Downstream Distributors' Request for Stay of Litigation Denied Where Stay Would Interfere with Plaintiff's Ability to Effectively Litigate

January 16, 2012

Plaintiff Internet Machines LLC ("iMac") filed a patent infringement action against several defendants including, among others, PLX Technology, Inc., ASUS Computer International and CDW Corp. alleging infringement of three patents that pertain to PCI Express switches. PLX manufactures the accused products while the remaining defendants distribute the products, incorporate the accused products into other devices or sell devices that incorporate the accused devices.

The defendants, other than PLX (the "Downstream Defendants"), moved to stay the litigation between themselves and iMac pending the resolution of iMac's claims against PLX. The Downstream Defendants argued that PLX, as the product manufacturer, was the only true defendant in the case and that the resolution of iMac's claims against PLX would moot any dispute between iMac and the Downstream Defendants. Based on a related case against PLX, iMac asserted that this was incorrect because PLX, in that other currently pending case, argued that it does not ship the accused products in an infringing state and that it is ignorant of any downstream configuration by its distributors or retailers. Based on this argument made by PLX, iMac asserted that a stay would therefore be inefficient and financially burdensome because it would require a second suit against the Downstream Defendants.

The Downstream Defendants also claimed that it would be in the interests of judicial economy to grant a stay. The district court disagreed. "Granting a stay would interfere with iMac's ability to effectively litigate its suit. In addition to PLX, the Downstream Defendants are real parties of interest in this case. It would be unnecessarily duplicative to require iMac to proceed against the Downstream Defendants at some later time in the event iMac's claims against PLX fail.

The district court therefore concluded that judicial economy would be furthered by allowing the claims against the Downstream Defendants to proceed. "Judicial economy would be better served by allowing iMac to proceed against PLX and the Downstream Defendants contemporaneously."

In addition, the district court found that the Downstream Defendants had not identified prejudice or hardship if the action was not stayed. "Additionally, the Downstream Defendants have not identified any hardship or inequity that would result if this action is not stayed. Because a stay in this case would needlessly prolong litigation, the Court denies the Downstream Defendants' motion to stay."


Internet Machines LLC v. ASUS Computer International, et al., Case No. 6:10-cv-548 (E.D. Tex. Jan. 5, 2012)

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