“Granted, the statute of limitations problems may not be 10 serious . . . . But why take chances? It is simpler just to 11 stay the [later] suit”.
How later courts described this case
- “Granted, the statute of limitations problems may not be 10 serious . . . . But why take chances? It is simpler just to 11 stay the [later] suit”.
- finding similar issues where 25 both cases involved claims to the same funds
Written by the judges who cited it.
The opinion
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8 UNITED STATES DISTRICT COURT
9 EASTERN DISTRICT OF CALIFORNIA
10 ----oo0oo----
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12 GUARDIAN ALLIANCE TECHNOLOGIES, No. 2:22-cv-01390 WBS AC
INC., a California corporation;
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Plaintiff,
14 ORDER STAYING CASE
v.
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MILLER MENDEL, INC., a
16 Washington corporation; and
TYLER MILLER, an individual,
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Defendants.
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----oo0oo----
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Plaintiff Guardian Alliance Technologies, Inc.
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(“Guardian”) brought this action against Miller Mendel, Inc. and
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Tyler Miller seeking various forms of declaratory relief that two
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of defendants’ patents are invalid, as well as asserting claims
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for violations of § 2 of the Sherman Act, 15 U.S.C § 2, and
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various California state law claims. (Docket No. 1.) Before the
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court are defendants’ motion to strike plaintiff’s state law
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claims pursuant to California’s Anti-SLAPP statute, Cal. Civil
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1 Code § 425.16, (Docket No. 11) and defendants’ motion to dismiss
2 plaintiff’s complaint in its entirety (Docket No. 12).
3 I. Factual and Procedural History
4 Plaintiff is a California-based company that creates
5 and sells access to software for managing employee background
6 checks, primarily for government organizations and law
7 enforcement agencies. (Compl. ¶¶ 4, 28.) Defendant Miller
8 Mendel is a Seattle-based company that creates and sells access
9 to similar software. (Id. ¶¶ 5, 28.) Defendant Tyler Miller is
10 the founder and sole owner of Miller Mendel. (Rylander Decl. ¶4,
11 Ex. A (Docket No. 15).)
12 In April 2011, Tyler Miller (“Miller”) filed a
13 provisional patent application with the U.S. Patent and Trademark
14 Office, U.S. Patent Application No. 61/472,556, covering public
15 safety background investigation management software. (Compl. ¶¶
16 48-49.) In April 2012, Miller filed a non-provisional patent
17 application claiming priority to the provisional patent
18 application. (Id. ¶ 53.) On June 30, 2015, Miller was issued
19 U.S. Patent No. 9,070,098 (the “‘098 Patent”). (Id. ¶ 55.) In
20 May 2015, Miller filed another non-provisional patent
21 application, resulting in the issuance of U.S. Patent No.
22 10,043,188 (the “‘188 Patent”) on August 7, 2018. (Id. ¶¶ 56,
23 58.) Miller licensed both patents to Miller Mendel. (Id. ¶ 59.)
24 Defendants have filed several lawsuits in different
25 district courts alleging that plaintiff’s customers infringe the
26 ‘188 Patent through use of plaintiff’s platform.1 In October
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1 Defendants have not sued plaintiff directly for patent
28 infringement. They have only sued plaintiff’s customers.
1 2018, both defendants sued the City of Oklahoma City, Oklahoma in
2 the Western District of Oklahoma (the “Oklahoma Action”).2 See
3 Case No. 5:18-cv-00990 JD (W.D. Okla.). In February 2021, Miller
4 Mendel sued Washington County, Oregon and the Washington County
5 Sheriff’s Office in the District of Oregon (the “Oregon Action”).
6 See Case No. 3:21-cv-00168 SB (D. Ore.). In May 2021, defendants
7 sued Alaska State Troopers and James E. Cockrell, the
8 Commissioner of the State of Alaska Department of Public Safety,
9 in the District of Alaska (the “Alaska Action”). See Case No.
10 3:21-cv-00129 (D. Alaska). Both the Oregon Action and the Alaska
11 Action were stayed under the first-to-file rule because of the
12 earlier-filed Oklahoma Action. In December 2021, Miller Mendel
13 sued the City of Anna, Texas in the Eastern District of Texas
14 (the “Texas Action). See Case No. 2:21-cv-00445 JRG (E.D. Tex.).
15 As of the date of this order, both the Oklahoma Action
16 and the Texas Action are ongoing. The Oklahoma Action remains
17 pending in the Western District of Oklahoma. In the Texas
18 Action, cross appeals were filed to the Federal Circuit following
19 the district court’s orders granting defendant City of Anna’s
20 motion for judgment on the pleadings and invalidated the ‘188
21 Patent,3 Miller Mendel, Inc. v. City of Anna, Tex., No. 2:21-cv-
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23 2 In October 2019, Guardian (as a non-party in the
Oklahoma Action) filed a petition with the Patent Trial and
24 Appeal Board (“PTAB”) for inter partes review of the validity of
the ‘188 Patent, IPR2020-00031. (Compl. ¶ 119, Ex. 30.) The
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PTAB denied review on March 26, 2020. (Id.)
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3 Judge Gilstrap found the ‘188 Patent ineligible for
27 patent protection under 35 U.S.C. § 101. Miller Mendel, Inc. v.
City of Anna, Tex., No. 2:21-cv-00445 JRG, 2022 WL 1437686, at
28 *10 (E.D. Tex. Apr. 14, 2022). On May 2, 2022, Miller Mendel
1 00445 JRG, 2022 WL 1437686, at *10 (E.D. Tex. Apr. 14, 2022), and
2 denying the city’s motion for attorneys’ fees,4 id., 2022 WL
3 2704790, at *6 (E.D. Tex. June 13, 2022). The appeals were
4 consolidated and are still pending. See Miller Mendel, Inc. v.
5 City of Anna, Tex., No. 22-1753 (Fed. Cir.) (associated with Case
6 No. 22-1999).
7 II. Discussion
8 The first-to-file rule is “a generally recognized
9 doctrine of federal comity . . . .” Pacesetter Sys. Inc. v.
10 Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). The rule
11 allows a district court to stay, transfer, or dismiss proceedings
12 where a similar case was previously filed in another district
13 court. See Kohn Law Grp., Inc. v. Auto Parts Mfg. Miss., Inc.,
14 787 F.3d 1237, 1239 (9th Cir. 2015). “When applying the first-
15 to-file rule, courts should be driven to maximize ‘economy,
16 consistency, and comity.’” Kohn, 787 F.3d at 1240 (quoting Cadle
17 Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 604 (5th Cir.
18 1999)); see also Pacesetter, 678 F.2d at 95 (explaining that the
19 first-to-file rule “is not a rigid or inflexible rule to be
20 mechanically applied, but rather is to be applied with a view to
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appealed the decision to the Federal Circuit. See Miller Mendel,
22 Inc. v. City of Anna, Tex., Case No. 22-1753 (Fed. Cir.).
23 4 Judge Gilstrap denied the motion for attorneys’ fees on
the ground that “finding the ‘188 Patent ineligibl[e] at the
24 12(c) stage” does not mean Miller Mendel’s arguments to the
contrary were “frivolous or objectively unreasonable.” Id., 2022
25 WL 2704790, at *6 (E.D. Tex. June 13, 2022). Furthermore,
“Miller Mendel was entitled to believe that the ‘188 Patent was
26 valid after it was examined and allowed by the [U.S. Patent and
Trademark Office].” Id. On July 8, 2022, the City of Anna
27 appealed the decision to the Federal Circuit. See Miller Mendel,
Inc. v. City of Anna, Tex., No. 22-1999 (Fed. Cir.). That appeal
28 is still pending.
1 the dictates of sound judicial administration”).
2 The first-to-file rule requires analysis of three
3 factors: (1) chronology of the lawsuits; (2) similarity of the
4 parties; and (3) similarity of the issues. Kohn, 787 F.3d at
5 1240 (citing Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d
6 622, 625 (9th Cir. 1991)). The first-to-file rule does not
7 require that the identities of the parties be identical, but
8 rather “requires only substantial similarity of the parties.”
9 Id. (citation omitted). Likewise, “[t]he issues in both cases
10 also need not be identical, only substantially similar.” Id.
11 Here, the court need not analyze the issue of
12 chronology because plaintiff does not argue that the present case
13 was filed first. Tyler Miller and/or Miller Mendel is a party in
14 the present case as well as the Texas Action and Oklahoma Action.
15 While plaintiff in the present case is not a named party in
16 either the Oklahoma Action or the Texas Action, plaintiff was
17 contractually obligated to indemnify the City of Oklahoma City
18 and the City of Anna against Miller Mendel’s patent infringement
19 claims. (Compl. ¶¶ 99, 103.) As a result, plaintiff has funded
20 the entirety of the defense in both the Oklahoma Action and Texas
21 Action. Because the parties in the present case are all heavily
22 involved in the previously filed cases, the court finds the
23 parties are substantially similar. See Kohn, 787 F.3d at 1240
24 (finding the parties were substantially similar even though the
25 defendant in one case was not a named party in the other case).
26 In finding that the first-to-file rule applied even though a
27 defendant in the first action was not named in the second action,
28 the court in Kohn explained that “a contrary holding could allow
1 a party . . . to skirt the first-to-file rule by omitting one
2 party from a second lawsuit. . . .” Kohn, 787 F.3d at 1240.
3 Similarly, here, defendants’ choice to sue only plaintiff’s
4 customers for patent infringement, rather than sue plaintiff
5 directly, should not render the first-to-file rule inapplicable.
6 “To determine whether two suits involve substantially
7 similar issues, [the court] look[s] at whether there is
8 ‘substantial overlap’ between the two suits.” Id., 787 F.3d at
9 1241 (citation omitted). Here, the central questions in both the
10 present case and the previously filed cases are the validity and
11 enforceability of the ‘098 and ‘188 Patents. Plaintiff’s four
12 claims for declaratory relief ask this court to find the ‘098 and
13 ‘188 Patents invalid and unenforceable. (Compl. ¶¶ 128-145.)
14 “[P]ermitting multiple litigations of these identical claims
15 could serve no purpose of judicial administration, and the risk
16 of conflicting determinations as to the patents’ validity and
17 enforceability [is] clear.” See Pacesetter, 678 F.2d at 96.
18 Furthermore, plaintiff’s two Sherman Act claims are at least in
19 part based on defendants’ patent infringement lawsuits, which
20 seek to enforce the same patents that plaintiff claims are
21 invalid and unenforceable. (Id. ¶¶ 146-159.) As such, six of
22 plaintiff’s eleven claims involve the validity and enforceability
23 of the patents and thus there is “substantial overlap” between
24 the cases. Kohn, 787 F.3d at 1241 (finding similar issues where
25 both cases involved claims to the same funds).
26 Defendants contend that dismissal is warranted because
27 plaintiff “may file its claims in the Oklahoma action to the
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1 extent necessary.” 5 (See Mot. to Dismiss at 2). The existence
2 of plaintiff’s state law claims, however, counsel against
3 outright dismissal. Were another district court to find the
4 patents invalid or otherwise dismiss defendants’ patent
5 enforcement action, plaintiff would have to file a new suit in
6 California and could risk encountering statute of limitation
7 problems. See Alltrade, 946 F.2d at 629 (citing Asset Allocation
8 & Mgt. v. Western Employers Ins., 892 F.2d 566, 571 (7th Cir.
9 1989) (“Granted, the statute of limitations problems may not be
10 serious . . . . But why take chances? It is simpler just to
11 stay the [later] suit”.)) Accordingly, because the central
12 issues in the present case--the validity and enforceability of
13 defendants’ patents--are the same as the previously filed cases,
14 the court finds the first-to-file rule is applicable to the
15 present case and warrants a stay.
16 IT IS THEREFORE ORDERED that defendants’ motion to
17 strike (Docket No. 11) and motion to dismiss (Docket No. 12), be
18 and hereby are, DENIED without prejudice, and the hearing on
19 those motions set for January 9, 2023, and any other deadlines in
20 this case, are hereby VACATED;
21 AND IT IS FURTHER ORDERED that all proceedings in this
22 case are hereby STAYED pending final adjudication of the validity
23 of the ‘098 and ‘188 Patents by the Federal Circuit. The parties
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5 Plaintiff argues that the first-to-file rule is not
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applicable here because of various issues it identifies with
transferring the case to the Western District of Oklahoma. (See
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Opp’n to Mot. to Dismiss at 9 (Docket No. 30).) However, the
27 court need not address plaintiff’s concerns because the court is
staying the case, not transferring it.
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eee eee ON IRIE I OE SEE OSE ND OE
1 shall file a joint status report within fourteen days after all
2 | proceedings in the Federal Circuit regarding the ‘098 and ‘188
3 | Patents have concluded. dh ble
(hi.
4 Dated: December 7, 2022 Pi he Vi (eh
5 UNITED STATES DISTRICT JUDGE
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