Softview v. Apple: District Court Grants Stay Pending Inter Partes Review Even Though It Had Denied Previous Request for Stay Pending Reexamination

by Jeffer Mangels Butler & Mitchell LLP

In this patent infringement action, a number of the defendants moved to stay the case pending an Inter Partes Review ("IPR") of the patent-in-suit. The district court had previously denied a motion to stay pending a previous reexamination proceeding before the patent office.

In October 2012, shortly after the America Invents Act's IPR process became available, Kyocera filed an IPR against all asserted claims of the patents-in-suit. The Patent Trial and Appeal Board ("PTAB") found that Kyocera demonstrated "a reasonable likelihood of prevailing in its challenge" to the asserted claims. Kyocera then moved to stay pending the IPR process and the other defendants filed a motion to stay pending the IPR process as well.

To begin its analysis of whether a stay is appropriate, the district court noted it generally "considers three factors: '(1) whether the granting of a stay would cause the non-moving party to suffer undue prejudice from any delay or allow the moving party to gain a clear tactical advantage over the non-moving party; (2) whether a stay will simplify the issues for trial; and (3) whether discovery is complete and a trial date set.' Cephalon, Inc. v. Impax Labs., Inc., 2012 WL 3867568, at *2 (D. Del. Sept. 6, 2012).

The district court had previously, in July 2012, denied an earlier motion for a stay because the district court concluded that a stay would cause prejudice to Softview, potentially provide Defendants with a tactical advantage, and possibly lead to evidentiary staleness. Although the district court continued to have these same concerns, it found that subsequent case developments made them less of a problem. "In particular, fact discovery is now complete, at least somewhat mitigating the risk of evidentiary staleness. Also, given that Softview is a non-practicing entity and not seeking injunctive relief, the limited delay (of about seven months) resulting from the Court's order should not severely prejudice Softview. Overall, the first factor is neutral."

The district court found that "[a] stay is likely to simplify the issues for trial. Unlike in connection with the earlier requested stay -- when only some of the asserted claims stood rejected -- the PTAB has granted inter partes review with respect to all of the asserted claims of the patents-in-suit. (D.I. 941 Exs. A, B) Should all of the asserted claims be found invalid, this litigation would be "simplified" because it would be concluded. Alternatively, should even some of the asserted claims be found invalid, that finding would reduce the number of issues left to be litigated. Another possibility is that some or all of the claims are found not invalid, yet even in that scenario, litigation should be somewhat simplified due to the estoppel effect on Kyocera -- and Moving Defendants' agreements to be bound (see D.I. 1010 at 4) -- of PTAB findings relating to certain prior art. Thus, while it remains true that in this litigation Defendants are pursuing invalidity and equitable defenses beyond the scope of what will be considered during the inter partes review, and Softview has reiterated its pledge not to seek to amend claims, the simplification factor favors a stay."

The district court then explained why a stay was appropriate now even though the court denied the request before. "In the Court's July 2012 decision denying a stay, the Court noted that the early stage of litigation and lengthy process of reexamination weighed against a stay. (D.I. 439 at 6-7) The inputs and result of this comparison are different now: while the case has substantially progressed, the inter partes review promises to be a more expeditious process than reexamination and appears to be relatively close to completion. More specifically, with respect to the status of the case, fact discovery is complete, as is the Markman process. (The Court has today issued its Markman opinion.) The parties have proposed a stipulation by which expert discovery would be completed by the end of February 2014 and case-dispositive motions would be filed by the end of March 2014. (D.I. 1102) While this is a reasonable schedule, by the time case-dispositive motions are filed, the inter partes review is likely to be over. Pursuant to 35 U.S.C. ยง 316(a)(11), the PTAB must issue a final determination within one year of the notice of a review -- here by March 29, 2014 -- unless that period is extended for six months for good cause shown. Hence, while the parties and the Court have dedicated substantial time and resources to this case -- and only this case can resolve all of the patent-related disputes among the parties -- the Court believes, under the circumstances, it is appropriate to allow the inter partes review a reasonable period to conclude before launching the parties into the expense of expert discovery."

Accordingly, the district court granted the motion to stay pending completion of the IPR.
Softview, Inc. v. Apple, Inc., Case No. 12-989-LPS (D. Del. Sept. 4, 2013)

Written by:

Jeffer Mangels Butler & Mitchell LLP

Jeffer Mangels Butler & Mitchell LLP on:

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