Defendants filed an emergency motion to stay the case pending an appeal of the PTAB's decision that invalidated all of the asserted claims in the patent-in-suit. Earlier in this case, Defendants had petitioned for inter partes review ("IPR") of all of the claims at issue in the patent. The PTAB granted review, and the Defendants subsequently moved for a stay pending completion of the IPR.
Although the court acknowledged that the IPR process had the potential to simplify issues for trial, the court determined "that a stay was not justified because the parties had made significant progress toward trial and a stay would deny the Plaintiff an expeditious resolution of its patent rights." As a result, the litigation and the IPR proceeded concurrently.
On May 15, 2015, the PTAB issued a Final Written Decision in the IPR, holding that all of the asserted claims of the patent are unpatentable under 35 U.S.C. § 103. Although the plaintiff had not yet filed an appeal of the final written decision, Defendants filed the motion to stay the case while the Federal Circuit hears Plaintiff's appeal.
The court analyzed the motion under the same three-factor test as the motion to stay pending IPR: "(1) whether discovery is complete and whether a trial date has been set.; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether the stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party. NFC Technology LLC v. HTC America, Inc., 2015 WL 1069111, *2 (E.D. Tex. Mar. 11, 2015)."
The court found that the case had proceeded to a late stage in the litigation, with the trial only four months away, the parties had largely completed claim construction, and fact and expert discovery have concluded. The court concluded that although this factor does not support staying the case, the "appellate review of the PTAB's decision finding invalid all of the claims at issue will certainly simplify this case by providing resolution of a key claim construction issue about which this Court and the PTAB came to different conclusions. . . . As such, the second factor favors staying the case."
The court then addressed whether the stay would unduly prejudice the plaintiff. "Motion Games argues a stay will cause undue prejudice because the Court has already ruled that staying the case is prejudicial and the parties have expended significant resources completing fact and expert discovery and resolving numerous discovery and substantive issues. Contrary to Plaintiff's argument, there comes a point at which any prejudice to the Plaintiff in staying the litigation is significantly outweighed by a determination that patent claims are invalid by the "expert agency" in the field. See NFC Technology, 2015 WL 1069111, at *5. Typically, at that point, any further expenditure of party or judicial resources on invalid claims is unwise. While it is true that significant resources have been invested to this point, there is little doubt that a substantial amount of pretrial, trial and post-trial resources have yet to be expended. Certainly, if the Federal Circuit disagrees with the PTAB, the litigation can resume. But until then, a stay of the case is appropriate. Moreover, Plaintiff was certainly aware that the PTAB could invalidate all of the relevant claims of the '607 patent. If Motion Games did not want to risk its time and resources litigating before this Court during the IPR proceeding, it could have simply agreed to Defendants' prior motion to stay."
Accordingly, the court granted the emergency motion to stay.
Motion Games, LLC v. Nintendo Co., LTD., Case No. 6:12-cv-878-RWS-JDL (E.D. Tex. June 5, 2015)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.