Patent; Motion to Stay; Patent and Trademark Office (PTO); Inter Partes Review; 35 U.S.C. §§ 311-319
OPINION AND ORDER
Defendant United States moves to stay this litigation pending inter partes review initiated by a third-party. Def.’s Mot., May 29, 2014, ECF No. 95; see Def.’s Reply, Jun. 26, 2014, ECF No. 98. Plaintiff opposes the request. Pl.’s Opp’n, Jun. 16, 2014, ECF No. 97. The court DENIES the motion without prejudice to re-filing, upon a decision by the United States Patent and Trademark Office (PTO) on the petition to institute inter partes review. 1
I. Statement of Facts
In August 2010, plaintiff CANVS Corporation (CANVS) filed suit seeking reasonable and entire compensation under 28 U.S.C. § 1498(a) for defendant’s alleged infringement of plaintiffs U.S. Patent No. 6,911,652 filed June 28, 2005 (the patent), disclosing a low light imaging system useful for military applications. Compl., ECF No. 1. Defendant has denied infringement and pled invalidity based on prior art and obviousness. See Ans., Dec. 13, 2010, ECF No. 8, at ¶¶ 31-34. The parties exchanged initial disclosures, including (accoi’ding to plaintiff) thirteen boxes of original documents from plaintiff and over 179,000 documents from defendant. See Pl.’s Opp’n 3. The parties also exchanged diselo- *590 sures of asserted claims and prior art, claim charts, proposed claim construction statements, and expert reports in support of claim construction. See id.; Scheduling Order, Mar. 25, 2011, ECF No. 12, amended by Order, Oct. 14,2011, ECF No. 18.
Throughout 2011 and 2012, discovery and claim construction slowed to a halt in the wake of multiple discovery disputes. These disputes culminated in numerous published and unpublished orders and opinions concerning discovery and the scope of claims and defenses.
2
The court then entered partial summary judgment for defendant, invalidating claims 1-3 and claims 6-7 of the seven-claim patent as anticipated by U.S. Patent No. 5,035,472 (the Hansen patent).
CANVS v. United States,
On June 2, 2014, the court entered a scheduling order setting deadlines for further proceedings concerning the validity and infringement of the surviving patent claims 4 and 5. ECF No. 96. The court also denied defendant’s request to expand its prior art disclosure, and denied plaintiffs request to expand its claim chart, because deadlines for both disclosures had expired two years earlier. Id. at 1. Over the last several months, the parties have restarted production of responsive documents and have been working toward filing revised claim construction positions to address a narrow construction issue still at play in patent claims 4 and 5. See id. at 2-3. The pre-trial conference is set for November 13, 2015 and trial for December 2015. Id. at 3.
In addition to instituting this action, CANVS has sued various third parties in Florida federal court, alleging that they also infringed the patent through their supply of accused devices to the U.S. military. See RCFC 40.2 Notice of Directly Related Cases, Apr. 21, 2014, ECF No. 90 (identifying directly related cases). Four months ago, one of the third-parties — specifically, FLIR Systems, Inc. (FLIR) — filed a petition with the PTO requesting inter partes review (IPR) of the patentability of all seven asserted patent claims, including those claims previously invalidated by this court. Def.’s Mot. Ex. B, ECF No. 95-2 (FLIR’s IPR Petition filed May 16, 2014) (arguing the patent is invalid as obvious over the Hansen patent in combination with three other prior art references); see Def.’s Mot. 4-5 (discussing petition). CANVS filed its preliminary response on August 25, 2014. 3 See Patent Owner’s Prelim. Resp., FLIR Sys., Inc. v. CANVS Corp., No. IPR2014-00773 (PTAB), corrected by Patent Owner’s Corr. Prelim. Resp., FLIR Sys., Inc. v. CANVS Corp., No. IPR2014-00773 (PTAB Sept. 6, 2014) (technical corrections), available at www.uspto.gov/ip/boards/ bpai/prps.jsp (follow Patent Review Processing System hyperlink; then search IPR case number or patent number for filing docket). The PTO must decide within three months (by late November 2014) whether it will “institute” or deny review. 35 U.S.C. § 314(b) (2012). Review is appropriate only if the PTO determines there is “a reasonable likelihood that [FLIR] would prevail with respect to at least [one] of the claims challenged in the petition.” Id. § 314(a). If review is instituted, the PTO’s Patent Trial and Appeal Board (PTAB) “eonductfs]” the review, id. § 316(c), and has one year to issue its findings, subject to a six-month extension for “good cause,” id. § 316(a)(ll). Therefore, either the PTO will deny review by late November, 2014, or it will grant review and issue a final decision on patentability by late November 2015 or, with an extension, by late May 2016. A party dissatisfied with the PTAB’s final determination on patentability *591 may- appeal to the Federal Circuit. Id. §§ 319,141(e).
Defendant seeks to stay this litigation pending resolution of the inter partes review petition and, presumably, any subsequent appeals. In brief, defendant argues a stay is warranted because, defendant assumes, the PTAB will invalidate the patent and render moot this litigation through a less costly and efficient proceeding. See Def.’s Mot. 6-11. Plaintiff responds that the stay request is inappropriate and a mere delay tactic because, plaintiff assumes, the PTAB is unlikely to invalidate either claim 4 or 5, which are the sole claims still at issue in this litigation. See Pl.’s Opp’n 1, 5-10. The court declines to speculate. Rather, as set forth below, the court considers whether a stay is appropriate pending the range of possible outcomes of a parallel PTAB proceeding.
Of note, as of the date of this opinion, all three of the parallel Florida infringement actions have denied similar requests to stay pending resolution of FLIR’s inter partes review petition, including the action in which FLIR is a party. 4 See Order at 4, CANVS Corp. v. FLIR Sys., Inc., No. 2:14-cv-00180-SPC-CM (M.D.Fla. Jun. 10, 2014), ECF No. 21 (denying stay without prejudice to refile motion if the PTO institutes inter partes review); Order at 2, CANVS Corp. v. Nivisys, LLC, No. 2:14-cv-00099-SPCDNF (M.D.Fla. Jul. 31, 2014), ECF No. 25 (same); Order at 1, CANVS Corp. v. Exelis, Inc., No. 2:14-cv-00100-SPC-CM (M.D.Fla. Jul. 2, 2014), ECF No. 21 (“Upon review and in its discretion, the Court does not find[ ] a stay is appropriate at this stage of the proceedings.”).
II. Standard of Review
The court has inherent power to stay proceedings pending inter partes review.
5
See Ethicon, Inc. v. Quigg,
The moving party bears the burden of showing that a stay is appropriate,
Netlist, Inc. v. Smart Storage Sys., Inc.,
No. 13-cv-
*592
589-YGR,
Courts considering the issue have weighed three factors: (1) the impact of inter partes review, to include whether a stay would simplify the issues in question and streamline the trial; (2) how far the litigation has progressed, taking into account whether discovery is complete and a trial date has been set; and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party.
See, e.g., Straight Path,
III. Discussion
A The Impact of Inter Partes Review on the Litigation
Under the first factor, the Federal Circuit has recognized that a stay is favored if PTO review would simplify or assist the court’s patent validity determination or eliminate its need to try infringement claims. See
Slip Track Sys., Inc. v. Metal Lite, Inc.,
Defendant is correct that all seven patent claims are at issue in both proceedings. Def.’s Mot. 6-8. Defendant is also correct that if the PTO institutes review, it would reach a decision on patentability in November 2015 (absent an extension) prior to the commencement of this court’s December 2015 trial.
6
See
Def.’s Reply 6. Accordingly, if the PTAB were to cancel or narrow all claims by November, it would simplify the December trial by narrowing the issues or rendering trial moot because inter partes review findings are binding on this court.
See Fresenius USA, Inc. v. Baxter Int’l, Inc.,
*593
Conversely, even if patent claims 4 and 5 were to survive PTAB review, the PTAB’s final decision sustaining these claims would contain analysis that would be helpful to the court.
See
Def.’s Mot. 2, 8 (arguing the PTAB’s unique expertise and ability, in this case, to consider obviousness combinations not presently before the court). A richer prosecution history aids the court in its work. See
Gould v. Control Laser Corp.,
The court is cognizant of Congress’s intention to offer, through inter partes review, a more streamlined, efficient and less costly alternative to litigation. See Universal Elecs., 943. F.Supp.2d at 1029 (discussing same); Def.’s Mot. 8; Def.’s Reply 1-3 (arguing same). The court also is aware that if it stays this action, the parties will realize some of these benefits through more limited discovery, albeit to a far lesser degree than Congress intended in light of the status of this litigation and, in particular, the extensive discovery that has already occurred. See Def.’s Reply 3 n.3.
Other factors, however, weigh against the possibility that inter partes review would simplify this litigation, and these factors mer-Among these factors is the decision pending before the PTO regarding whether it will initiate or reject review, which creates uncertainty about whether a stay would simplify issues in this case.
See Ultratec, Inc. v. Sorenson Commc’ns, Inc.,
No. 13-CV-346-bbc,
The Federal Circuit “express[es] no opinion on which is the better practice.”
See VirtualAgility,
Anticipating the lack of uniformity among the various court decisions, defendant argues that the early filing of the motion to stay in this case should not be a matter of concern to the court because defendant expresses confidence that PTO review will be forthcoming. Def.’s Mot. 7 (arguing PTAB review is a “virtual certainty”). Defendant contends that (i) the PTAB has a high statistical rate of granting petitions; and (ii) the PTAB is likely to reconsider patentability in light of this court’s partial summary judgment opinion invalidating five of the seven claims. Id. at 4, 6-8; Def.’s Reply 8-9. In contrast, plaintiff responds that inter partes review is “highly likely to be denied, and if granted is unlikely to result in cancellation of [c]laim 4 or [c]laim 5, which [already survived summary judgment].” See PL’s Opp’n 2. The court again declines to accept the likelihood of either party’s speculation.
The court will not base its stay decision on speculation as to the likelihood that the PTO will accept review or ultimately cancel one or more claims. Such “review is not automatic and requires [the PTO’s independent determination] of a substantial question of patentability” presented, in this case, through a third-party’s inter partes review petition.
See Malibu Boats, LLC v. Nautique Boat Co., Inc.,
No. 3:13-CV-656-TAVHBG,
In any event, even if the PTO were to review all of the claims presented in this case, there are no estoppel benefits to be obtained that would ensure that a stay achieves the intended efficiencies in this circumstance. A petitioner seeking inter partes review is subject to a statutory estoppel requirement that precludes the petitioner from asserting invalidity in a subsequent lawsuit “on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 35 U.S.C. § 315(e)(2). “This critical limitation results in a more streamlined litigation and reduces the likelihood of inconsistent judgments.”
Personal-Web Tech., LLC v. Google, Inc.,
No. 5:13-cv-1317-EJD,
The petitioner who has sought the inter partes review concerning the patent-in-suit is neither defendant nor CANVS, but rather the third-party FLIR. Thus, the statutory estoppel limitation does not apply in this case because defendant as movant for the stay is not the petitioner; nor has defendant agreed to be bound to the same scope of statutory estoppel applicable to FLIR. With no estop-pel requirement here, defendant would be at liberty to bring to the court the same arguments that were, or could have been, raised by FLIR with the PTAB. This ability to assert the same positions in a different forum defeats one of the intended benefits of inter partes review, should any claims survive inter partes review.
See PersonalWeb Tech,
To support a stay request, some non-petitioner defendants have agreed to be subject to the same estoppel effects as the inter partes review petitioners.
E.g., Intellectual Ventures II LLC v. Commerce Bancshares, Inc.,
No. 2:13-CV-04160-NKL,
In other eases, courts have conditioned stays on the defendant’s agreement to be bound as if it had filed the petition.
E.g., PersonalWeb Tech.,
Although the court recognizes the potential for some simplification of the sole remaining claims 4 and 5 of the seven-claim patent, the prematurity of defendant’s motion and the lack of estoppel benefits to be gained weigh against the grant of a stay.
B. Progress in this Case
This second factor calls for an examination of the progress already made in litigation and often has included a specific inquiry into whether discovery is complete and a trial date has been set.
7
E.g., Evolutionary Intelligence,
But, if protracted and expansive discovery has already occurred, or the court has expended significant resources, then courts have found that this factor weighs against a stay.
E.g., Endotach,
Discovery in this case is not yet complete and trial is scheduled to be held in December 2015, shortly after defendant filed its request for stay. See Def.’s Mot. 8; Scheduling Order at 3, Jun. 2,2014, EOF No. 96. Defendant contends that discovery is still in its “early stages,” pointing out that claim construction is pending and the parties have yet to conduct expert discovery on infringement and damages discovery. Def.’s Mot. 8-9 (capitalization omitted).
Both the parties and the court have expended substantial resources to advance this case. Progress in this litigation has not been insignificant. The parties have responded to written discovery regarding infringement and invalidity, have exchanged thousands of pages of documents, inspected prior art, and have taken depositions. In addition, the court has resolved numerous discovery disputes in multiple orders. 8 See supra note 2 (listing orders). The court also entered partial summary judgment invalidating patent claims 1-3 and 6, and (on cross-motions from the parties) reconsidered that ruling to invalidate claim 7 as well. The parties exchanged claim construction positions years ago and, following summary judgment, have narrowed their claim construction dispute to a sole remaining phrase or two—even as plaintiff insists that claim construction is not necessary. See Status Report, Apr. 28, 2014, ECF No. 91, at 3-6.
The parties and court have expended considerable effort in this case and have made substantial progress. This work has resulted in a narrower and more refined dispute between the parties. The advanced procedural posture of this ease militates against a stay.
C. Prejudice and Tactical Disadvantage
The last factor requires that the court evaluate “whether a stay would ‘unduly prejudice or present a clear tactical disadvantage to the non-moving party.’”
E.g., TAS Energy,
Weighing in favor of stay here is the fact that the parties are not direct competitors. Any harm that might result from a temporary stay of this litigation could be addressed through a final damages award. E.g.,
TAS Energy,
Also weighing in favor of a stay is defendant’s prompt request for a stay within two weeks of FLIR having filed its petition for inter partes review. Contrary to plaintiffs assertions that defendant is attempting to use the request for review to delay these proceedings, there is no evidence — only plaintiff’s argument — that defendant’s motive is dilatory. See PL’s Opp’n 8,10.
A critical countervailing consideration, however, is that a grant of stay at this time is likely to put plaintiff at a tactical disadvantage. Defendant had an opportunity to seek inter partes review earlier in this case, and it chose not to do so.
See
35 U.S.C. § 311(c). Instead, defendant elected to pursue litigation and aggressively challenge plaintiff at every turn. In furtherance of the litigation, both the parties and court devoted significant time and resources. Defendant now seeks to avail itself of the benefits of a stay pending inter partes review, without any of the attendant risks for such a petitioner.
9
Thus, defendant can sit idly by while a third party defends its interests, and plaintiff continues to expend resources. See
PersonalWeb Tech.,
The court discerns a measure of undue prejudice and a tactical disadvantage to plaintiff under this factor that counsels against a stay.
IV. Conclusion
The Court finds that a stay pending inter partes review initiated by a third party is inappropriate at this time based on a review of the relevant factors and considering the totality of the circumstances. Accordingly, defendant’s motion for a stay is DENIED without prejudice.
If the PTAB institutes review, defendant may refile its motion to stay within twenty (20) days of the PTAB’s decision, taking care to address the impact, if any, of: (i) the PTAB’s decision to accept review; (ii) defendant’s status as a third party to the inter partes review not subject to statutory estop-pel in this court; and (iii) any changed factual circumstances.
IT IS SO ORDERED.
Notes
. In September 2012, inter partes review (IPR) replaced the old inter partes reexamination process as a new means to challenge the validity of patent claims before the United States Patent and Trademark Office (PTO) Patent and Trial Appeal Board (PTAB).
See
Leahy-Smith America Invents Act (AIA), Pub.L. No. 112-29, § 6, 125 Stat. 284, 299-305 (2011), 35 U.S.C. §§311-319 (2012);
see also TAS Energy, Inc. v. San Diego Gas & Elec. Co.,
No. 12-cv-2777-GPC(BGS),
.
E.g., CANVS Corp. v. United States,
. The court may take judicial notice of PTAB filings. Fed.R.Evid. 201(b)(2), (c)(1) (judicial notice);
Genentech, Inc. v. Chiron Corp.,
. The court may take judicial notice of decisions of other courts.
See Advanced Software Design Corp. v. Fed. Res. Bank of St. Louis,
. Although inter partes review is a new means to challenge patent validity, the same general principles that governed stays pending the old inter partes reexamination process should apply with equal force to stays pending the new inter partes review.
E.g., Ultratec, Inc. v. Sorenson Commc’ns, Inc.,
No. 13-CV-346-BBC,
. Defendant is adamant that the remaining patent claims 4 and 5 are "highly unlikely ... [to] survive the [inter partes review] process” given the narrow issue of independent brightness adjustment and the fact that this court has already invalidated claims 1-3 and 6-7.
See
Def.’s Mot., May 29, 2014, ECF No. 95, at 6, 8; Def.'s Reply, Jun. 26, 2014, ECF No. 97, at 1, 5 n.4. In contrast, plaintiff contends that claims 4 and 5 are "highly likely” to survive inter partes review because they already have survived summary judgment.
See
Pl.’s Opp’n 2. The court will not speculate on the likely outcome of a third-party inter partes review petition or the extent to which the unique procedural posture of this case might have some effect.
See Rensselaer Polytech. Instit. v. Apple, Inc.,
No. 1:13-CV-0633 (DEP),
. Generally, the court should measure litigation progress as of the filing of the motion rather than later, when it rules on the motion.
VirtualAgility Inc. v. Salesforce.com, Inc.,
. Defendant argues that plaintiff is responsible for the delayed discovery. Def.'s Mot. 9. But, responsibility is not relevant to the consideration of this factor. Rather, this factor is concerned with what progress has been made and what remains to be done.
. See supra Section III.A (discussing statutory estoppel).