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CG Technology v. DraftKings District Court Stays Discovery Pending Motion to Dismiss Challenging Validity of Asserted Patents Under Alice

DraftKings filed a motion to stay discovery until the district court had an opportunity to rule on the a motion to dismiss. The motion to dismiss asserted that all of the ten patents-in-suit were invalid because they claimed patent-ineligible subject matter. CG Technology opposed the motion.

The district court began its analysis by noting that the Federal Rules do not provide for automatic or blanket stays of discovery when a potentially dispositive motion is pending. Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597 (D. Nev. 2011) (citation omitted). But the district court also noted that as a general matter, courts have broad discretionary power to control discovery. See e.g., Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988). In determining whether to stay discovery, and in light of the directive in Rule 1 to construe the Federal Rules of Civil Procedure in a manner to “secure the just, speedy, and inexpensive determination of every action,” the preferred approach is that set forth previously in Twin City Fire Insurance v. Employers of Wausau, 124 F.R.D. 652 (D. Nev. 1989).

The district court also stated that: “It is well-established that a party seeking a stay of discovery carries the heavy burden of making a strong showing why discovery should be denied.” Tradebay, 278 F.R.D. at 601 (citing Turner Broadcasting, 175 F.R.D. at 556). Dispositive motions are a frequent part of federal practice. An overly lenient standard for granting requests to stay due to pending dispositive motions would result in unnecessary delay in many cases. Thus, in the context of a pending Rule 12(b)(6) motion, “[a] stay of discovery should only be ordered if the court is ‘convinced’ that a plaintiff will be unable to state a claim for relief.” Id. at 603. This often requires a magistrate judge to take a “preliminary peek” at a pending dispositive motion.

The district court then explained that it had preliminarily reviewed the pending motion to dismiss and finds that DraftKings has made the necessary showing to support its requested stay. “DraftKings’ motion to dismiss challenges each of the ten asserted patents on the basis that they are not patent-eligible subject matter under 35 U.S.C. ยง 101. After having considered the parties’ arguments, it appears that if the motion is granted, it would be dispositive of the entire case. It does not appear that additional discovery is needed to resolve the motion, and it appears that the motion is likely to prevail.”

Accordingly, the district court granted the motion to stay pending the decision on the motion to dismiss.

CG Technology Development, LLC v. Draftkings, Inc.,
Case No. 2:16-cv-00781-MMD-CWH (D. Nev. Sept. 27, 2016)

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

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