Motion to Stay Pending CBM Review Granted Where Non-Practicing Entity Did Not Seek Preliminary Injunction

by Jeffer Mangels Butler & Mitchell LLP

Boku, Inc. ("Boku") filed a CBM petition with the PTAB seeking review of the patentability of Plaintiff's U.S. Patent No. 7,273,168 (the "'168 patent"). The petition challenged all claims of the '168 patent on grounds that they are indefinite, or anticipated by or rendered obvious by one or more of four prior art references not considered by the Patent Office during prosecution of the patent -in-suit.

Boku moved to stay the litigation pending the CBM review based on Section 18(b) of the America Invents Act ("AIA"). As explained by the district court, this statute requires the court to weigh four factors when determining whether to stay litigation pending CBM review, including (1) whether a stay, or denial thereof, will simplify issues and streamline the trial, (2) whether discovery is complete and whether a trial date has been set, (3) whether a stay, or denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party, and (4) whether a stay, or denial thereof, will reduce the burden of litigation on the parties and the court.

With respect to the first factor, the district court found that "[h]ere, both parties agree that the imposition of a stay, in and of itself, will not simplify the issues or streamline the trial. Whether that will occur depends on the outcome of Defendants' petition, not whether a stay is or is not imposed. Plaintiff argues the patent at issue may not qualify for CBM review as it discloses a "technological invention" which is ineligible for CBM review. Though Plaintiff may be correct, it has failed to show on the present record that Defendants' petition is futile, or will not succeed. That is a matter for the PTAB to determine. But until the PTAB issues a decision on the petition, the Court can do no more than speculate about whether a stay will or will not simplify the issues in this case or streamline any trial. Accordingly, this factor weighs against the imposition of a stay."

The second factor also weighed in favor a stay because the case was in its early stages. "The next factor looks to the status of the case, in particular, whether discovery is complete and a trial date has been set. The simple answer to both of these questions is "no." Further, the Court's Markman hearing is not scheduled until October 28, 2014. When the present motion was filed, Plaintiff had served its preliminary infringement contentions on Defendants and Defendants' preliminary invalidity contentions were not due until 13 days after the motion to stay was filed. Thus, as both parties agree, the case is still in its early stages. Under these circumstances, this factor weighs in favor of staying the case."

Turning to the prejudice factor, the district court also found this factor weighed in favor of a stay because the plaintiff is non practicing entity and had not sought a preliminary injunction. "As for the relationship between the parties, Defendants assert, and Plaintiff does not dispute, that Plaintiff is not a direct competitor of Defendants. Further it appears from Plaintiff's opposition brief that Plaintiff is a non-practicing entity. Plaintiff claims that it is seeking to monetize its patent and that Defendants intend to continue selling their accused product during any CBM review. Plaintiff asserts that the stay will prejudice its potential market share even if it prevails in the CBM proceedings. However, Plaintiff has not sought any preliminary injunctive relief to suggest that it has any stake in this case other than alleged money damages, which are available even if this case proceeds after CBM review."

Finally, the district court that the burden factor also favored a stay. "Here, there is no dispute that a stay would reduce the burden of litigation on the parties and the Court. Defendants' CBM petition challenges every claim of the '168 patent. The parties would be relieved of their current obligations to conduct claim construction discovery and provide briefing for the claim construction hearing. Indeed, the parties would be relieved of the burden of litigating common issues in two fora. The Court also would be relieved of its obligation to construe the claims and resolve any other issues that may arise during the course of litigation. Thus, this factor, too, weighs in favor of the imposition of a stay."

Accordingly, the district court entered the stay pending a review of the patent by the PTAB.

Xlidev, Inc. v. Boku, Inc., Case No. 13cv2793 DMS (NLS) (S.D. Cal. July 1, 2014)

Written by:

Jeffer Mangels Butler & Mitchell LLP

Jeffer Mangels Butler & Mitchell LLP on:

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