Two orders recently issued regarding whether district court litigation should be stayed pending inter partes review.  In both cases, the IPR petition had been filed recently, and the institution decision had not yet issued—but the results could not have been more different.  Judge Tigar granted a stay in Uniloc USA, Inc. v. LG Electronics U.S.A. Inc. (Case No. 3:18-cv-06739, “Uniloc”).  Two floors down, Judge Orrick went the other way in J & K IP Assets, LLC v. Armaspec, Inc. (Case No. 3:17-cv-07308, “J & K”).

In Uniloc, that well-known NPE sued LG Electronics, asserting a standards read against various cell phone technologies, such as 3G, LTE, and Bluetooth.[1]  LG and non-parties Microsoft, Apple, and Samsung filed IPRs challenging the asserted patents.[2]  LG had not yet served its invalidity contentions and very little discovery had occurred.[3]  And although the Court head set deadlines for claim construction, those deadlines were not imminent.[4]

While the Court noted that the PTO could decide not to institute the IPRs, there were three countervailing reasons to institute the stay: 1) all asserted claims were challenged, so the stay presented “the maximum potential for simplification of issues,” 2) it would be “wasteful” to proceed with invalidity contentions and other aspects of the case, and 3) institution decisions were expected in less than 4 months.[5]  Under these circumstances, “the potential for simplification outweighs the uncertainty inherent in a pre-institution stay.”[6]  The Court conditioned the stay on LG’s agreement to be bound by the third party IPR petitions.[7]  Even though LG filed its IPR petitions seven months after the initiation of the district court suit—and then waited four more months to file its stay motion—this did not result in unnecessary prejudice to Uniloc.[8]  Uniloc’s NPE status also weighed in favor of a stay, because monetary damages would be adequate and because it had not moved for an injunction.[9]

J & K bore a number of similarities to Uniloc.  All asserted claims were challenged in the IPR petition, the plaintiff was an NPE, and the case had been pending for over a year.[10]  The primary difference?  The state of discovery.  In J & K, invalidity contentions had been served, both parties had responded to interrogatories, and both parties had produced documents under the Patent Local Rules and pursuant to document requests.[11]  Even though the Court had not yet held an initial CMC or issued a scheduling order, the patent owner argued that claim construction could be completed before the PTAB issued an institution decision and that the district court trial could occur before the PTAB’s final written decision.[12]  Judge Orrick agreed, denying the motion to stay (albeit  “without prejudice to renewal if the PTAB institutes an IPR”), and scheduled a claim construction ruling for July, before the 18-month deadline for the PTAB’s institution decision would run out.

Although the ruling in J & K was a summary order without much analysis, it appears the late stage of discovery may have made the difference.

 

Uniloc USA, Inc. v. LG Electronics U.S.A. Inc., Case No. 3:18-cv-06739-JST, Dkt. 109 (N.D. Cal. Apr. 29, 2019)J & K IP Assets, LLC v. Armaspec, Inc., Case No. 3:17-cv-07308-WHO, Dkt. 45 (N.D. Cal. Apr. 2, 2019).


Endnotes:

[1]  Uniloc, Dkt. 109 at 2 (N.D. Cal. Apr. 29, 2019).

[2]  Id. at 2-3.

[3]  Id. at 4.

[4]  Id.

[5]  Id. at 6-8.

[6]  Id. at 8.

[7]  Id. at 8-9.

[8]  Id. at 6-10.

[9]  Id. at 11.

[10]  J & K, Dkt. 45 at 1-2 (N.D. Cal. Apr. 2, 2019).

[11]  J & K, Dkt. 41 at 3-5 (N.D. Cal. Apr. 2, 2019).

[12]  Id. at 6.