Prencipe v. KERV Wearables LTD
5:16-cv-07159
N.D. Cal.May 30, 2017Background
- Plaintiffs Joseph Prencipe and McLear & Co. d/b/a NFC Ring sued Kerv Wearables Ltd. for infringement of U.S. Patent No. 9,313,609, Lanham Act violations, and DTSA-related claims arising from Kerv’s contactless payment ring.
- Non‑party Esos Rings, Inc. claims it—not NFC Ring—is the rightful owner of the ’609 patent and has filed state court litigation seeking to restrain NFC Ring from acting with respect to the patent.
- Kerv moved to stay the federal action pending resolution of the state‑court ownership dispute; NFC Ring does not oppose the stay.
- Esos moved to intervene in the federal case, asserting it is the true patent owner; Kerv does not oppose intervention.
- The district court considered the traditional three‑factor stay test (possible damage from stay, hardship/inequity of proceeding, and orderly course of justice) and Esos’s opposition arguing intervention and irreparable harm.
- The court granted Esos’s motion to intervene and granted Kerv’s motion to stay the federal case until the state court resolves the ownership dispute; parties ordered to file a joint status update by November 30, 2017 or earlier if the state court decides ownership.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether non‑party Esos may intervene | Esos: it is the true owner of the ’609 patent and should be allowed to intervene to protect ownership rights | Kerv: does not oppose intervention (focuses on staying case) | Court granted Esos leave to intervene |
| Whether to stay the federal action pending state‑court resolution of patent ownership | NFC Ring: does not oppose stay; resolution will clarify who can enforce the patent and avoid wasted resources | Kerv: a stay is warranted to avoid litigating against multiple parties and potential duplicative litigation if ownership is resolved against NFC Ring | Court granted stay pending resolution of the state‑court ownership dispute |
| Whether Esos will suffer irreparable harm from a stay | Esos: stay would cause irreparable harm and loss of goodwill | Kerv: harm from proceeding outweighs Esos’s asserted harms; money damages would be adequate | Court found Esos’s irreparable‑harm claim unsubstantiated and not enough to defeat stay |
| Whether a stay would promote orderly justice and avoid prejudice | NFC Ring/Kerv: staying simplifies issues, avoids piecemeal litigation, and prevents hardship/inequity to Kerv | Esos: distinguishes precedent and contends justice does not require a stay | Court found factors (hardship, simplification, avoidance of duplicative litigation) strongly favor a stay |
Key Cases Cited
- CMAX, Inc. v. Hall, 300 F.2d 265 (9th Cir. 1962) (stay/abstention framework; prejudice and orderly administration of justice factors)
- Intermedics Infusaid, Inc. v. Regents of Univ. of Minn., 804 F.2d 129 (Fed. Cir. 1986) (consideration of prejudice and potential to moot or preclude federal claims)
- Loral Fairchild Corp. v. Matsushita Elec. Indus. Co., 840 F. Supp. 211 (E.D.N.Y. 1994) (avoidance of piecemeal adjudication relevant to stay decisions)
- Gen‑Probe, Inc. v. Amoco Corp., 926 F. Supp. 948 (S.D. Cal. 1996) (granting stay where state litigation over patent ownership could resolve parties’ rights and avoid duplicative federal litigation)