Message: Pacer: Strong Handal response against Arcsoft motion for stay
12
Sep 25, 2015 03:26PM
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA e.Digital Corporation, Plaintiff, v. ArcSoft, Inc., dba as Closeli and as simplicam. Defendant. Case No. 3:15-cv-00056-BEN-DHB PLAINTIFF E.DIGITAL CORPORATION’S OPPOSITION TO DEFENDANT ARCSOFT, INC.’S MOTION FOR A STAY PENDING INTER PARTES REVIEW OF THE PATENTS-IN-SUIT Date: October 5, 2015 Time: 10:30 a.m. Ctrm: 5A (5th Floor - Schwartz) Assigned to the Honorable Judge Roger T. Benitez Plaintiff e.Digital Corporation (“e.Digital” or “Plaintiff”) hereby submits the following opposition to the Motion for a Stay Pending Inter Partes Review of the Patent-In-Suit (Doc. No. 37) filed by Defendant Arcsoft, Inc. (“Arcsoft”). Arcsoft’s motion to stay is an improper attempt to delay e.Digital’s infringement claims. More importantly, Arcsoft has failed to meet its burden of establishing that the balance of competing interests weighs in its favor. Among other things, the subject petition for inter partes review (“IPR petition”) has not yet been granted and the District Court case against the non-party Defendant that filed the subject IPR petition is not stayed and is still ongoing. As such, Arcsoft’s motion to stay is premature. INTRODUCTION e.Digital filed its complaint against Arcsoft on January 12, 2015 (Doc. No. 1) alleging direct infringement, inducement of infringement, and contributory infringement of e.Digital’s U.S. Patent Nos. 8,306,514 (“the ’514 patent”); 8,311,522 (“the ’522 patent”); 8,311,523 (“the ’523 patent”); 8,311,524 (“the ’524 patent”); and 8,315,619 (“the ’619 patent”). (Doc. No. 1.) The asserted claims of the patents concern, generally speaking, a system and method for automatically managing communications to a user and others to whom a user wants to communicate utilizing information based on sensors, such as, e.g., audio sensors, light sensors, map databases, etc. This court issued a scheduling order on June 29, 2015. The parties have exchanged initial disclosures, preliminary infringement contentions and preliminary invalidity contentions. (See Doc. No. 32.) By the time this Court hears the present motion, the parties will have exchanged preliminary claim constructions and extrinsic evidence. (Id.) Responsive claim constructions and extrinsic evidence will be exchanged on October 13, 2015. (Id.) The claim construction hearing is scheduled for January 21, 2016. (Id.) On July 1, 2014, e.Digital filed a complaint for patent infringement against Dropcam, Inc. (“Dropcam”) alleging infringement of the same pool of patents at issue in the present case, though the asserted claims vary. On June 24, 2015, Dropcam, along with its parent companies, Google, Inc. and Nest, Inc. filed a petition for inter partes review with the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office (hereinafter referred to as “the Dropcam IPR”). Of the claims asserted in the present case, four are not at issue in the Dropcam IPR – dependent claims 22 and 23 of the ’522 patent and independent claim 14 and dependent claim 16 of the ’514 patent. On August 31, 2015, almost two months after the Dropcam IPR was filed and just before the commencement of claim construction proceedings, Arcsoft filed this motion seeking a stay pending resolution of the Dropcam IPR. As of the date of this opposition, Arcsoft as not filed its own petition for inter partes review related to the asserted patents. In addition, despite being the party filing the Dropcam IPR, Dropcam has not sought a stay of its own litigation and that case has continued through completion of claim construction proceedings. (See e.Digital v. Dropcam, Case No. 3:14-cv-04922-JST (N.D. Cal., J. Tigar), Doc. No. 73.)1 According to 37 C.F.R. 42.107(b), the due date for any preliminary response to the Dropcam IPR Petition is September 24, 2015. A decision as to whether to grant the Dropcam IPR petition will most likely be made on or after December 24, 2015. (See 37 C.F.R. 42.107; 37 C.F.R. 42.108; and 35 U.S.C. § 314.) II. LEGAL STANDARD The Federal Circuit recognizes the existence of a “strong public policy favoring expeditious resolutions of litigation.” Kahn v. Gen. Motors Corp., 889 F.2d 1078, 1080 (Fed. Cir. 1989). Nevertheless, “District courts have inherent authority to stay proceedings before them.” Rohan ex rel. Gates v. Woodford, 334 F.3d 803, 817 (9th Cir. 2003). “[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). However, a “court is under no obligation to delay its own proceedings” where parallel litigation is pending before the Patent Trial and Appeal Board (“PTAB”). Robert Bosch Healthcare Systems, Inc. v. Cardiocom, LLC, 2014 U.S. Dist. LEXIS 92792, 2014 WL 3107447 at *2 (N.D. Cal. Jul. 3, 2014); see also e.Digital v. Micron Consumer Products Group, Inc., 1 In the Dropcam case, a Markman hearing was held on August 3, 2015. The parties currently awaiting issuance of the claim construction order. denying motion to stay where IPR had not yet been granted). “There is no per se rule that patent cases should be stayed pending reexamination, because such a rule ‘would invite parties to unilaterally derail’ litigation.” Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 2014 U.S. Dist. LEXIS 4025, at *4 (N.D. Cal. Jan. 13, 2014) (quoting ESCO Corp. v. Berkeley Forge & Tool, Inc., 2009 U.S. Dist. LEXIS 94017, at *5 (N.D. Cal. Sept. 28, 2009)). Indeed, a “court is under no obligation to delay its own proceedings by yielding to ongoing PTO reexaminations, regardless of their relevancy to infringement claims which the court must analyze.” Verinata Health at *5 (quoting ESCO Corp. v. Berkeley Forge & Tool, Inc., 2009 U.S. Dist. LEXIS 94017, at *5). Instead, the decision to grant a stay is within the court’s discretion, taking into account the totality of the circumstances. See Ethicon v. Quigg, 849 F.2d 1422, 1426-27. This is especially true when the Patent Office has yet to decide whether to institute IPR proceedings. See, e.g., e.Digital v. Micron Consumer Products Group, Inc., supra, Case No. 13-cv-2907-H-BGS, Doc. No. 38 (July 20, 2015, J. Huff); VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1315-16 (Fed. Cir. 2014); Loyalty Conversion Sys. Corp. v. American Airlines, Inc., 2014 U.S. Dist. LEXIS 102978, 2014 WL 3736514 at *1-2 (E.D. Tex. Jul. 29, 2014) (noting that the “majority of courts . . . have denied stay requests when the PTAB has not yet acted on the petition for review”). In determining whether to stay a case pending inter partes review, the Court considers three factors: (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 prejudice the non-moving party or present a clear tactical advantage for the moving party. See e.Digital v. Micron Consumer Products Group, Inc., supra, Case No. 13-cv-2907-H-BGS, Doc. No. 38 (July 20, 2015, J. Huff); Netlist, Inc. v. Smart Storage Systems, 2014 U.S. Dist. LEXIS The Leahy-Smith America Invents Act, § 18(b)(1), P.L. 112-29, 125 Stat. 284, 331 (setting out the same factors and adding a fourth to determine whether to stay litigation pending PTO review of covered business method patents). “The proponent of a stay bears the burden of establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997) (citing Landis, 299 U.S. at 255.) “If there is even a fair possibility that the stay for which [the movant] prays for will work damage to someone else,” the movant “must make out a clear case of hardship or inequity in being required to go forward.” CMAX, 300 F.2d at 268 (quoting Landis, 299 U.S. at 255). III. ARGUMENT A. A Stay Will Not Simplify the Issues For Trial Arcsoft argues, “this factor supports a stay because it is highly likely that the PTO proceedings on the e.Digital Patents-in-Suit will simplify, and perhaps even eliminate, the issues left to litigate in this case.” (Arcsoft Motion at 8:14-17.) Arcsoft then cites to statistics regarding the percentage of IPR petitions that have been granted in the past 3 years. (Id. at 8:18-25.) First, this argument has been rejected time and again by this Court and by courts in this and other jurisdictions where, as here, the subject petition has yet to be granted. This is because whether a stay will simplify the issues for trial is entirely speculative. See Audatex N. Am., Inc. v. Mitchell Int'l, Inc., 46 F. Supp. 3d 1019, 2014 U.S. Dist. LEXIS 128145 at *1021-1024 (S.D. Cal. 2014, J. Benitez) (“Defendant cites to general statistics regarding review, but such statistics do little to support their claim that review will be instituted in this case”); e.Digital v. Micron Consumer Products Group, Inc., S.D.Cal., Case No. 13-cv-2907-H-BGS, Doc. No. 38, at 4:15-19 (July 20, 2015, J. Huff) (denying motion to stay where IPR had not yet been granted); Overland v. BDT AG, Case No. 10-cv-1700, Doc. No. ; In re Ameranth Patent Litig. Cases, 2013 U.S. Dist. LEXIS 185032 **13-14 (S.D. Cal. Nov. 26, 2013); Warsaw Orthopedic, Inc. v. Nuvasive, Inc., Case No. 12-cv-2738-CAB-MDD, Doc. No. 69 at 1:21-25 (S.D.Cal., May 30, 2013, J. Bencivengo) (denying motion to stay because inter partes review was speculative); Dane Techs., Inc. v. Gatekeeper Sys., Inc., 2013 U.S. Dist. LEXIS 117718, *5-6 (D. Minn. Aug. 20, 2013) (finding fact that PTAB had granted 89% of petitions to date unpersuasive, likelihood of review still speculative); Proctor & Gamble Co. v. Team Techs., Inc., Case No. 1:12-cv-552, 2013 U.S. Dist. LEXIS 128949, at *8-9 and n.1 (S.D. Ohio Sept. 10, 2013) (denying motion to stay as premature where inter partes review petition was not yet granted; collecting similar cases from other districts). In fact, Arcsoft oddly cites extensively to the Overland v. BDT AG case in which the undersigned was counsel of record for the Defendants. Arcsoft cites only to the order granting a second motion for stay filed by the defendants in that case, which was entered only after the petition for inter partes review had been granted. (See Defendants’ Exhibit 7 at 3:20-22; 11:20-12:4.) Arcsoft ignores the fact that the defendants’ first motion for stay was denied as premature because, at the time of the first order, the petition had not yet been granted – this much is evident from the very order relied upon by Arcsoft. Overland v. BDT AG, Case No. 10-cv-1700, Doc. No. 56 (S.D.Cal., Dec. 10, 2013, J. Sammartino). (See also Defendants’ Exhibit 7 at 3:15-22.) Moreover, even if the petition were granted, it is entirely speculative as to whether the PTAB would grant the petition as to all, most or only some of the claims at issue in the present case. If, by way of example only, the PTAB were to grant the petition as to just a handful of claims, the vast majority of the remaining claims at issue in this case would not be subject to review and Arcsoft’s arguments regarding simplification of issues would be entitled to little consideration, if any. Accordingly, whether the imposition of a stay at this stage of the proceedings will simplify the issues or streamline the trial is entirely speculative. This factor therefore weighs against a stay. B. The Stage of Litigation Factor Weighs Against a Stay As pointed out in the introduction, by the time this motion is heard, the case will have been pending for ten months. While no trial date has been set, this Court has set the final pretrial conference for December 5, 2016. (See Doc. No. 32.) Further, while no written requests for discovery have been made as of the date of this opposition, infringement contentions and invalidity contentions have been served. (Id.) In addition, claim construction proceedings are imminent and, by the time this Court hears and ultimately rules on the motion, the parties will have already begun the claim construction process. (Id.) See Audatex N. Am., Inc., supra, 46 F.Supp. 3d at 1025 (noting “the parties had already invested substantial resources in preparation for claim construction”). e.Digital has already completed claim construction proceedings in the related e.Digital v. Dropcam case. Given that the Dropcam case involves the same patents at issue in the present case, it is reasonable to assume that the Dropcam Court’s imminent claim construction order will streamline and possibly eliminate any claim construction disputes in the present case. More importantly, Arcsoft waited two months after the filing of Dropcam’s IPR petition to file this motion. As Arcsoft points out in its motion, the parties had notified the Court of the breakdown in settlement negotiations on the date Dropcam’s IPR petition was filed. (Dropcam Motion at 3:1-3.) Rather than file the present motion to stay right away, Arcsoft forced e.Digital through the time and expense of preparing and serving its preliminary infringement contentions and related document production. Arcsoft further expended its own time and resources preparing a voluminous set of invalidity contentions along with an associated document production, which it prepared and served a month and a half after Dropcam filed its IPR. In light of the upcoming date for exchanging preliminary claim constructions and extrinsic evidence, Arcsoft has likewise no doubt expended substantial time and resources preparing for claim construction. Given Arcsoft’s dilatoriness in filing the present motion while proceeding with costly and time-consuming Patent L.R. 3.1 through and 3.4 disclosures and preparation for claim construction, Arcsoft’s proclaimed intent to preserve time and expense associated with continued litigation is entirely specious. Finally, as argued previously, whether a stay would preserve the time and expense associated with litigation is speculative since it is uncertain whether or to what extent Dropcam’s IPR petition will be granted. In light of the foregoing, the stage of the proceedings factor weighs against a stay. C. Possible Damage Resulting from a Stay Weighs Against a Stay Courts have found that this factor also weighs against a stay where the PTAB has not yet decided whether to grant the petition for IPR. Overland v. BDT AG, supra, Case No. 10-cv-1700, Doc. No. 56 at 5:4-6:6; e.Digital v. Micron, supra, Case No. 13-cv-2907, Doc. No. 38 at 4:15-19; Loyalty Conversion Sys. Corp. v. Am. Airlines, Inc., supra, 2014 U.S. Dist. LEXIS 102978 at *8-9. This is because the public policy favoring “expeditious resolutions of litigation” favors allowing litigation to proceed where the grant of a petition for IPR is speculative. Overland, supra, Doc. No. 56 at 5:26-6:6; see also Loyalty Conversion Sys. Corp., supra at 9 (where grant of IPR petition is speculative, “issuing a stay would disrupt the proceedings leading to trial”); Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F.Supp.2d. 1028, 1035 (C.D. Cal. May 2, 2013) (“the Court is concerned that allowing the progress of its docket to depend on the status of proceedings elsewhere can interfere with its obligation ‘to secure the just, speedy, and inexpensive determination of every action’”) (internal citation omitted). If the petition is denied, this case “will have been left languishing in the Court’s docket with no discovery, no … claim construction, and no dispositive motions.” See Automatic Mfg. Sys. v. Primera Tech., Inc., 2013 U.S. Dist.. Accordingly, the delay caused by a stay would “unduly prejudice” e.Digital and would “present a clear tactical disadvantage.” Id. at *8. e.Digital should be able “to prosecute its claims, to take discovery, and to set its litigation positions, at least until such a time as the USPTO takes an interest in reviewing the challenged claims.” Id. The risk of damage to e.Digital based on the speculative notion that the IPR could be granted therefore weighs against granting a stay. Further, as pointed out above, Arcsoft has not even filed a petition for IPR on its own behalf. Instead, it is relying entirely on the petition filed by Dropcam and its parent companies. However, the Dropcam District Court litigation has not been stayed and will proceed at least until the PTAB renders a decision on the petition at the end of the year. In the meantime, Arcsoft will presumably work with Dropcam as part of a common interest group and become privy to e.Digital’s legal theories, infringement theories and patent validity positions, and other relevant facts through discovery responses propounded in the Dropcam case. However, a stay would prohibit e.Digital from obtaining any discovery from Arcsoft. This would present a clear and heavy tactical advantage in favor of Arcsoft. Based on the foregoing, this factor weighs heavily against a stay. IV. CONCLUSION Based on the foregoing, Arcsoft’s motion to stay pending resolution of Dropcam’s petition for inter partes review is entirely speculative and premature. A stay would not necessarily simplify issues or avoid unnecessary expenditure of time and resources. Furthermore, a stay would prejudice e.Digital and is not in the interest of orderly justice. Arcsoft’s motion to stay should therefore be denied.Respectfully submitted. HANDAL & ASSOCIATES Date: September 21, 2015 By: /s/ Gabriel G. Hedrick Gabriel G. Hedrick Attorney for Plaintiff E.DIGITAL CORPORATION
14 Recommendations
Loading...
Loading...
5
Sep 27, 2015 01:18PM
New Message
Please
login
to post a reply