Unisone Strategic IP, Inc. v. Life Technologies Corporation ( 2019 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 UNISONE STRATEGIC IP, INC, Case No.: 13-cv-1278-GPC-LL 12 Plaintiff, ORDER GRANTING DEFENDANT’S 13 v. MOTION TO STAY 14 LIFE TECHNOLOGIES [ECF. No. 144] CORPORATION; and DOES 1 through 15 300, inclusive, 16 Defendant. 17 18 Defendant Life Technologies Corporation (“Life Tech”) filed a motion to stay the 19 case on November 5, 2019. ECF No. 144. Plaintiff Unisone Strategic IP, Inc. 20 (“Plaintiff” or “Unisone”) filed an amended opposition on November 26, 2019. ECF No. 21 151. TraceLink filed a reply on December 10, 2019. ECF No. 152. The Court finds the 22 motion suitable for disposition without oral argument pursuant to Civil Local Rule 23 7.1(d)(1). Upon review of the moving papers, the Court GRANTS Defendant’s motion to 24 stay. 25 I. Background 26 27 1 On July 25, 2013, Plaintiff filed its initial Complaint asserting infringement of U.S. 2 Pat. No. 6,996,538 (“the ‘538 patent”) against Defendant. ECF No. 1. Defendant soon 3 filed a motion to dismiss the Complaint, ECF No. 10, which the Court granted on 4 October 22, 2013. ECF No. 19. On November 4, 2013, TraceLink, Inc. (“TraceLink”), a 5 defendant in a co-pending action before this Court, filed a request for ex parte 6 reexamination of the ‘538 patent. See 3:13-CV-01743-GPC-LL. Shortly afterwards, 7 Plaintiff filed a first amended complaint alleging infringement of the same patent. ECF 8 No. 21. The Court stayed this action on April 2, 2014, pending the reexamination of the 9 patent. ECF No. 35. 10 A reexamination certificate was subsequently issued on November 24, 2014, 11 amending the ‘538 patent and allowing the claims over the asserted prior art. U.S. Ex 12 Parte Reexamination Cert. No. US 6,996,538 C1. On December 5, 2014, Life Tech filed 13 a Petition with the PTAB seeking CBM review of ’538 patent claims 52, 62, 67, 70-76, 14 81, 83-85, and 96 (the “first CBM”). On April 8, 2015, the Court granted a motion to 15 stay this action, pending the final outcome the first CBM. ECF No. 59. On December 16 30, 2015, Life Tech filed a second petition with the PTAB requesting CBM patent review 17 of the ’538 patent claims 1, 14, 19, 22-28, 32, 34-36, and 45 (the “second CBM”). In 18 total, Life Tech requested CBM review of claims 1, 14, 19, 22-28, 32, 34-36, 52, 62, 67, 19 70-76, 81, 83-85, and 96. See CBM2015-00037, Paper No. 1; CBM2016-00025, Paper 20 No. 2. None of these challenged claims survived review and were thus declared invalid 21 by the PTAB on June 20, 2019. 22 On August 26, 2019, the Court granted Plaintiff leave to file a second amended 23 complaint. ECF No. 123. On September 12, 2019, Plaintiff filed the currently operative 24 second amended complaint, which asserts fifty-three dependent claims that were not at 25 issue in the prior CBM reviews. ECF No. 125. Specifically, Plaintiff asserted 26 27 1 infringement of claims 4, 6, 8-12, 15-18, 21, 29-31, 39-40, 42-43, 46, 49, 57-58, 60, 63, 2 66, 69, 77-78, 86, and 93-94. ECF No. 125 at ¶¶ 24, 53. 3 On November 1, 2019, Life Tech filed two CBM petitions requesting that the PTO 4 institute CBM review of all remaining dependent claims of the ’538 patent on the ground 5 that the claims are unpatentable under 35 U.S.C. § 101. See CBM2020-00001 (ECF 127, 6 Ex. 1); CBM2020-00005. The PTAB will reach a decision on institution by May 8, 2020 7 and, if instituted, reach a final decision no later than May 3, 2021. Life Tech alleges that 8 a decision of unpatentability in the latest CBMs would effectively end this litigation. 9 ECF No. 144-1 at 8. 10 II. Legal Standard 11 The Leahy-Smith America Invents Act (the “AIA”) provides a “transitional 12 program” to review CBM patents. AIA § 18. The AIA further grants district courts 13 authority to stay proceedings, pending CBM review before the U.S. Patent and 14 Trademark Office (the “USPTO”), upon the consideration of four factors: (A) whether a 15 stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B) 16 whether discovery is complete and whether a trial date has been set; (C) whether a stay, 17 or the denial thereof, would unduly prejudice the nonmoving party or present a clear 18 tactical advantage for the moving party; and (D) whether a stay, or the denial thereof, will 19 reduce the burden of litigation on the parties and on the court. Id. § 18(b)(1); 20 VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1310 (Fed. Cir. 2014). 21 III. Discussion 22 Plaintiff argues that the four factors weigh in favor of denying the motion to stay 23 or, alternatively, continuing this motion until the PTAB decides to undertake review of 24 the two latest CBMs. Defendant opposes. 25 A. Simplification 26 27 1 The first factor considers whether a stay will simplify the issues. AIA § 2 18(b)(1)(A). The two latest CBM petitions filed by Life Tech challenge all remaining 3 claims. ECF No. 127-1 at 7. Plaintiff argues that this factor does not weigh in favor a 4 stay because Life Tech is using the CBM petition as a delay tactic. ECF No. 132 at 14- 5 15. Life Tech counters that a stay would not present a tactical advantage to Life Tech 6 and therefore was not the motivation behind seeking the stay, and further contends that 7 the current CBM reviews will substantially simplify or moot the present infringement 8 claims, noting that all claims in the ’538 patent that were challenged in the earlier CBM 9 petitions are no longer at issue in this litigation. The Court agrees. Plaintiff’s fifty-three 10 new dependent claims asserted in its SAC were not at issue in the prior CBM reviews, 11 and a CBM review of these remaining claims can simplify the issues. See Versata 12 Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, 1371–73 (Fed. Cir. 2014) 13 vacated on other grounds by 780 F.3d 1134, 2015 WL 981523 (Fed. Cir. Feb. 27, 2015). 14 If any dependent claims are invalidated based on a CBM review, those claims will not 15 need to be litigated. 16 Plaintiff further argues that it would be premature to grant a stay even before 17 PTAB has made its decision on institution and that the Court should therefore defer 18 ruling on the motion to stay, citing Loyalty Conversion Sys. Corp., 2014 WL 3736514 19 (E.D. Tex. July 29, 2014) and other cases. Life Tech counters that since the Federal 20 Circuit has already confirmed that the ’538 patent qualifies for CBM review, the PTAB is 21 highly likely to institute review of the remaining claims. 22 There is a split on authority on the question of whether a motion to stay is 23 premature if it is filed in district court after the CBM petition has been filed with the 24 USPTO but before the petition has been instituted by the PTAB. Protegrity Corp. v. 25 Epicor Software Corp., 67 F. Supp. 3d 555, 561 (D. Conn. 2014) (collecting cases and 26 describing the split of authority). In VirtualAgility, the Federal Circuit stated that while 27 1 the case for a motion to stay is stronger after post-grant review has been instituted, a 2 motion to stay could be granted either before or after institution, and ultimately that the 3 VirtualAgility court “express[ed] no opinion on which is the better practice.” 759 F.3d at 4 1315-16. Therefore, filing a motion to stay before the institution “is not an automatic bar 5 against granting the motion, but rather is one component that could weigh against the 6 granting of the motion, in conjunction with the myriad of other factors.” Protegrity, 67 7 F. Supp. 3d at 562–63. 8 Here, prior CBM petitions with respect to the ’538 patent have already been 9 granted on two separate occasions – both times resulting in simplification of issues in this 10 instant litigation. Cf. Audatex N. Am. Inc. v. Mitchell Int’l Inc., 46 F. Supp. 3d 1019, 11 1022 (S.D. Cal. 2014) (defendants’ reliance on general statistics about the rate of PTAB’s 12 petition review was insufficient to establish a likelihood of review for the specific patent 13 at issue in the instant action and therefore weighed against granting a stay). Ultimately, 14 the legislative history of the AIA indicates that a “very heavy thumb” is placed “on the 15 scale in favor of the stay.” Protegrity Corp. v. Epicor Software Corp., 67 F. Supp. 3d 16 555, 560 (D. Conn. 2014) (citing 157 Cong. Rec. S1053–54 (daily ed. Mar. 1, 2011)). 17 Considering this and the outcomes of the prior CBM reviews with respect to the ’538 18 patent, the Court finds the PTAB’s remaining CBM reviews are likely to simplify the 19 issues in this litigation and therefore weigh in favor of a stay. 20 B. Discovery and Trial Date 21 The second factor considers whether discovery is complete and a trial date has 22 been set. AIA § 18(b)(1)(B). The case is still in the preliminary stages of litigation, with 23 a significant amount of discovery yet to be completed. This factor strongly favors 24 staying the proceeding. 25 Plaintiff argues that petitioner should be estopped from bringing duplicative 26 proceedings on the AIA’s estoppel provision, which states: 27 1 The petitioner in a transitional proceeding that results in a final written decision under section 328(a) of title 35, United States Code, with respect to a claim in a 2 covered business method patent, or the petitioner’s real party in interest, may not 3 assert, either in a civil action arising in whole or in part under section 1338 of title 28, United States Code, or in a proceeding before the International Trade 4 Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), that the 5 claim is invalid on any ground that the petitioner raised during that transitional proceeding. 6 7 AIA § 18(a)(1)(D). Plaintiff argues that this provision prevents a petitioner from raising 8 any invalidity arguments in a civil action that the petitioner had previously raised before 9 the PTAB. Life Tech counters that Plaintiff misinterprets this provision, which in fact 10 estops a petitioner from relitigating a particular claim on a particular ground for which 11 PTAB had previously issued a final decision. The Court agrees with Life Tech. This 12 estoppel provision does not apply to this instant action since Life Tech is challenging new 13 dependent claims. Since Life Tech has not previously challenged the claims in that are 14 challenged in the current CBM petitions, Life Tech is therefore not estopped from 15 bringing these claims before the PTAB or before this Court.1 16 C. Prejudice 17 The third factor is whether the nonmoving party would be unduly prejudiced or the 18 moving party would gain a tactical advantage. AIA § 18(b)(1)(C). Plaintiff argues that 19 since this case has been pending since 2013, Life Tech has used successive CBM 20 petitions to delay the case to the prejudice of Plaintiff, and that TraceLink has used the 21 same strategy. Plaintiff asserts that it has been “put in limbo for years because of Life 22 [Tech]’s harassing, successive CBM petitions.” ECF No. 151 at 22. However, as 23 Defendant correctly points out, the compressed time frame allotted by Congress for CBM 24 25 26 1 TraceLink argues that none of the cases that Plaintiff cites challenges this understanding of AIA § 27 18(b)(1)(C). ECF No. 133 at 7-8. The Court agrees. 1 || review lessens any risk of prejudice; Plaintiff may easily recover any money damages it 2 ||is due if it ultimately prevails on its infringement claims; and, finally, the risk of 3 || prejudice to TraceLink — in terms of spending substantial sums for litigating claims that 4 ||may ultimately be held invalid by any CBM review — outweighs any risk to Plaintiff. 5 D. ‘Litigation Burden 6 The fourth factor considers whether a stay would reduce the litigation burden. 7 || AIA § 18(b)(1)(D). Plaintiff contends that any conclusion on this factor would be 8 || premature since there is no guarantee that PTAB will grant review of the CBM petitions. 9 || Defendant argues this factor weighs in favor of the stay since if the petition is granted, 10 || then several claims will be invalidated and excluded from the litigation, thereby reducing 11 || the burden on the Court and parties. Defendant contends that if, in the alternative, the 12 || petitions are denied, then parties can continue with this litigation in six months with the 13 exact same litigation burden. This factor weighs in favor of Defendant. Addressing the 14 issue of whether or not the remaining dependent claims recite patent eligible subject 15 || matter under 35 U.S.C. § 101 can reduce the litigation burden on this Court and the 16 || parties. See Ultramercial Inc. v. HULU, LLC, 772 F.3d 709, 718 (Fed. Cir. 2014) 17 || (Mayer, J., concurring) (section 101 is a “threshold test” and addressing it “at the outset 18 || of litigation will have a number of salutary effects”). 19 ||IV. Conclusion 20 IT IS SO ORDERED. 21 ||Dated: December 16, 2019 <= 23 United States District Judge 24 25 26 27 28 13-cv-1278-GPC-LL