District Court Stays Litigation Pending Inter Partes Review ("IPR") over Defendant's Objection That Summary Judgment Motion Should be Determined First

September 13, 2016

After the Patent Trial and Appellate Board ("PTAB") instituted inter partes review ("IPR") of all asserted claims in three of the Patents-in-Suit and with the PTAB's decision on FMC's petition for IPR of the fourth challenged patent pending, the district court received briefs on whether the case should be stayed pending the IPRs.

The district court analyzed the issued by nothing that it had authority to stay the case pending IPRs based on a three factor test. See, e.g., Procter & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 848-49 (Fed. Cir. 2008) (citing 35 U.S.C. ยง 318). "District courts typically analyze stays under a three-factor test: (i) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (ii) whether a stay will simplify the issues in question and trial of the case; and (iii) whether discovery is complete and whether a trial date has been set." Murata Mach. USA v. Daifuku Co., Ltd., __ F.3d __, 2016 WL 4073320, *3 (Fed. Cir. Aug. 1, 2016).

Under this test, defendant FMC argued that it would be prejudiced by a stay because the district court should grant FMC's motion for summary judgment without delay. The district court disagreed for several reasons.

First, it found that "it is unclear from the current record whether FMC's dispositive motion would be granted. Additionally, Plaintiffs argue that the Court should not rule on FMC's Motion for Summary Judgment until after a full Markman ruling is issued after the IPR process is completed. The Court finds that neither party will be unduly prejudiced or suffer a clear tactical disadvantage if the case is stayed.

Second, the district court found that a "stay will simplify the issues in question and the trial of the case. The PTAB has already granted inter partes review of three of the Patents-in-Suit. The PTAB will decide by October 2016 whether to grant IPR of the fourth patent asserted by Plaintiffs, and will decide by February 2017 whether to grant IPR of FMC's asserted patent. If the PTAB ultimately determines that any of the patent claims are invalid or otherwise narrows the scope of any asserted patent claims, the proceedings in this Court will likely be resolved or simplified considerably.

Third, "[r]egardless of the outcome of the IPR process, this litigation is likely to be simplified. This factor weighs heavily in favor of the stay. With reference to the third factor, the lawsuit is in an early stage, having been filed less than eight months ago. The Court has not yet issued a full claim construction ruling, dispositive motions have not been fully briefed and, indeed, Plaintiffs have not yet filed their Final Infringement Contentions. This factor weighs in favor of a stay."

Finally, the district court also considered the burden that the litigation places on the court and the parties. "This lawsuit involves five complicated patents. Litigation will be costly, time-consuming, and otherwise burdensome to the parties. The PTAB's IPR process may reduce this burden, and a stay will clearly reduce the burden of proceeding with both the IPR and this lawsuit simultaneously."

Accordingly, the district court concluded that a stay of the case "pending the completion of the IPR process will provide the Court and the parties with potentially important guidance from the patent office, will simplify the case, will avoid a needless waste of resources, and will prevent inconsistent results between the IPR proceedings and this lawsuit. The Court finds also that the significant benefits from the stay outweigh any prejudice to either party."

OneSubsea IP US Limited v. FMC Technologies, Inc., Case No. H-16-0051 (S.D. Tex. Aug. 30, 2016)

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.