Apple v. Samsung: District Court Denies Samsung's Emergency Renewed Motion for Stay Pending Reexamination of Apple's Patent

In the continuing battle between Apple and Samsung, Samsung recently filed an emergency motion to stay pending reexamination of an Apple patent. To analyze whether the stay was appropriate, the district court provided an overview of the litigation beginning with the filing of Apple's complaint against Samsung in April 2011 and noting that in December 2011, the district court declined to enter a preliminary injunction prohibiting Samsung from selling Samsung products which Apple claimed infringed Apple's design patents.

As explained by the district court, the case went to trial in August 2012, where a jury found that twenty-six Samsung smartphones and tablets infringed one or more of six Apple patents. The jury also found that six Samsung smartphones diluted Apple's registered iPhone trade dress and unregistered iPhone 3G trade dress. After the trial, the district court ruled on the parties' post-trial motions and issued nine separate orders, including a ruling on Apple's motion to permanently enjoin Samsung from importing or selling any of its twenty-six infringing smartphones and tablets. The district court denied Apple's request for the permanent injunction. The Federal Circuit affirmed the denial of injunctive relief with respect to Apple's design patents, but vacated the district court's denial of injunctive relief with respect to Apple's utility patents and remanded for reconsideration.

In March 2013, the district court also ordered a partial retrial on the issue of damages for certain Samsung products. The district court held the retrial in November 2013 and the jury returned a verdict in favor of Apple in the amount of $290 million.

The district court also addressed the stage of the patent reexamination proceedings, noting that "[o]n July 26, 2013, the PTO Examiner issued a Final Office Action rejecting all claims of the '915 patent as invalid. ECF No. 2349-1 at 4. Apple filed a response to the Final Office Action on October 28, 2013. ECF No. 2614-1 at 3. On November 20, 2013, the PTO examiner issued an "Advisory Action" noting that Apple's "proposed response . . . fails to overcome all of the rejections in the Final Rejection," and maintaining its position that all claims of the '915 patent are invalid. ECF No. 2810 at 4. Apple asserts that at this point in time, Apple still has time to file a second response to the Final Office Action, for consideration by the Examiner, because as the Advisory Action states, "[t]he Period for response is extended to run 5 months from the mailing date of the final rejection," id. at 4, and the final rejection was mailed on July 26, 2013. Apple is correct that it is entitled to file a response to a "final" rejection within the period allowed for response, and that the response may still result in the Examiner's withdrawal of the rejection or allowance/certification of the claims under reexamination. See 37 C.F.R. § 1.116. Further, Apple still has the option to appeal the Examiner's decision to the Patent Trial and Appeal Board ("PTAB"). "

The district court also addressed the factors as to whether to stay a case pending re-examination, including: (1) whether discovery is complete and whether a trial date has been set; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party. Telemac Corp. v. Teledigital, Inc., 450 F.Supp.2d 1107, 1111 (N.D. Cal. 2006).

Turning to the first factor, the district court noted that "the Court is to consider "whether discovery is complete and whether a trial date has been set." Telemac Corp., 450 F.Supp.2d at 1111. The Court finds that this factor weighs heavily in favor of Apple. The Court agrees with Samsung that "the stage of the case is not considered in a vacuum," Mot. at 3. As the procedural history set forth above indicates, this case has reached a stage far beyond discovery, dispositive motions, or the mere setting of a trial date. See Telemac Corp., 450 F.Supp.2d at 1111 (denying motion for a stay pending patent reexamination proceedings in part because "this case is not in an 'early stage' of proceedings"). This Court has already conducted not only one but two trials with respect to the patents at issue in this case, and has already issued nine orders on post-trial motions concerning the 2012 trial. The Federal Circuit has already reviewed one of those post-trial motion rulings."

With respect to the second factor, the district court explained that "the Court considers . . . whether a "stay will simplify the issues in question and trial of the case." Telemac Corp., 450 F.Supp.2d at 1111. The Court finds that this factor also weighs in favor of Apple. First, given that the damages retrial is already over, a stay is obviously unnecessary to simplify any issues at trial. See Orion IP, 2008 WL 5378040, at *8 ("As this case has already been tried to a verdict, a stay [pending patent reexamination] will not simplify the issues at trial.") Second, and more importantly, the Court is unconvinced by Samsung's argument that a finding of invalidity by the PTAB and subsequently the Federal Circuit would simplify the proceedings simply because any damages award made by the retrial jury on the '915 patent would be unsupportable and the entire jury verdict on damages would need to be disregarded, thus mandating a second retrial and mooting the need for a second round of post-trial motions."

The district court also found that the third factor, "whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party." Telemac Corp., 450 F.Supp.2d at 1111, also weighed heavily in favor of Apple. "As discussed above, Apple won a jury verdict in August 2012 in which a jury found that Samsung had infringed, among other things, various Apple patents and that Apple's patents were valid. Yet one year and three months later, due to the necessity of a retrial, Apple still has received no damages award as compensation. Further delay of relief due to a stay of this entire case pending a final decision on the '915 patent would thus substantially prejudice Apple. Samsung's arguments to the contrary are unconvincing. First, while Samsung argues that not granting a stay would prejudice Samsung, this Court must consider whether granting a stay would prejudice the nonmoving party, Apple. Telemac Corp., 450 F.Supp.2d at 1111. Second, while Samsung argues that "it would be unjust to have damages evaluated and awarded on a patent found to be invalid by the PTO," Mot. at 2, Samsung heavily discounts the possibility that the PTO may change its mind as it did with the '381 patent or that the PTAB or the Federal Circuit may disagree with the PTO's decision and find the '915 patent valid, as did the 2012 jury. The Court finds that the certain prejudice to be caused to Apple if a stay is granted outweighs any possible prejudice Samsung will endure if the stay is not granted. See Orion, 2008 WL 5378040, at *8 (E.D. Tex. Dec. 22, 2008) ("[Plaintiff's] certain prejudice if the stay is continued pending the re-examination proceedings outweighs [Defendant's] speculative prejudice if the stay is not continued.")."

Accordingly, the district court denied Samsung's emergency motion to stay.

Apple, Inc. v. Samsung Electronics Co., Case No. 11-CV-01846-LHK (N.D. Cal. Nov. 25, 2013)