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Smartflash v. Apple: District Court Stays Case Sua Sponte Based on Pending Covered Business Method (“CBM”) Patent Review

The court had previously stayed a cased pending between Smartflash LLC and Amazon and simultaneously declined to stay an earlier-filed case between Smartflash LLC and Apple, Inc. because the stay request came after a jury trial. The court was perplexed that despite Apple’s argument for a stay in the first case well after conclusion of a jury trial, Apple had “curiously not requested a stay in this case even though CBM review has been instituted on all but one of the asserted patents.”

The court then found that “[a]lthough the Court denied Apple’s motion to stay in the earlier Apple case, this case is procedurally more similar to the Amazon case. This case involves the same asserted patents at the Amazon case. As with Amazon, this case is in its very early stages; the court has not yet held a scheduling conference. Similarly, substantial opportunities remain for cost-savings and issue simplification.”

The court stated that “[m]any of the issues in this case undoubtedly overlap with the prior Apple case. The Court’s Order denying Apple’s motion to stay the earlier case is currently on interlocutory appeal at the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit has ordered a temporary stay in the case pending its decision. If the Federal Circuit decides to uphold the Court’s decision to deny the stay and allow the earlier Apple case to proceed to a new damages trial and the appeals process, the Court will likely have additional guidance on overlapping issues. Additionally, if the Federal Circuit determines a stay is warranted pending CBM review, the outcome of CBM review could have a dispositive effect on all but one asserted patent as in the Amazon case. Either outcome of the appeal of the stay issue will eventually lead to simplification of issues in this case. It does not benefit the parties or the court to proceed with relitigating many of the same issues already decided by the Court in the earlier Apple case when either outcome of the interlocutory appeal will lead to the ultimate simplification of issues in this case without expending additional resources. As the Court noted previously, Smartflash will not be unduly prejudiced by a stay.”

Accordingly, the court stayed the case upon sua sponte consideration.

Smartflash LLC v. Apple, Inc., Case No. 6:15-CV-145-JRG-KNM (E.D. Tex. July 27, 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