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District Court Stays Patent Infringement Action Pending Inter Partes Review Prior to Institution of Review by Patent Trial and Appeal Board

The plaintiff CRFD Research, Inc. (“CRFD”) filed a patent infringement action defendants Dish Network Corporation, Dish DBS Corporation, Dish Network L.L.C., Echostar Corporation, and Echostar Technologies L.L.C. (collectively, “Dish Network”). CRFD also filed separate actions against defendants Hulu, LLC (“Hulu”), Netflix, Inc. (“Netflix”), and Spotify USA Inc. (“Spotify”). CRFD alleges that each of the above-captioned defendants infringe U.S. Patent No. 7,191,233 (“the ‘233 Patent”).

Certain of the defendants, Hulu, Netflix, and Spotify, filed a petition for inter partes review (“IPR”) of the ‘233 Patent with the Patent Trial and Appeal Board (“PTAB”). Those same defendants then filed a motion to stay the proceeding pending the review by the PTAB, even though the PTAB had not yet accepted the petition for hearing. Dish Network then filed a separate petition for IPR and also filed a motion to join the other defendants’ Joint Motion to Stay.

The district court then found that “each defendant has now filed an IPR challenging every claim CRFD has asserted against that defendant. As a result, all four defendants are now subject to the statutory estoppel provision set forth in 35 U.S.C. § 315.”
In analyzing whether to grant the stay, the district court noted that the decision to stay an action lies within the sound discretion of the trial court. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988); Cost Bros. Inc. v. Travelers Indemnity Co., 760 F.2d 58, 60 (3d Cir. 1985); First Am. Title Ins. Co. v. MacLaren, L.L.C., No. 10-363-GMS, 2012 WL 769601, at *4 (D. Del. Mar. 9, 2012). In the patent litigation arena, this power includes “the authority to order a stay pending conclusion of a PTO [review].” Ethicon, 849 F.2d at 1426-27. Central to the rationale providing for such discretion is that of the “court’s inherent power to conserve judicial resources by controlling its own docket.” Cost Bros. Inc., 760 F.2d at 60-61 (citation omitted); see also Cheyney State Coll. Faculty v. Hufstedler, 703 F.2d 732, 737-38 (3d Cir. 1983) (citing Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936)).

As explained by the district court, “[t]he following factors govern the court’s stay analysis:

(1) whether the granting of a stay would cause the non-moving party to suffer undue prejudice from any delay or allow the moving party to gain a clear tactical advantage over the non-moving party; (2) whether a stay will simplify the issues for trial; and (3) whether discovery is complete and a trial date set. Bos. Scientific Corp. v. Cordis Corp., 777 F. Supp. 2d 783, 788 (D. Del. 2011); see also First Am. Title Ins., 2012 WL 769601, at *4.”

The district court then found that “these factors weigh in favor of staying proceedings. First, although CRFD would undoubtedly prefer a quicker resolution to a slower one, there is no suggestion that time is particularly important, or that any prejudice suffered would be undue. See Neste Oil, 2013 WL 3353984, at *2 (D. Del. July 2, 2013) (“The mere potential for delay . . . is insufficient to establish undue prejudice.”).

Second, should the PTAB institute review and invalidate some or all of the asserted claims, the issues for trial would be greatly simplified. And the defendants will be estopped from rearguing issues raised during IPR. See 35 U.S.C. §315(e). What the PTAB will ultimately do is obviously a matter of speculation, but that does not mean the court is obligated to assume that review will not be instituted or that claims will survive. At worst, if the PTAB denies review, the parties will only endure a brief delay.

Finally, the court recognizes that these cases have been proceeding according to the stipulated schedule. But discovery will not be complete for several more months, and, as reflected in the scheduling order, the court specifically declined to assign a trial date when the parties convened for the Rule 16 scheduling conference. (C.A. 14-313-GMS, D.I. 18.) Thus, in the court’s view, a stay of proceedings at this time is warranted, before significant effort is expended on claim construction.”

Accordingly, the district court granted the motion to stay the case pending the institution of the IPR review.

CFRD Research, Inc. v. Dish Network Corporation, Case No. 14-064-GMS (D. Del. June 3, 2015)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or