Palo Alto Networks, Inc. v. Packet Intelligence LLC ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PALO ALTO NETWORKS, INC., Case No. 19-cv-02471-WHO 8 Plaintiff, ORDER GRANTING MOTION TO 9 v. STAY 10 PACKET INTELLIGENCE LLC, Re: Dkt. No. 85 Defendant. 11 12 Plaintiff Palo Alto Networks, Inc. (“PAN”) moves to stay this action pending Inter Partes 13 Review (“IPR”) based upon the Patent Trial and Appeal Board’s (“PTAB”) recent decision to 14 institute review of petitions on several of the patents-in-suit. Defendant Packet Intelligence LLC 15 (“Packet”) opposes, contending that a stay would be premature. I disagree with Packet and 16 GRANT PAN’s motion. In the event the PTAB changes course on the IPRs, Packet may file a 17 motion to lift the stay.1 18 BACKGROUND 19 PAN brought this action for declaratory judgment of noninfringement on May 7, 2019. 20 This matter is related to Packet Intelligence LLC v. Juniper Networks Inc., Case No. 19-cv-4741 21 (N.D. Cal.), an infringement action involving the same patents that was brought three months 22 later. This case has proceeded through claim construction and discovery is set to close on 23 December 22, 2020. Expert discovery has not begun and no depositions have yet been taken. 24 Dkt. No. 85 (“Mot.”) 1. Trial is set for August 30, 2021. Dkt. No. 62. 25 As of the filing of PAN’s motion, the PTAB instituted IPRs on four of the five patents 26 asserted in this matter, resulting in review of patentability of 31 of the 33 Asserted Claims in this 27 1 action. Id. The PTAB denied institution of IPRs on one patent asserted in this matter, U.S. Patent 2 Nos. 6,651,099 (“the ’099 Patent”). Id. at 3. Packet, PAN, and Juniper Networks, Inc. have all 3 expressed their intent to request reconsideration of the PTAB’s IPR decisions. Dkt. No. 89 4 (“Oppo.”) 1. In the related case, Juniper also filed a motion to stay. Case No. 19-cv-4741, Dkt. 5 No. 80. 6 LEGAL STANDARD 7 Courts consider three factors in deciding whether a civil action should be stayed pending 8 IPR proceedings: “(1) whether discovery is complete and whether a trial date has been set; (2) 9 whether a stay would simplify the issues in question and trial of the case; and (3) whether a stay 10 would unduly prejudice or present a clear tactical disadvantage to the non-moving party.” 11 PersonalWeb Techs., LLC v. Apple Inc., 69 F. Supp. 3d 1022, 1025 (N.D. Cal. 2014). These 12 factors are “general considerations that are helpful in determining whether to order a stay,” but 13 “ultimately the Court must decide stay requests on a case-by-case basis.” Asetek Holdings, Inc. v. 14 Cooler Master Co., Case No. 13–cv–00457–JST, 2014 WL 1350813, at *1 (N.D. Cal. Apr. 3, 15 2014). 16 DISCUSSION 17 Packet opposes PAN’s motion, arguing that a stay would be premature given the parties’ 18 intent to seek reconsideration of the PTAB’s decision. Oppo. 1. It also argues that extensive 19 discovery has taken place, my Claim Construction order is pending, and the PTAB denied review 20 of one of the patents-in-suit. Id. at 2. It states that Packet conducted expert review of PAN’s 21 source code; the parties exchanged infringement, validity, and damages contentions; and claim 22 construction has been submitted to the Court. Id. at 5. It also argues that it will be prejudiced 23 because PAN waited nearly a year after filing this action to file its IPRs, the IPRs could take until 24 2021 to resolve, and PAN filed this declaratory judgment action. Id. at 8-10. 25 I. STAGE OF THE CASE 26 As discussed above, a trial date has been set in this case, but discovery is not complete. 27 Fact discovery does not close until December of this year, and expert discovery has not yet begun. 1 motion. Contour IP Holding, LLC v. GoPro, Inc., No. 17-CV-04738-WHO, 2018 WL 6574188, 2 at *3 (N.D. Cal. Dec. 12, 2018) (“Although claim construction is complete and some substantial 3 discovery has already occurred, several costlier stages of pretrial preparation remain, not to 4 mention the trial itself.”). 5 II. SIMPLIFICATION OF THE ISSUES 6 “A stay is favored under the second factor when the outcome of the reexamination would 7 be likely to assist the court in determining patent validity and, if the claims were canceled in the 8 reexamination, would eliminate the need to try the infringement issue.” Id. at *3 (citation 9 omitted). Here, as to four of the five patents, the outcome of the reexamination would almost 10 certainly assist me in determining patent validity and could eliminate the need to try the 11 infringement issue. Although the PTAB denied review of the ’099 Patent, this patent is related to 12 the other patents. Moreover, the PTAB’s determination not to institute review of the ’099 Patent 13 does not defeat PAN’s motion for a stay. See Neodron, Ltd. v. Lenovo Grp., Ltd., No. 19-CV- 14 05644-SI, 2020 WL 5074308, at *2 (N.D. Cal. Aug. 27, 2020). The standard is whether the 15 PTAB’s decision could simplify the issues in this matter, not whether they would eliminate the 16 issues. There is no real dispute that the outcome of the IPRs would simplify the issues in this case. 17 This factor weighs in favor of granting PAN’s motion. 18 III. PREJUDICE 19 With respect to the third factor, “[t]his district applies a four sub-factor analysis 20 considering: (i) the timing of the reexamination request; (ii) the timing of the request for stay; (iii) 21 the status of reexamination proceedings; and (iv) “the relationship of the parties.” GoPro, 2018 22 WL 6574188, at *6 (citations omitted). “Courts have repeatedly found no undue prejudice unless 23 the patentee makes a specific showing of prejudice beyond the delay necessarily inherent in any 24 stay.” Neodron, 2020 WL 5074308, at *2 (citation omitted). Packet does not dispute that PAN 25 filed its IPR petitions five months before the statutory deadline. Dkt. No. 90 at 10. Similarly, it 26 cannot dispute that PAN moved for a stay promptly after learning of the PTAB’s decision to 27 institute review. The prejudice that Packet articulates largely stems from prejudice inherent in a 1 showing specific prejudice. For these reasons, I find that this factor also weighs in favor of 2 || granting PAN’s motion. 3 CONCLUSION 4 For the above reasons, 1 GRANT PAN’s motion. Should the PTAB’s determination on the 5 || parties’ expected requests for rehearing warrant it, Packet may file a motion to lift the stay after 6 such determination. 7 IT IS SO ORDERED. 8 Dated: September 28, 2020 9 . 10 liam H. Orrick I United States District Judge 12 © 15 16 & = 17 Z 18 19 20 21 22 23 24 25 26 27 28