Inc. v. Bos. Heart Diagnostics Corp.,
`No. 3:14CV796-HEH, 2015 WL 13879824 (E.D. Va. Feb. 4, 2015)......................................... 9
`
`Limelight Networks, Inc. v. XO Commc’ns, LLC,
`No. 3:15-cv-720-JAG (E.D. Va. Apr. 7, 2017)................................................................... 17, 23
`
`Murata Mack USA v. Daifuku Co.,
`830 F.3d 1357 (Fed. Cir. 2016)................................................................................................... 9
`
`NTP, Inc. v. T-Mobile USA, Inc.,
`No. 3:07-CV-548, 2007 WL 3254796 (E.D. Va. Nov. 2, 2007) .............................................. 20
`
`PersonalWeb Techs., LLC v. Facebook, Inc.,
`No. 5:13-CV-01356-EJD, 2014 WL 116340 (N.D. Cal. Jan. 13, 2014)......................... 9, 17, 19
`
`ii
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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 4 of 30 PageID# 7315
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`
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`Sand Revolution II, LLC v. Continental Intermodal Group - Trucking LLC,
`IPR2019-01393 Paper 12 (PTAB Feb. 5, 2020) ................................................................. 11, 23
`
`Sand Revolution II, LLC v. Continental Intermodal Group - Trucking LLC,
`IPR2019-01393, Paper 24 (June 16, 2020) ......................................................................... 12, 23
`
`Sharpe Innovations, Inc. v. T-Mobile USA, Inc.,
`No. 2:17-CV-351, 2018 WL 11198604 (E.D. Va. Jan. 10, 2018) .................................. 9, 15, 19
`
`Smartflash LLC v. Apple Inc.,
`621 F. App’x 995 (Fed. Cir. 2015) ........................................................................................... 17
`
`VirtualAgility Inc. v. Salesforce.com, Inc.,
`759 F.3d 1307 (Fed. Cir. 2014)..................................................................................... 13, 18, 19
`
`Statutes
`
`35 U.S.C. § 100 ............................................................................................................................... 6
`
`35 U.S.C. § 311 ................................................................................................................... 6, 16, 22
`
`35 U.S.C. § 315(e)(2) .................................................................................................................... 22
`
`35 U.S.C. § 321 ................................................................................................................... 6, 16, 22
`
`35 U.S.C. § 325(e)(2) .............................................................................................................. 16, 22
`
`157 Cong. Rec. S5409 (daily ed. Sept. 8, 2011) ........................................................................... 19
`
`Other Authorities
`
`
`
`
`
`iii
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`

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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 5 of 30 PageID# 7316
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`
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`I.
`
`INTRODUCTION
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`Defendants Altria Client Services, LLC (“ACS”), Philip Morris USA Inc. (“PM USA”),
`
`and Philip Morris Products S.A. (“PMP”) (collectively, “Defendants”) hereby move for an Order
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`directing a partial stay of this District Court action pending resolution of the PTAB proceedings
`
`for U.S. Patent Nos. 9,814,268 (the “’268 patent”) and 10,492,542 (the “’542 patent”)—the two
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`un-stayed patents asserted in this case by RAI Strategic Holdings, Inc. and R.J. Reynolds Vapor
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`Company (collectively, “Plaintiffs”). Defendants also respectfully request a ruling on this motion
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`before December 14, 2020 in view of certain imminent Patent Trademark Appeal Board (“PTAB”)
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`deadlines that will be directly impacted by the partial stay, as discussed below.
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`Based upon a recent and extraordinary ruling from the PTAB, it is now apparent that the
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`PTAB will not institute Defendants’ post-grant petitions related to the ’268 and ’542 patents unless
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`this case is stayed with respect to those patents (or, alternatively, this Court rules that it will stay
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`the case if the PTAB proceedings for such patents are instituted). The PTAB first applied this new
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`and unannounced rule in Defendants’ Petition for Inter Partes Review (“IPR”) challenging the
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`’268 patent. Although noting that the ’268 patent IPR was “particularly strong” on the merits,
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`and that Defendants very diligently filed it within four weeks of the Complaint, the PTAB declined
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`to review the ’268 patent’s validity in view of this Court’s projected trial date, which the PTAB
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`determined would predate its IPR hearing date. (Exhibit 3, ’268 Institution Decision at 28-29.)
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`The PTAB has not yet issued its decision regarding the ’542 patent petitions, but Defendants
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`anticipate (and Plaintiffs acknowledge) that the PTAB will likely decline review of that patent’s
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`validity for the same reason.
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`This case presents what is believed to be a case of first impression warranting further
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`consideration of this Court’s practice of denying pre-institution stays in light of this recent change
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`in PTAB practice. This Court and others have historically often denied stays of their proceedings
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`
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`1
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`before PTAB institution of post-grant proceedings, such as an IPR. However, the PTAB’s new
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`approach of denying institution of PTAB petitions when the PTAB’s decision would be preceded
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`by a district court trial date, regardless of the other factors the PTAB purports to consider (such as
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`the merits of the petition), warrants revisiting the reasoning behind denying pre-institution stays.
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`Under the PTAB’s new practice, PTAB petitioners are precluded from seeking PTAB review in
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`fast forums such as this one, unless the district court case is stayed before the PTAB institutes
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`review.1 PTAB review will therefore de facto be unavailable in fast forums, regardless of how
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`diligent a petitioner is in filing a meritorious PTAB petition, unless the forum grants a pre-
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`institution stay or indicates that it will grant a stay upon the PTAB’s institution of review.
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`On the other hand, if this Court grants the limited stay sought by Defendants (or
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`alternatively rules that it will stay the case upon institution of review by the PTAB), it is much
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`more likely that the PTAB will reach the merits of Defendants’ petitions. Even if this Court is not
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`inclined to alter its general practice regarding such stays, a limited stay is particularly warranted
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`under the facts of this case—where Defendants’ petitions were filed diligently (within just four
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`weeks of the Complaint for the ’268 patent, and within 11 weeks for the others), and the PTAB
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`has already determined that the merits of at least one of the petitions are “particularly strong.”
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`The totality of the circumstances in this case, including the diligently-filed petitions, the
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`strength of those petitions, and the PTAB’s new approach to denying post-grant petitions in fast
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`forums regardless of other facts, justify the grant of a limited stay here, at least until the PTAB has
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`the opportunity to consider the impact of such stay and to address the merits of the petitions.
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`Even without regard to the PTAB’s new approach to institution in cases pending in fast
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`
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`1 Defendants did not previously request a stay for PTAB review in light of the Court’s general
`practice of denying such stays before institution.
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`2
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`forums, the traditional factors favor a stay in this case. As discussed below, this and other courts
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`often consider the following non-exclusive four-factor test when considering a stay: “(A) whether
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`a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B)
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`whether discovery is complete and whether a trial date has been set; (C) whether a stay, or the
`
`denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage
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`for the moving party; and (D) whether a stay, or the denial thereof, will reduce the burden of
`
`litigation on the parties and on the court.” Centripetal Networks, Inc. v. Cisco Sys., Inc., No.
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`2:18cv94, 2019 WL 8888193, at *1-2 (E.D. Va. Feb. 25, 2019). Each of these factors also compel
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`the grant of a partial stay in this case.
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`Accordingly, Defendants respectfully request that the Court stay this case with respect to
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`the ’268 and ’542 patents at least until the PTAB decides whether to institute review of Defendants’
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`petitions. Alternatively, Defendants respectfully request that the Court rule that it will stay the
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`case upon institution. This will increase the likelihood that Defendants’ well-founded and
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`diligently filed petitions receive consideration on the merits, and are not effectively barred on pro
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`forma procedural grounds by virtue of this Court’s speedy docket.
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`II.
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`FACTUAL BACKGROUND
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`Plaintiffs filed their Complaint on April 9, 2020. (Dkt. 1.) Although the statute permits
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`IPR petitions challenging the validity of the asserted patents to be filed up to one year from the
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`filing of a district court action, Defendants were extraordinarily diligent in this case—filing their
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`first three IPR petitions, including the one for the ’268 patent, within a month of the filing of the
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`Complaint, on May 8th. (See Exhibit 1, Petition for Inter Partes Review of U.S. Pat. No. 9,814,268
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`at 71.) By June 26, 2020, only 11 weeks after Plaintiffs filed their Complaint, Defendants
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`completed the filing of all of their PTAB petitions challenging all asserted claims in all six (now
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`five, see note 2) asserted patents. The PTAB petitions predated the Court’s Rule 16(b) scheduling
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`3
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`order by several months. (Dkt. 39, 40, 99.) Simply put, Defendants could hardly have moved any
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`faster in seeking the PTAB’s review after being sued by Plaintiffs for infringement.
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`The PTAB Petitions At Issue
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`Of relevance to the present motion are Defendants’ petitions challenging the validity of the
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`only two remaining un-stayed patents in this case—the ’268 and ’542 patents.2
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`The ’268 Patent. Defendants’ IPR petition for the ’268 patent includes two distinct
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`invalidity theories relying on two different primary prior-art references. (Exhibit 1 at 23-70.)
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`Unlike an infringement complaint, an IPR petition sets forth the petitioner’s entire case. For
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`example, the IPR for the ’268 patent is comprised of 71 pages of in-depth analysis showing why
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`each of the two asserted claims in this case (i.e., claims 16 and 17) are invalid, and is supported by
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`33 exhibits, including a detailed 116-page expert declaration. (Id.; Exhibit 2, Declaration of Dr.
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`Seetharama Deevi in Support of Petition for Inter Partes Review of U.S. Patent No. 9,814,268.)
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`The PTAB analyzed the ’268 patent’s IPR petition and Plaintiff’s preliminary response,
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`and concluded that the merits of the petition “are particularly strong.” (Exhibit 3, ’268 Institution
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`Decision at 26.) For example, when discussing independent claim 16, the PTAB explained:
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`Petitioner makes a strong showing that each element of claim 16 is disclosed by
`each of two primary references (Morgan and Counts-962) under claim
`constructions consistent with Patent Owner’s district court
`infringement
`contention. Petitioner also makes a strong showing that certain claim elements are
`disclosed by secondary references (Collins, Adams, or Brooks) under narrower
`claim constructions and that a POSA would have had a reason to combine the prior
`art teachings in a manner recited in the challenged claims.
`
`
`
`2 Plaintiffs dropped a third asserted patent, U.S. Patent No. 8,314,591, after Defendants filed its
`IPR petition challenging that patent. (Compare Dkt 1 at 13 (Count 1) with Dkt. 51 (lacking any
`count for the ’591 patent).) The PTAB instituted review of that patent. (See Exhibit 4, ’591
`Institution Decision.) This Court has already stayed proceedings for Plaintiffs’ other three patents
`(U.S. Patents 9,930,915, 9,901,123 and 9,839,238) pending resolution of the ITC investigation.
`(Dkt. 27).
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`4
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`(Exhibit 3 at 26 (emphasis added); see also id. at 20-26 (discussing the invalidity grounds in
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`detail).)
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`Importantly, despite Defendants’ strong showing on the merits and unparalleled diligence,
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`the PTAB declined to institute review solely because of this Court’s expected trial3 date:
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`This case presents a close call [but]… we determine that, in this instance, the
`anticipated EDVA trial between the same parties eight to nine months before the
`projected statutory deadline, outweighs slightly the factors that favor institution,
`including Petitioner’s diligence in filing the Petition, the strength of the Petition on
`the merits, the relatively modest investment in the district court action to date, and
`the lack of exact overlap based on Petitioner’s narrow stipulation.4
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`(Exhibit 3 at 28-29.) To the best of Defendant’s knowledge, the PTAB has never before declined
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`to institute an IPR on these or similar facts. In other words, the court’s trial date has never before
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`outweighed all of the other relevant factors.5
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`With its decision on the ’268 patent’s IPR, the PTAB effectively fashioned a new and
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`previously unannounced per se rule that the PTAB will deny institution if a district court is
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`currently scheduled to hold trial before the PTAB issues its final decision. In faster forums such
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`
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`3 The PTAB does not take into account post-trial motion practice, but looks only to the expected
`trial date.
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`4 To reduce duplication of effort, Defendants stipulated that, if the Board institutes review,
`Defendants will drop the IPR’s invalidity grounds from the case before this Court.
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`5 To the contrary, the PTAB’s “Precedential” case establishing this balancing test states that an
`early trial date is “non-dispositive” and should be weighed as part of a “balanced assessment of all
`relevant circumstances of the case, including the merits.” Apple Inc. v. Fintiv, Inc., IPR2020-
`00019, Paper 11 at 5 (PTAB Mar. 20, 2020) (precedential) (Exhibit 5); see also Apple Inc. v. Seven
`Networks, IPR2020-00506, Paper 11 at 9 & n.16 (Sept. 1, 2020) (instituting despite longer 10-
`month gap from jury trial to Board decision) (Exhibit 6); Apple Inc. v. Maxell, Ltd., IPR2020-
`00204, Paper 11 at 15-17 (June 19, 2020) (instituting with a nine-month gap) (Exhibit 7). In short,
`the PTAB had never before denied a “particularly strong” petition on this discretionary basis where
`the petition was filed with the same diligence, i.e., less than one month after the complaint was
`filed, and especially not when it deemed the parties’ and the court’s current investment as
`“relatively modest” and the lack of exact overlap.
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`5
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`as this one, IPR practice would effectively be eradicated as most trials in this forum would typically
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`be scheduled well in advance of a PTAB trial and decision on even the most diligently filed IPRs,
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`as in this case.
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`If this Court grants a stay (or at least rules that it will stay on institution), Defendants intend
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`to seek reconsideration of the PTAB’s denial of institution on the grounds that the stay moots the
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`PTAB’s sole (and unanticipated) ground for denial of institution. Defendants seek an expedited
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`ruling by December 14, 2020 because their request for reconsideration in the PTAB is due on
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`December 16, 2020.
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`The ’542 Patent. Defendants filed separate petitions for IPR and for Post-Grant Review
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`(“PGR”) of the ’542 patent’s claims on two distinct and meritorious theories.6
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`First, Defendants demonstrated that all claims are invalid for a lack of written description
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`support, including certain dependent claims (claims 10, 13-17, and 27) that each lack written
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`description support for additional reasons. (Exhibit 8, Petition for Post-Grant Review of U.S. Pat.
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`No. 10,492,592 at 16-51.)
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`Second, Defendants demonstrated that all claims of the ’542 patent are invalid over the
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`prior art. (Exhibit 8 at 51-108.) Defendants’ PGR petition contains well over 100 pages of detailed
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`legal and factual analysis addressing these two invalidity theories. It is supported by nearly 50
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`exhibits, including a detailed 160-page expert declaration. (Id.; Exhibit 9, Declaration of Dr.
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`
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`6 PGR is procedurally similar to IPR, but allows validity challenges under §§ 101 and 112 in
`addition to §§ 102 and 103. For procedural reasons, Defendants filed a PGR petition in parallel
`with an IPR petition in the alternative. (Exhibit 10, Petition for Inter Partes Review of U.S. Pat.
`No. 10,492,592.) If the PTAB agrees that any one or more of the ’542 patent’s claims lack written
`description support, the ’542 patent is eligible for PGR only and the IPR petition will be dismissed.
`Conversely, if the PTAB decides that all of the ’542 patent’s claims have sufficient support, the
`’542 patent is eligible for IPR only, and the PGR petition will be dismissed. See 35 U.S.C. §§ 100,
`311, 321 (including all notes) (describing when PGR and IPR are available).
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`6
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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 11 of 30 PageID# 7322
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`Seetharama Deevi in Support of Petitions for PTAB Review of U.S. Pat. No. 10,492,592.) The
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`merits of the ’542 PGR petition are strong, and Plaintiffs’ preliminary response primarily raised
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`the same arguments regarding this Court’s trial date that precipitated this motion, and barely
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`disputed the merits. (See Exhibit 11, ’542 PGR Patent Owner Preliminary Response at 20-41;
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`Exhibit 12, ’542 PGR Petitioner’s Reply at 3-4 (summarizing Patent Owner’s deficient response
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`on the merits).)
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`Based upon the filing date of the ’542 patent IPR and PGR petitions, the PTAB is required
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`by statute to issue its decision no later than January 16, 2021—before the close of discovery under
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`the Court’s schedule, as discussed below. Defendants expect that, absent a stay, the PTAB will
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`deny review as it did in the ’268 patent IPR—solely based upon the trial date and irrespective of
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`the merits. Plaintiffs agree. (Exhibit 13, Patent Owner’s Sur-Reply in ’542 PGR at 1-5 (arguing
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`that the decision for the ’268 patent controls).)7
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`
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`This Case Is At An Early Stage
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`Plaintiffs filed their complaint against Defendants on April 9, 2020, accusing Defendants’
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`IQOS devices of infringing six patents. (Dkt. 1.) The Court issued its Rule 16(b) Scheduling
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`Order on September 8, 2020, and clarified it on September 21, 2020. (Dkt. 99, 107.) The Court
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`granted Plaintiffs’ motion to extend expert discovery dates on November 2 and November 16,
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`2020. (Dkt. 286, 334.) Accordingly, the current schedule is as follows:
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`
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`7 Defendants do not agree that the PTAB properly exercised its discretion in denying the ’268
`patent’s IPR or that denial is appropriate for the ’542 patent absent a stay. Rather, Defendants
`anticipate that the PTAB will likely arrive at the same result if it applies the same reasoning as in
`the ’268 patent IPR, regardless of its propriety.
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`7
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`(Dkt. 308 (Plaintiffs’ motion to extend discovery).)
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`The January dates shown above in the table from Plaintiffs’ (granted) motion have not been
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`adjusted to account for the Court’s changes in the earlier deadlines. For example, the Court issued
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`its Markman Order on November 25, 2020. Accordingly, opening expert reports will be due two
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`weeks later, on December 9, 2021. Discovery will not close until seven weeks after that, on
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`January 27, 2021. Thus the January deadlines for the Rule 26(a)(3) and other disclosures,
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`dispositive motions, final pretrial conference, and so forth will presumably also need to shift to
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`late February at the earliest. The trial date for this case is also not yet set, and will likely be
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`impacted by the pandemic. Criminal trials are suspended until January 19, 2021. (Exhibit 14,
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`General Order 2020-22 at 5.) All civil trials remain suspended indefinitely, and once the Court
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`can again hold trial, criminal trials necessarily take precedence over civil trials. (Id. at 2 & n.1, 5.)
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`In summary, this case is still at an early stage. Fact discovery is ongoing. Expert discovery
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`has not commenced, and the close of discovery and the trial date itself are not set. Any predictions
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`8
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`

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`of a trial date at this juncture are speculative at best. Further, “a substantial portion of the work—
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`expert discovery, summary judgment, pre-trial preparation, and trial itself”—remains ahead. See,
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`e.g., PersonalWeb Techs., LLC v. Facebook, Inc., No. 5:13-CV-01356-EJD, 2014 WL 116340, at
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`*3 (N.D. Cal. Jan. 13, 2014).
`
`III.
`
`STATEMENT OF LAW
`
`District courts have the inherent power to stay proceedings pending PTAB proceedings,
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`and whether a court will do so is within its discretion. See Health Diagnostic Lab., Inc. v. Bos.
`
`Heart Diagnostics Corp., No. 3:14CV796-HEH, 2015 WL 13879824, at *1 (E.D. Va. Feb. 4,
`
`2015). In reaching a decision, district courts frequently consider the following four factors:
`
`“(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the
`
`trial; (B) whether discovery is complete and whether a trial date has been set; (C) whether a stay,
`
`or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical
`
`advantage for the moving party; and (D) whether a stay, or the denial thereof, will reduce the
`
`burden of litigation on the parties and on the court.” Centripetal Networks, 2019 WL 8888193, at
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`*1-2; see also Sharpe Innovations, Inc. v. T-Mobile USA, Inc., No. 2:17-CV-351, 2018 WL
`
`11198604, at *2 (E.D. Va. Jan. 10, 2018) (considering “(1) the stage of the litigation, including
`
`whether discovery is complete and a trial date is scheduled; (2) whether a stay would simplify the
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`matters at issue, and (3) whether a stay would unduly prejudice or clearly disadvantage the non-
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`moving party.” (citation omitted)); Murata Mack USA v. Daifuku Co., 830 F.3d 1357, 1361 (Fed.
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`Cir. 2016) (finding that there was no error in considering factor (D) in determining whether to stay
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`a case).
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`These factors, however, are not exclusive, and district courts must make a stay
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`determination based on the totality of the circumstances. See Cobalt Boats, LLC v. Sea Ray Boats,
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`Inc., No. 2:15CV21, 2015 WL 7272199, at *2 (E.D. Va. Nov. 16, 2015).
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`9
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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 14 of 30 PageID# 7325
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`IV. ARGUMENT
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`Even though the PTAB has not yet instituted review, the Court should grant Defendants’
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`motion for a partial stay. The totality of the unique facts supporting a stay, including Defendants’
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`diligence in filing its petitions, the strength of the first of Defendants’ petitions, and the PTAB’s
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`decision against instituting based solely on this Court’s early trial date (which also is now
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`unknown), are particularly compelling in this case. See Cobalt Boats, 2015 WL 7272199, at *2
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`(District court must make a determination based upon totality of the circumstances). Additionally,
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`all four of the traditional stay factors likewise strongly favor a stay as discussed below. Centripetal
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`Networks, 2019 WL 8888193, at *1-2.
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`Defendants Are Seeking A Stay Because The PTAB Will Not Institute Its
`Review Of Defendants’ Diligently Filed, Meritorious Petitions Without One
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`The PTAB denied institution of the ’268 patent’s “particularly strong” IPR because this
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`Court’s previously projected trial date was well before the PTAB’s projected final decision date.
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`The PTAB will likely arrive at the same result with the ’542 patent, absent a stay. With a stay,
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`however, Defendants will assert that the PTAB should reconsider its decision for the ’268 patent,
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`and should also decide whether to institute review of the ’542 patent based on the petitions’ merits,
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`rather than this Court’s trial date.
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`The PTAB precedential8 guidance instructs PTAB panels to balance six “non-dispositive
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`factors” relating to “efficiency, fairness, and the merits” when deciding whether to institute review
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`in light of a parallel district court proceeding. Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11
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`at 5-6. (See also Exhibit 3 (’268 IPR Inst. Dec.) at 14-15.) Nonetheless, one factor proved
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`dispositive in the ’268 patent’s IPR, namely Factor 2, “the proximity of the court’s trial date to the
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`8 “A precedential decision is binding Board authority in subsequent matters involving similar facts
`or issues.” (Exhibit 15, PTAB Standard Operating Procedure 2 at 11.)
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`10
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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 15 of 30 PageID# 7326
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`Board’s projected statutory deadline for a final written decision,” and the PTAB denied institution.
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`(Exhibit 3 at 14-16, 28-29.) In short, the PTAB denied institution of a strong petition because it
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`projected that this Court would hold a trial on validity before the PTAB would issue its final
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`decision. 9 A stay will remove that barrier to PTAB review of the ’268 and ’542 patents.
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`To be sure, the PTAB ruled that the ’268 IPR petition demonstrated that the ’268 patent’s
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`claims are likely invalid. The PTAB expressly stated that the petition’s merits were “particularly
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`strong,” and that Defendants made a “strong showing” that the claims are invalid under Plaintiffs’
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`broad construction or even a narrower one. (Exhibit 3 at 26; see also id. at 20-26 (discussing the
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`grounds in detail, emphasis added); Section II(A) above (discussing the PTAB petitions at issue).)
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`The PTAB rejected all of Plaintiffs’ counterarguments, concluding that Plaintiffs’ “substantive
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`response [is] weak” and “misstates” Defendants’ contentions. (Exhibit 3 at 26-27, n.16.)
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`The PTAB then proceeded to deny institution solely because it believed that this Court
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`would hold a jury trial before the PTAB would enter its final decision. (Exhibit 3 at 28-29.)
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`If this proceeding is stayed as to the ’268 patent, the PTAB will likely reconsider its
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`decision because the trial date becomes a non-issue. In Sand Revolution, the Board originally
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`denied institution because the court’s trial date was nine months prior to PTAB’s projected final
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`decision date and the court would decide the exact same validity issues. Sand Revolution II, LLC
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`v. Continental Intermodal Group - Trucking LLC, IPR2019-01393 Paper 12 (PTAB Feb. 5, 2020)
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`(Exhibit 16, “Sand Revolution I”). On rehearing, however, the PTAB reversed course and granted
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`institution because the petitioner reduced overlap with a narrow stipulation and the court’s trial
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`9 To reduce duplication of effort, Defendants stipulated that, if the Board institutes review,
`Defendants will drop the IPR’s invalidity grounds from the case before this Court. The parties are
`also the same in the PTAB and this Court, but that is usually the case and the PTAB did not
`apparently find that factor compelling.
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`11
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`Case 1:20-cv-00393-LMB-WEF Document 371 Filed 11/27/20 Page 16 of 30 PageID# 7327
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`date was delayed and became uncertain due to, among other things, the COVID pandemic. Sand
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`Revolution II, LLC v. Continental Intermodal Group - Trucking LLC, IPR2019-01393, Paper 24
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`(June 16, 2020) (Exhibit 17, “Sand Revolution II”).
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`Sand Revolution II is not an outlier. The Director of the USPTO designated it an
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`“Informative” case to provide guidance to parties and counsel. Sand Revolution II (cover page);
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`Exhibit 14 (PTAB SOP 2, explaining that “Informative decisions set f