E.D. Texas court grants stay of litigation pending an IPR based, in part, on patent owner's failure to timely respond to the stay motion

October 16, 2014

In Norman IP Holdings v. TP-Link Technologies, Co., et al., the Defendants moved to stay the litigation pending completion of an inter partes review involving the patents-in-suit. The plaintiff did not respond to the motion. Thereafter, the court granted the motion and stayed the litigation pending completion of the IPR involving claim 6 of the '597 Patent.

Plaintiff's complaint alleges ADTRAN infringes U.S. Patent Nos. 5,502,689 (the "'689 Patent"), 5,530,597 (the "'597 Patent"), and 5,592,555 (the "'555 Patent"). Specifically, the plaintiff asserts claims 5 and 6 of the '689 Patent, claims 1-6, 10, and 11 of the '597 Patent, and claims 10, 12, and 51 of the '555 Patent against ADTRAN, the sole remaining defendant at the time the court decided the stay motion. The court noted that there have been 10 petitions for post-grant review of the three patents asserted by Norman. A total of 33 separate claims from the asserted patents have been canceled in the four proceedings that have been completed. The remaining six proceedings were pending at the time of the filing. In concurrent litigation, Norman alleged Nissan North America, Inc. ("Nissan") infringes the same asserted claims of the '689 and '597 patents. Nissan filed a petition for IPR as to claim 6 of the '597 patent and claims 5 and 6 of the '689 patent. On September 23, 2014 PTAB granted Nissan's petition for IPR as to the asserted claims in the '689 and '597 patents. During the October 7, 2014 hearing ADTRAN agreed, if the court granted a stay of the present litigation, "to be estopped as to invalidity contentions raised and adjudicated in the [Nissan] IPR proceedings."

The court examined the three relevant factors in determining whether a stay is appropriate. In addressing the first factor, i.e., whether a stay would cause any undue prejudice to the plaintiff, the court held that the plaintiff's failure to respond to the stay motion in a timely manner belies its contention that a delay in the litigation would be prejudicial:

Plaintiff did not respond to Defendant's motion prior to the October 7, 2014 hearing. During the hearing Norman argued that it would be unduly prejudiced by a stay because the administrative proceedings could cause a multi-year delay. Norman argued that during the stay evidence may be lost, witnesses may become unavailable, memories may fade, and Norman's experts may become unavailable. However, Norman's failure to respond to this motion in a timely manner belies its contention that a delay in the litigation would be prejudicial. Furthermore, Defendant's argument that staying the proceeding would benefit both parties is convincing. At the time the motion was filed, litigation was in the early stages of pleading and discovery. Additionally, the PTO has already issued final rejections as to a number of the asserted claims, several defendants have been dismissed since the filing of this motion, and all the asserted claims are currently undergoing reexamination, IPR or are the subject of petitions for IPR. Allowing reexamination and IPR to proceed will conserve the time and resources of both parties. Limiting the stay to the culmination of the IPR proceedings will ensure that the stay is finite and not unduly prejudicial.

Turning to consideration of whether a stay would simplify the issues for trial, the court held that "a stay at is appropriate because reexamination and IPR of the three patents-in-suit will likely simplify the resolution of the case by narrowing or eliminating issues for trial. Furthermore, ADTRAN notes that the PTO has already rejected several of the asserted claims which will determine whether some or all of the claims subject to reexamination or IPR are invalid."

Finally, regarding the status of the case, the court noted that when the motion was filed, the parties had not engaged in any substantive discovery, the parties' claim construction positions had not been submitted, and a Markman hearing was several months away. And although a trial date has been set for April 15, 2016, it was over twenty-one months away at the time of filing.

Based on its analysis of these factors, the court determined that a stay was warranted "until the PTO has issued its final decisions on the inter partes review of claim 6 of the '597 Patent."

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The court's decision illustrates the continuing uphill battle patent owner's face opposing a stay pending an IPR, particularly when the motion is filed in the early stages of a case. To make matters worse, in this case the patent owner did not timely oppose the stay, which only further supported the court's decision to stay the case. Norman IP Holdings v. TP-Link Technologies, Co., et al., 6:13-cv-00384 (E.D. Tex. Oct. 8, 2014) (J. Love).


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.