Court stays litigation pending IPR challenge, but requires that Defendants agree to be estopped from asserting any invalidity contention that was "actually raised and finally adjudicated" in the IPR proceedings

September 25, 2014

In Coho Licensing LLC v. Glam Media, et al., Coho filed suits against defendants AOL Inc. ("AOL"), Glam Media Inc., Ning Inc., LinkedIn Corp., Rovi Corp., and Twitter, Inc. (collectively referred to as "Defendants"). On May 16, 2014, AOL filed petitions for IPR challenging the validity of all the claims of two of the three asserted patents, and, on June 17, 2014, AOL filed a petition for IPR challenging the validity of all claims of the third patent. Defendants subsequently moved to stay the above captioned cases pending the IPR. As summarized below, the Court granted AOL's motion to stay and granted the motions of the remaining defendants on the condition that they agree "to be estopped from asserting any invalidity contention that was actually raised and finally adjudicated in the IPR proceedings."

After reciting the application legal standards and the factors courts consider when ruling on a stay, the Court stated that "[t]here is a 'liberal policy in favor of granting motions to stay proceedings pending the outcome of USPTO reexamination or reissuance proceedings.'" Decision at 3 (quoting ASCII Corp. v. STD Entertainment, 844 F. Supp. 1378, 1381 (N.D. Cal. 1994)). The Court then addressed each of the relevant factors.

Stage of Litigation. The Court held the early stages of the case favored a stay. In doing so, the Court noted that "[c]laims construction briefing has not yet been filed, no discovery has occurred yet, and these cases have not been set for trial yet. In fact, this Court has not even held a case management conference yet that the cases."

Undue Prejudice on the Non-moving Patent Owner. The Court held that, even though the patent owner argued that it would be prejudiced by the delay incurred, that delay is insufficient to demonstrate undue prejudice. While the Court did not identify the estimated length of the delay, it noted only that the "likely length of the reexamination does not generally, by itself, constitute undue prejudice."

Simplification of the Issues; Streamline Trial; and Reduce Litigation Burden on the Parties and the Court. The Court began with the oft-repeated advantages of a stay pending reexamination:

A stay pending reexamination is justified where "the outcome of the reexamination would be likely to assist the court in determining patent validity and, if the claims were canceled in the reexamination, would eliminate the need to try infringement issues." Slip Track Sys., Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1341 (Fed. Cir. 1998). A stay may also be granted in order to avoid inconsistent results, obtain guidance from the PTAB, or avoid needless waste of judicial resources. To the extent claims survive the reexamination process, the reexamination would "facilitate trial by providing the Court with expert opinion of the PTO and clarifying the scope of the claims." Target Therapeutics, 33 U.S.P.Q.2d at 2023.

The Court then concluded that these advantages would apply in the instant case even though the PTAB had not yet ruled on the IPR petitions. In addition, except for AOL, who was bound by the IPR estoppel provisions, and Rovi, who already had agreed to the Court's proposed estoppel, the Court required that the remaining defendants agree to be estopped from "asserting any invalidity contention that was actually raised and finally adjudicated in the IPR's initiated by AOL":

Here, the AOL has sought IPR for all of the claims on the patents in suit. Accordingly, the PTAB's review of the petitions, if granted, could potentially streamline invalidity, claim construction, and infringement issues in this action. Development of the inter partes review record may also clarify claim construction positions for the parties, raise estoppel issues, and encourage settlement. The fact that the PTAB has not yet determined whether it will grant the requests for IPR does not alter the Court's findings. See Evolutionary Intelligence, LLC v. Facebook, Inc., 2014 WL 261837, *3 (N.D. Cal. Jan. 23, 2014).

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The Court CONDITIONALLY GRANTS the motions to stay in Civil Case Nos. 14-1576 and 14-2128, Coho Licensing LLC v. Glam Media Inc. and Ning Inc., Civil Case Nos. 14-1577 and 14-2131, Coho Licensing LLC v. LinkedIn Corp., and Civil Case Nos. 14-2132 and 14-2718, Coho Licensing LLC v. Twitter, Inc. on an agreement from Glam Media Inc., Ning Inc., LinkedIn Corp., and Twitter, Inc. to be estopped from asserting any invalidity contention that was actually raised and finally adjudicated in the IPR proceedings.

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There are two aspects of this decision that are worth mentioning. First, the Court does not address whether, and to what extent, the advantages of staying litigation may not be realized if one of the defendants does not agree to the proposed estoppel. Second, the Court's proposed estoppel appears narrower than the statutory estoppel. Compare Court's estoppel of "asserting any invalidity contention that was actually raised and finally adjudicated" with the statutory estoppel of "any ground that the petitioner raised or reasonably could have been raised in the inter partes review."

Coho Licensing LLC v. Glam Media, et al., Case No. 14-01576 JSW (Sept. 17, 2014 N.D. Cal.) (White, J.).

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. The authors represent inventors, patent owners and technology companies in patent licensing and litigation in U.S. District Courts and in the United States Patent and Trademark Office, including numerous IPRs currently pending before the PTAB. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Greg Cordrey at 949.623.7236 or GCordrey@jmbm.com.