Omnitracs, LLC v. Platform Science, Inc.

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8 UNITED STATES DISTRICT COURT

9 SOUTHERN DISTRICT OF CALIFORNIA

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11 OMNITRACS, LLC and XRS Case No.: 20-cv-0958-JLS-MDD

CORPORATION,

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ORDER (1) GRANTING

13 PLAINTIFFS LEAVE TO FILE

Plaintiffs,

SUR-REPLY; (2) GRANTING

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v. MOTIONS TO SEAL; (3)

15 GRANTING IN PART MOTION TO

STAY PENDING INTER PARTES

16 PLATFORM SCIENCE, INC.

REVIEW; AND (4) DENYING

17 Defendant. WITHOUT PREJUDICE MOTION

TO DISMISS

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19 (ECF Nos. 20, 22, 39, 50, 53, 57, 59)

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21 Presently before the Court is Defendant Platform Science, Inc.’s Motion to Stay

22 Pending Inter Partes Review (“Mot.,” ECF No. 39). Also before the Court is Plaintiffs

23 Omintracs, LLC and XRS Corporation’s Opposition to the Motion (“Opp’n,” ECF No. 52)

24 and Motion for Leave to File Documents Under Seal (“Pls.’ Mot. to Seal,” ECF No. 50),

25 and Defendant’s Reply in Support of the Motion (“Reply,” ECF No. 54) and Motion for

26 Leave to File Documents Under Seal (“Def.’s Mot. to Seal,” ECF No. 53). Plaintiffs also

27 have submitted an Unopposed Ex Parte Motion to File a Sur-Reply (“Sur-Reply Mot.,”

28 ECF No. 59), and an associated Motion to File Documents Under Seal (“Sur-Reply Mot.

1 to Seal,” ECF No. 57). The Court took these matters under submission without oral

2 argument pursuant to Civil Local Rule 7.1(d)(1). See generally ECF No. 56. Having

3 carefully considered the totality of the circumstances, the papers filed in connection with

4 this matter, and the relevant law, the Court rules as follows.

5 BACKGROUND

6 Plaintiffs “are leading providers of fleet management solutions to transportation and

7 logistics companies and provide a variety of innovative hardware and software solutions,

8 including: safety and compliance, vehicle routing, dispatch and navigation, and efficiency

9 and data analytics.” ECF No. 1 (“Compl.”) ¶ 2. Plaintiffs’ “customizable software

10 applications leverage [vehicle performance and location] data and information to offer

11 customers, such as fleet managers (and their drivers), a host of logistical planning tools

12 include[ing] unique solutions integrating hardware such as smartphones, tablets, and

13 ruggedized handheld devices with electronic logging devices [(“ELDs”)] and

14 applications.” Id. ¶ 17. Defendant “offers fleet management, safety, and compliance

15 software applications and in-vehicle telematics hardware to capture vehicle data and driver

16 activity information.” Id. ¶ 5.

17 On October 26, 2017, Plaintiffs filed a complaint alleging willful infringement of

18 the following seven United States patents: U.S. Patent Nos. 9,262,934 (the “’934 patent”);

19 7,043,365 (the “’365 patent”); 8,626,568 (the “’568 patent); 10,255,575 (the “’575

20 patent”); 6,925,308 (the “’308 patent”); 7,725,216 (the “’216 patent”); and 9,147,335 (the

21 “’335 patent”) (collectively, the “Patents-in-Suit”). The Patents-in-Suit generally claim

22 technology related to fleet management. See id. ¶¶ 24–37. Defendant filed a Motion to

23 Dismiss, which is presently pending. See generally ECF No. 22. On January 5, 2021,

24 Defendant filed the instant Motion to stay this litigation pending the issuance of final

25 written decisions on nine inter partes review (“IPR”) petitions filed by Defendant on the

26 seven Patents-in-Suit. See generally ECF No 39-1 (“Mot. Mem.”) at 1. The Patent Trial

27 and Appeal Board (“PTAB”) has not yet to issued decisions whether it will institute trial

28 on the claims challenged by Defendant’s IPR petitions. See Mot. Mem. at 3–4.

1 MOTION TO FILE SUR-REPLY

2 Plaintiffs moved ex parte to file a sur-reply to Defendant’s Motion to Stay and

3 Plaintiffs attached their proposed sur-reply (“Sur-Reply”) to the Motion. See generally

4 Sur-Reply Mot. The Civil Local Rules do not allow for sur-replies. “District courts have

5 the discretion to either permit or preclude the filing of a sur-reply.” Estate of Alvarado v.

6 Tackett, No. 13-CV-1202 W (JMA), 2018 WL 1141502, at *1 (S.D. Cal. Mar. 2, 2018)

7 (citing Johnson v. Wennes, No. 08-CV-1798-L (JMA), 2009 WL 1161620, at *2 (S.D. Cal.

8 Apr. 28, 2009)). Courts generally exercise discretion when a valid reason exists, such as

9 where the movant raises new arguments in the Reply brief. Id. (citation omitted). Because

10 the Court finds Plaintiffs’ discussion of the relationship between the Parties and the

11 competitive landscape helpful, the Court GRANTS Plaintiffs’ Sur-Reply Motion.

12 MOTIONS TO SEAL

13 Plaintiffs contend that their Opposition to Defendant’s Motion to Stay and the

14 supporting Declaration of Omnitracs’s Chief Commercial Officer Greg Nelson incorporate

15 Plaintiffs’ “highly sensitive and confidential business information.” Pls.’ Mot. to Seal at

16 3. Additionally, Plaintiffs request portions of Exhibit A and Exhibits 7–8 be filed under

17 seal because the documents contain the Parties’ “highly confidential business information.”

18 Sur-Reply Mot. to Seal at 1. Similarly, Defendant contends that its Reply in support of its

19 Motion to Stay contains “confidential, proprietary and highly sensitive business

20 information.” Def.’s Mot. to Seal at 2.

21 Sealing court records implicates the “general right to inspect and copy public records

22 and documents, including judicial records and documents.” Nixon v. Warner Commc’ns,

23 Inc., 435 U.S. 589, 597 & n.7 (1978). A party seeking to seal a judicial record bears the

24 burden of overcoming the strong presumption of public access. Kamakana v. City & Cty.

25 of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citation omitted). The showing required

26 to meet the burden depends upon whether the documents relate to a motion that is “more

27 than tangentially related to the merits of a case.” Ctr. for Auto Safety v. Chrysler Grp. LLC,

28 809 F.3d 1092, 1101 (9th Cir. 2016). A party need only show good cause to seal documents

1 related to non-dispositive motions. See Kamakana, 447 F.3d at 1180 (citation omitted).

2 Rule 26(c) of the Federal Rules of Civil Procedure provides broad discretion for a trial

3 court to permit sealing of documents for, inter alia, the protection of “a trade secret or other

4 confidential research, development, or commercial information.” Fed. R. Civ. P.

5 26(c)(1)(G).

6 For purposes of the present motion to stay, which is a non-dispositive motion, the

7 Court finds good cause to seal portions of Plaintiffs’ Opposition, Defendant’s Reply, the

8 Declaration of Greg Nelson, and Exhibit A. The Court similarly finds good cause to seal

9 Exhibits 7 and 8 in their entirety. See In re Midland Nat. Life Ins. Co. Annuity Sales

10 Practices Litig., 686 F.3d 1115, 1119 (9th Cir. 2012) (applying the good cause standard

11 under Fed. R. Civ. P. 26(c) to non-dispositive motions). Accordingly, the Court GRANTS

12 Plaintiffs and Defendant’s motions to seal (ECF Nos. 50, 53, 57). The Clerk of Court

13 SHALL FILE an unredacted version of Plaintiffs’ Opposition, Defendant’s Reply, the

14 Declaration of Greg Nelson, Exhibit A, Exhibit 7, Exhibit 8 under seal (seals lodged at

15 ECF Nos. 51, 54, 58). The Clerk of Court SHALL FILE a redacted version of the same

16 documents on the publicly available docket.

17 MOTION TO STAY

18 I. Legal Standard

19 “District courts have inherent authority to stay proceedings before them.” Rohan ex

20 rel. Gates v. Woodford, 334 F.3d 803, 817 (9th Cir. 2003), abrogated on other grounds by

21 Ryan v. Gonzales, 568 U.S. 57 (2013). “[T]he power to stay proceedings is incidental to

22 the power inherent in every court to control the disposition of the causes on its docket with

23 economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co.,

24 299 U.S. 248, 254 (1936).

25 In evaluating whether to stay an action pending IPR, courts apply the same

26 framework as motions to stay pending patent reexamination and consider the following

27 three factors: “(1) whether discovery is complete and whether a trial date has been set; (2)

28 whether a stay will simplify the issues in question and trial of the case; and (3) whether a

1 stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving

2 party.” DMF, Inc. v. AMP Plus, Inc., No. 2:18-cv-07090-CAS(GJSx), 2019 WL 9077477,

3 at *6 (C.D. Cal. Dec. 13, 2019) (quoting Universal Elecs., Inc. v. Universal Remote

4 Control, 943 F. Supp. 2d 1028, 1030–31 (C.D. Cal. 2013)). These considerations are

5 nonexhaustive, and “the totality of the circumstances governs.” Universal Elecs., Inc., 943

6 F. Supp. 2d at 1035 (quoting Allergan Inc. v. Cayman Chem. Co., No. SACV 07-01316-

7 JVS (RNBx), 2009 WL 8591844, at *2 (C.D. Cal. Apr. 9, 2009)) (internal quotation marks

8 omitted). “The moving party bears the burden of demonstrating that a stay is appropriate.”

9 Apple Inc. v. IXI IP, LLC, No. 19-CV-06769-HSG, 2021 WL 389214, at *1 (N.D. Cal. Jan.

10 26, 2021) (citing DSS Tech. Mgmt., Inc. v. Apple, Inc., No. 14-cv-05330-HSG, 2015 WL

11 1967878, at *2 (N.D. Cal. May 1, 2015)).

12 “There is a liberal policy in favor of granting motions to stay proceedings pending

13 the outcome of re-examination, especially in cases that are still in the initial stages of

14 litigation and where there has been little or no discovery.” Masimo Corp. v. Wireless, No.

15 19-CV-01100-BAS-NLS, 2021 WL 321481, at *2 (S.D. Cal. Feb. 1, 2021) (quoting Aten

16 Int’l Co., Ltd. v. Emine Tech. Co., Ltd., No. SACV 09–0843 AG (MLGx), 2010 WL

17 1462110, at *6 (C.D. Cal. Apr. 12, 2010)). “While case law supplies these general

18 considerations, the Court ultimately must decide whether to issue a stay on a case-by-case

19 basis.” Masimo Corp., 2021 WL 321481, at *2 (citing Asetek Holdings, Inc. v. Cooler

20 Master Co., Ltd., No. 13–cv–00457–JST, 2014 WL 1350813, at *1 (N.D. Cal. Apr. 3,

21 2014)).

22 II. Analysis

23 A. Stage of the Proceedings

24 First, the Court considers “the stage of litigation, i.e., whether discovery is almost

25 complete and whether a trial date has been set.” DNA Genotek Inc. v. Spectrum Sols.

26 L.L.C., No. 16-CV-1544 JLS (NLS), 2016 WL 9047159, at *2 (S.D. Cal. Oct. 7, 2016)

27 (quoting Wave Loch, Inc. v. Am. Wave Machs., Inc., No. 08cv928-MMA (WMc), 2009 WL

28 9102848, at *1 (S.D. Cal. Feb. 19, 2009)). “The early stage of a litigation weighs in favor

1 of a stay pending reexamination.” Wireless Recognition Techs. v. A9.com Inc., No. 5:12-

2 CV-01217-EJD et al., 2012 WL 4005459, at *2 (N.D. Cal. Sept. 11, 2012). As to

3 discovery, the concern is not so much how much discovery has already occurred as

4 “whether discovery is nearing completion.” DNA Genotek Inc., 2016 WL 9047159, at *2

5 (quoting Sorensen ex rel. Sorensen Research & Dev. Tr. v. Black & Decker Corp., No.

6 06cv1572-BTM (CAB), 2007 WL 2696590, at *4 (S.D. Cal. Sept. 10, 2007)).

7 Defendant contends that the case is still in its infancy because the parties are in their

8 first wave of discovery and are still negotiating discovery orders. See Mot. Mem. at 6–7.

9 Defendant argues that “given the vast amount of work ahead in this case, and in light of

10 the expected scheduling delays, the first factor weighs heavily in favor of a stay.” Id. at 7.

11 Defendant further contends that Plaintiffs are “entirely responsible for the discovery

12 delay,” as Plaintiffs requested a Rule 26(f) conference more than six months after filing the

13 case. Reply at 2. Plaintiffs counter that “[h]aving reached agreement on most portions of

14 the schedule, the parties will make significant headway on discovery well before any

15 institution decision is issued, let alone before all institution decisions are due.” Opp’n at

16 28. Plaintiffs further contend that the discovery delay was due to Defendant’s filing of a

17 partial motion to dismiss, which suspended the time for Defendant to file an answer. See

18 id. at 30. The filing of an answer is what triggers the Rule 26(f) conference. See id.; see

19 also S.D. Cal. Civ. R. 16.1.c.1 (stating parties and counsel must appear for the assigned

20 magistrate judge for an Early Neutral Evaluation and Case Management Conference

21 (“ENE/CMC”) within forty-five days of the filing of an answer).

22 The Court agrees with Defendant that the case is still in its infancy. Since Plaintiff

23 instituted this action, the Parties have had their Rule 26(f) conference, exchanged initial

24 disclosures, and served and responded to their first round of document requests and

25 interrogatories. See Opp’n at 21. A trial date has not been set, pretrial deadlines are still

26 being negotiated, and the Parties are in the early stages of discovery, which started in the

27 third week of December. See Mot. Mem. at 6–7; see also ASCII Corp., 844 F. Supp. at

28 1381 (granting stay where “the parties are in the initial stages of the lawsuit and have

1 undertaken little or no discovery”). Although Plaintiffs could have requested a Rule 26(f)

2 conference after Defendant’s first appearance on June 15, 2020, it was not required. See

3 Zavala v. Kruse-W., Inc., No. 119CV00239DADSKO, 2019 WL 3219254, at *3 (E.D. Cal.

4 July 17, 2019) (holding “[t]he Rule 26(f) conference shall occur ‘as soon as practicable’

5 following the Court’s ruling on Defendants’ motion to dismiss”).

6 Further, courts have held much later stages in litigation have weighed towards a stay.

7 See Tierravision, Inc. v. Google, Inc., 2012 WL 559993, *1–*3 (S.D. Cal. Feb. 21, 2012)

8 (finding this factor favored a stay where the parties had already exchanged infringement

9 and invalidity contentions and prepared claim construction briefs because “there [was]

10 more work ahead of the parties and the Court than behind the parties”); SAGE

11 Electrochromics, Inc. v. View, Inc., No. 12-CV-06441-JST, 2015 WL 66415, at *2 (N.D.

12 Cal. Jan. 5, 2015) (finding this factor favored a stay where the parties had “exchanged

13 documents, responded to discovery requests, litigated a discovery dispute, underwent claim

14 construction for four patents, and briefed claim construction on the remaining five

15 patents”); Wonderland Nursery Goods Co. v. Baby Trend, Inc., No. EDCV 14-01153 VAP,

16 2015 WL 1809309, at *3 (C.D. Cal. Apr. 20, 2015) (finding the stage of litigation weighed

17 in favor of stay where “fact discovery [was] not yet complete, expert discovery ha[d] not

18 yet begun, and a trial date ha[d] not yet been set”). Accordingly, the Court finds that the

19 current stage of the proceeding weighs in favor of a stay.

20 B. Undue Prejudice or Clear Disadvantage to Plaintiffs

21 Second, the Court considers “whether a stay would cause undue prejudice or present

22 a clear disadvantage to the non-moving party.” Sorensen, 2009 WL 5184497, at *2. The

23 “delay inherent in the reexamination process does not constitute, by itself, undue

24 prejudice.” ProtectConnect, 2011 WL 1559762, at *3 (quoting Esco Corp. v. Berkeley

25 Forge & Tool, Inc., No. C 09-1635 SBA, 2009 WL 3078463, at *3 (N.D. Cal. Sept. 28,

26 2009)) (internal quotation marks omitted). “Rather, proper considerations include whether

27 the nonmovant will be prejudiced ‘by delaying access to discovery and allowing

28 Defendant’s alleged infringement to continue in the interim.’” DNA Genotek Inc., 2016

1 WL 9047159, at *3 (quoting George Kessel Int’l Inc. v. Classic Wholesales, Inc., 544 F.

2 Supp. 2d 911, 912 (D. Ariz. 2008). “In making this evaluation, courts have considered

3 factors which include: (1) the timing of the reexamination request; (2) the timing of the

4 request for stay; (3) the status of reexamination proceedings; and (4) the relationship of the

5 parties.” Wi-LAN, Inc. v. LG Elecs., Inc., No. 317CV00358BENMDD, 2018 WL 2392161,

6 at *2 (S.D. Cal. May 22, 2018) (citations omitted).

7 1. Timing of Requests for Reexamination and Stay

8 “Because of the delay that may accrue by virtue of the PTO instituting an IPR trial

9 on a patent-in-suit, this Court expects defendants to evaluate whether to file, and then to

10 file, IPR petitions as soon as possible after learning that a patent may be asserted against

11 them.” TPK Touch Solutions, 2013 WL 6021324, at *4. “[T]he less time that a party waits

12 to file a motion to stay pending reexamination, the less that the movant’s conduct gives

13 rise to an inference that the delay in so doing was impermissibly tactical.” Ever Win Int’l

14 Corp. v. Radioshack Corp., 902 F. Supp. 2d 503, 508 (D. Del. 2012).

15 Plaintiffs filed the Complaint on May 26, 2020, and Defendant subsequently filed

16 the first IPR petition on September 23, 2020 and the last petition on December 15, 2020.

17 See Mot. Mem. at 3; see also Lodge Mfg. Co. v. Gibson Overseas, Inc., No.

18 CV188085PSGGJSX, 2019 WL 9443180, at *4 (C.D. Cal. Sept. 24, 2019) (“A party may

19 not file IPR proceedings more than one year after that party has been served with a

20 complaint.” (citing 35 U.S.C. § 315(b)). Defendant contends that “it prepared and filed its

21 IPRs promptly when sued” and “[t]here is nothing from the timing of the IPR petitions to

22 suggest dilatory motives or tactics.” Mot. Mem. at 9. The Court finds Defendant’s actions

23 reasonable and not intended to cause undue delay or prejudice in the proceedings. See

24 Evolutionary Intelligence LLC v. Yelp Inc., No. C–13–03587 DMR, 2013 WL 6672451, at

25 *9 (N.D. Cal. Dec. 18, 2013) (finding that petitioning for IPR five months after being

26 served preliminary infringement contentions was reasonable timing); SAGE

27 Electrochromics, 2015 WL 66415, at *4 (“[The defendant] acted with reasonable diligence

28 in filing its IPR petitions within six months of being served with [the plaintiff’s] revised

1 infringement contentions.”). Additionally, Defendant filed the instant Motion to Stay on

2 January 5, 2021. See generally Mot. Accordingly, this sub-factor does not support a

3 finding of undue delay because Defendant filed the Motion to Stay shortly after filing the

4 last IPR petition. This sub-factor thus weighs in favor of a stay.

5 2. Status of Reexamination Proceedings

6 “[T]his sub-factor weighs against issuing a stay when the PTO has not yet decided

7 whether to grant IPR.” SAGE Electrochromics, Inc., 2015 WL 66415, at *4 (citing TPK

8 Touch Solutions, 2013 WL 6021324, at *5). Because the IPRs are in the pre-institution

9 phase until June 2021, this sub-factor weighs against a stay at this time.

10 3. Relationship of the Parties

11 “Courts are hesitant to grant a stay if the parties are direct competitors.” See Tric

12 Tools, Inc. v. TT Techs., Inc., No. 12-CV-3490 YGR, 2012 WL 5289409, at *2–3 (N.D.

13 Cal. Oct. 25, 2012) (collecting cases); see also VirtualAgility Inc. v. Salesforce.com, Inc.,

14 759 F.3d 1307, 1318 (Fed. Cir. 2014) (“[C]ompetition between parties can weigh in favor

15 of finding undue prejudice.”). This is “because of the risk that Plaintiff may suffer harm

16 ‘that is not compensable by readily calculable money damages.’” TPK Touch Solutions,

17 2013 WL 6021324, at *6 (quoting Avago Techs. Fiber IP (Singapore) Pte. Ltd. v. Iptronics

18 Inc., No. 10-CV-02863-EJD, 2011 WL 3267768, at *5 (N.D. Cal. July 28, 2011)). “Some

19 courts require evidence to substantiate an argument that direct competition will result in

20 prejudice to the non-moving party.” Masimo Corp., 2021 WL 321481, at *5 (quoting

21 Finjan, Inc. v. Symantec Corp., 139 F. Supp. 3d 1032, 1037 (N.D. Cal. 2015)).

22 The record is unclear regarding whether the Parties are direct competitors.

23 Defendant contends that there are numerous other, more prominent competitors in the

24 market and has presented evidence of sixty-three pages of currently registered ELDs on the

25 U.S. Department of Transportation’s Federal Motor Safety Carrier Administration’s

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1 website. Further, Defendant provides evidence that Plaintiffs listed six competitors,

2 including Defendant, as the “Competitive Landscape” during a presentation at an annual

3 industry conference. See Reply at 6–7. Defendant contends that the top for-hire fleets in

4 the market use as many as eleven different providers and argues that other market-driven

5 considerations attributed to Plaintiffs’ loss in market share. See id. at 7. Where the parties

6 are not direct competitors but rather share the market with multiple players, undue

7 prejudice as a result of the stay is less likely. See Inogen, Inc. v. Inova Labs, Inc., No.

8 SACV 11-1692-JST ANX, 2012 WL 4748803, at *3 (C.D. Cal. Mar. 20, 2012) (finding

9 undue prejudice was unlikely where the defendant provided evidence that the market had

10 ten participants, “diluting the direct effect of [the defendant’s] sales on [the plaintiff’s]

11 market share”).

12 In response, Plaintiffs contend that Defendant “mischaracterizes the market” and

13 inflates the number of market participants. Sur-Reply at 3–4. Plaintiffs argue that the

14 relevant market should be limited to fleets of more than 1,000 vehicles. See Declaration

15 of Greg Nelson (“Nelson Decl.,” ECF No. 52-1) ¶ 3. Plaintiffs further assert that

16 Defendant’s own documentation includes only five enterprise competitors, including

17 Plaintiffs, and that two of those competitors are “only partially in the enterprise market.”

18 Sur-Reply at 4; Ex. 7 (ECF No. 58-1) at 5. The Court is persuaded by Plaintiffs’ evidence

19 of the relevant market landscape and finds that both Parties provide “enterprise-grade fleet-

20 management solutions to customers with large fleets of vehicles.” Opp’n at 18; see also

21 Sur-Reply Ex. 7 at 5. The Court thus finds that there is a total of five to six competitors in

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1 These documents are available to the public and are certified and maintained by an official office. Thus,

24 their accuracy cannot be reasonably disputed. Accordingly, the Court takes judicial notice of the sixty-

three pages listing registered ELDs on the Federal Motor Carrier Safety Administration’s website

25 <https://eld.fmcsa.dot.gov/List>. However, the Court does not at this time take notice of the truth of the

facts asserted therein. See Romero v. Securus Techs., Inc., 216 F. Supp. 3d 1078, 1084 n.1 (S.D. Cal.

26 2016) (“[T]he court can take judicial notice of ‘public records and government documents available from

reliable sources on the Internet, such as websites run by governmental agencies.’” (quoting Gerritsen v.

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Warner Bros. Entm’t Inc., 112 F. Supp. 3d 1101, 1033 (C.D. Cal. 2015)); Marsh v. Cnty. of San Diego,

28 432 F. Supp. 2d 1035, 1043 (S.D. Cal. 2006) (“[A] court may take judicial notice of the existence of

1 the relevant enterprise market, with Plaintiffs being the largest provider. Compare Sur-

2 Reply Ex. 7 (ECF No. 58-1) at 5 with Reply at 2. While there are multiple players in the

3 market, there are not enough market participants to make competition between the Parties

4 unlikely. See Masimo Corp., No. 19-CV-01100-BAS-NLS, 2021 WL 321481, at *5

5 (finding that eleven competitors in the market “limit[ed] the danger of loss of market

6 share.”). In light of the Parties’ conflicting evidence, the Court finds it unclear whether

7 Plaintiffs and Defendant are direct competitors.

8 Plaintiffs further contend they are suffering irreparable harm because Defendant has

9 taken existing customers where “it is reasonable to expect that these customers would have

10 continued partnering with [Plaintiffs] had [Defendant’s] infringing products not been on

11 the market.” Opp’n at 12–13. Defendant contends that Plaintiffs failed to present evidence

12 that the loss of these customers was due to products resting on the Patents-in-Suit. See

13 Reply at 5. Defendant provides other factors as to why customers may have switched,

14 including specific reasoning as to why one enterprise customer switched to Defendant’s

15 platform. See Reply at 3, 8; see generally Reply Ex. F (ECF No. 55-7). Plaintiff counters

16 that Defendant would not exist in the enterprise market without the allegedly infringing

17 technology, and the lost customers “were using or had available to them” Plaintiffs’

18 comparable technology. Sur-Reply at 2. Without more, Plaintiffs have not persuaded the

19 Court that there is a nexus between the loss in enterprise customers and Defendant’s alleged

20 infringement. Although Plaintiffs provide evidence regarding the amount of lost revenue

21 due to the loss of these customers, whether the customers’ moving of their business is

22 attributable to the allegedly infringing technology is unclear, and therefore Plaintiffs’

23 evidence does not support a finding of direct competition or irreparable injury. See Neste

24 Oil Oyj v. Dynamic Fuels, LLC, No. CIV.A. 12-662-GMS, 2013 WL 424754, at *3 (D.

25 Del. Jan. 31, 2013) (“Where the question of ‘direct competition’ remains unanswered,

26 courts have sometimes considered whether the plaintiff sought a preliminary injunction.”).

27 Ultimately, the Court finds that Plaintiffs’ failure to pursue injunctive relief

28 undermines their position that monetary relief is inadequate to compensate for any harm

1 incurred as a result of the stay. Blast Motion v. Zepp Labs, 2016 WL 5107678, at *5 (S.D.

2 Cal. 2016) (“[T]he Court does find that Plaintiff’s failure to pursue a preliminary injunction

3 undermines its position that monetary damages are insufficient.”). Some courts have found

4 that a plaintiff’s decision not to assert preliminary injunctive relief undercuts a party’s

5 argument that a stay would be prejudicial. See Uniloc USA Inc. v. LG Elecs. U.S.A. Inc.,

6 No. 18-CV-06737-JST, 2019 WL 1905161, at *6 (N.D. Cal. Apr. 29, 2019) (“[That

7 Plaintiff] did not seek injunctive relief further undercuts its prejudice argument.”);

8 Pragmatus Telecom, LLC v. NETGEAR, Inc., No. C 12-6198 SBA, 2013 WL 2051636, at

9 *3 (N.D. Cal. May 14, 2013) (“[The plaintiff] only seeks damages, not injunctive relief.

10 As such, any delay resulting from a stay will not result in undue prejudice.”); Masimo

11 Corp., 2021 WL 321481, at *6 (“Even if [the plaintiff] suffers some irreparable harm in

12 the form of loss of market share, [the plaintiff’s] failure to seek preliminary injunctive relief

13 undercut [its] argument that [it] cannot be made whole by monetary damages.’”) (citations

14 omitted). However, the Court is somewhat persuaded by Plaintiffs’ reasoning for not filing

15 injunctive relief, including that these customers continued to migrate off of Plaintiffs’

16 platforms after the case was filed. See Sur-Reply at 5.

17 Defendant’s request to stay this action until the PTAB issues final written decisions

18 on the pending IPRs is premature. However, as the last decision of whether to institute

19 IPR will occur in June, the Court finds that there is not sufficient evidence to demonstrate

20 that a limited stay for less than four months will cause Plaintiffs irreparable injury. The

21 stay will be in place no longer than four months if the PTAB does not grant Defendant’s

22 IPR requests, which weighs against finding undue prejudice. Blast Motion, 2016 WL

23 5107678, at *5 (“[I]f the PTO does not grant Defendant’s IPR requests, the stay will be in

24 place no longer than five months, weighing against finding undue prejudice.”) (citations

25 omitted). Therefore, the Court finds this sub-factor weighs slightly in favor of a stay.

26 4. Totality of the Circumstances

27 Ultimately, “the totality of the circumstances governs,” Universal Elecs., 943 F.

28 Supp. 2d at 1035 (quoting Allergan, 2009 WL 8591844, at *2) (internal quotation marks

1 omitted), and “the court must decide stay requests on a case-by-case basis,” TPK Touch

2 Solutions, 2013 WL 6021324, at *1. Taking into account the short time until the last

3 decision whether to institute IPR and Defendant’s lack of bad faith or delay, the Court finds

4 this factor weighs slightly in favor of a limited stay.

5 C. Simplification of Issues in Question

6 With regards to IPR, “[s]ome of the advantages of a stay include the fact that the

7 record of the reexamination may be entered at trial[;] that the PTO’s expertise will

8 govern[,] thus simplifying the case; that evidentiary and other issues will be further

9 narrowed following a reexamination; and that costs will be reduced.” Spellbound Dev.

10 Grp., Inc. v. Pac. Handy Cutter, Inc., No. SACV 09-951 DOC (Anx), 2011 WL 1810961,

11 at *2 (C.D. Cal. May 12, 2011). IPR may also alleviate discovery problems and lead to

12 settlement. See Allergan, 2009 WL 8591844, at *1.

13 Defendant asserts that the pending IPRs “have the potential to take these patents

14 entirely out of the case (if determined to be invalid) and/or narrow the scope of invalidity

15 challenges (by way of estoppel under 35 U.S.C. § 315(e)(2)).” Mot. Mem. at 12. Further,

16 Defendant contends “the Court and jury may benefit from the PTAB’s analysis of the

17 technology in this case.” Id. Plaintiffs counter that, in view of the facts and statistics

18 surrounding whether the PTAB will institute an IPR, any simplification from a stay is

19 merely speculative. See Mot. at 17; see also id. at 16 (“The PTAB’s overall institution rate

20 is currently 53%. At this rate, even in the best case scenario, only 5 of the 9 petitions are

21 expected to be instituted.” (footnote and citation omitted)).

22 Here, Defendant filed the instant Motion to Stay prior to the PTAB electing whether

23 to institute IPR proceedings. Some courts have found that any simplification of the issues

24 in the pre-institution phase is merely speculative. See TPK Touch Solutions, 2013 WL

25 6021324, at *4 (“[T]he filing of an IPR request by itself does not simplify the issues in

26 question and trial of the case. Ultimately, the PTO may not institute IPR proceedings.”);

27 Overland Storage, Inc. v. BTD AG (Germany), No. 10-CV-1700 JLS (BLM), 2013 WL

28 12066130, at *3 (S.D. Cal. Dec. 10, 2013) (“Defendant[’s] alleged harm is merely

1 theoretical given that the inter partes review has not yet been granted or denied.”); Security

2 People Inc. v. Ojmar US, LLC, 2015 WL 3453780, at *3 (N.D. Cal. May 29, 2015) (“[T]he

3 uncertainty surrounding whether the PTO will elect to institute IPR proceedings weighs

4 against a finding of likelihood of simplification of issues.”).

5 Following the Supreme Court’s decision in SAS Institute, Inc. v. Iancu, this factor in

6 the pre-institution phase is less speculative now that the PTAB is statutorily required to

7 address every contested claim if the PTAB grants review of an IPR petition. 138 S. Ct.

8 1348 (2018); see also Wi-Lan Inc., 2018 WL 2392161, at *2 (“While review is not

9 guaranteed and, therefore, the benefits of review are only speculative at this juncture, in

10 light of the Supreme Court’s mandate to review all contested claims upon a grant of IPR

11 and the complexity of this case the Court finds this factor weighs in favor of a limited

12 stay.”).

13 In Blast Motion, the court found this factor weighed in favor of a stay where the

14 PTAB’s decision on whether to institute IPR proceedings were expected within five

15 months, and the Defendant challenged all of the patents in the underlying suit. 2016 WL

16 5107678, at *6. Here, similar to Blast Motion, the last decision whether to institute IPR is

17 expected within four months and Defendant has challenged all the Patents-in-Suit. See

18 Mot. Mem. at 9 (“The [PTAB] will likely issue institution decisions on four of the IPRs

19 . . . by April 2021, and remainder by June 2021.”) (citations omitted). Because Defendant

20 has filed IPR petitions on all of the seven Patents-in-Suit, it is likely that the PTAB’s review

21 would streamline the issues before the court. See Delphix Corp. v. Actifio, Inc., No. 13-

22 CV-04613-BLF, 2014 WL 6068407, at *2 (N.D. Cal. Nov. 13, 2014) (where the patents

23 subject to IPR were a significant portion of the underlying action, finding this factor

24 favored a stay in the pre-institution phase because “[a]t a minimum, instituting a brief,

25 limited stay of approximately five months to see whether and how the PTAB will act on

26 Defendant’s IPR petitions will conserve judicial resources and avoid inconsistent results”)

27 (citation omitted). Therefore, the Court finds this factor weighs in favor of a stay.

28 ///

1 D. Totality of the Circumstances

2 Ultimately “the totality of the circumstances governs,” Universal Elecs., 943 F.

3 Supp. 2d at 1035 (quoting Allergan, 2009 WL 8591844, at *2) (internal quotation marks

4 omitted), and “the court must decide stay requests on a case-by-case basis,” TPK Touch

5 Solutions, 2013 WL 6021324, at *1. Although the Court finds Plaintiffs’ loss of customers

6 concerning, whether this loss is attributed to Defendant’s alleged infringement is unclear.

7 In addition, Plaintiffs’ failure to seek preliminary injunctive relief undercuts their assertion

8 of irreparable injury caused by a limited stay. The Court finds a limited stay of less than

9 four months to prevent potentially unnecessary discovery and conserve judicial resources

10 will not unduly prejudice Plaintiffs while the Court waits for the PTAB’s institution

11 decisions. See Blast Motion, 2016 WL 5107678, at *6 (“Although the Court harbors some

12 concerns about Plaintiff’s allegations of irreparable harm in the form of loss of market

13 share and price erosion, the short duration of the stay and Plaintiff’s failure to seek

14 preliminary injunctive relief undercut Plaintiff’s argument that Plaintiff cannot be made

15 whole by monetary damages.”).

16 On balance, the early stage in the litigation, Defendant’s lack of dilatory tactics, and

17 the short-term length of the stay ultimately outweigh Plaintiffs’ attenuated allegations of

18 undue prejudice. See, e.g., Sec. People, Inc. v. Ojmar US, LLC, No. 14-CV-04968-HSG,

19 2015 WL 3453780, at *5 (N.D. Cal. May 29, 2015) (granting a stay prior to the PTO’s

20 institution of IPR despite finding that “the undue prejudice factor is either neutral or weighs

21 slightly against a stay of this action”). Therefore, in light of the Court’s interest in

22 managing its docket efficiently, the Court GRANTS IN PART Defendant’s Motion to

23 Stay. See Wi-LAN, 2018 WL 2392161, at *2 (“Although, the PTO has not yet decided

24 whether to grant review of [defendant’s] petitions, the [c]ourt finds a limited stay would

25 further promote the interests of justice and judicial economy.”). The Court will revisit

26 whether the stay should be lifted when the PTAB issues its last institution decision. Of

27 course, should the PTAB decide not to institute review on any of the Patents-in-Suit, the

28 Court will lift the stay.

1 MOTION TO DISMISS

2 Also presently before the Court is Defendant’s Motion to Dismiss (ECF No. 22).

3 Among other claims that Plaintiffs’ Complaint is legally deficient, Defendant specifically

4 argues that “two of the asserted patents fail to claim patentable subject matter and should

5 be found invalid under 35 U.S.C. § 101.” MTD at 1. The Court acknowledges that the

6 posture of the case may change depending on the PTAB’s decisions of whether to institute

7 IPRs. Additionally, if IPRs are instituted, the decision of the PTAB could simplify the

8 issues presently before the Court in Defendant’s Motion to Dismiss.

9 Accordingly, in the interest of judicial economy, the Court DENIES WITHOUT

10 PREJUDICE Defendant’s Motion to Dismiss (ECF No. 22) and its associated motion to

11 seal (ECF No. 20). Defendant is granted leave to refile these motions, to the extent they

12 are still relevant, when the stay is lifted.

13 CONCLUSION

14 For the foregoing reasons, the Court rules as follows:

15 1. Plaintiffs’ Unopposed Ex Parte Motion to File a Sur-Reply (ECF No. 59) is

16 GRANTED.

17 2. Plaintiffs and Defendant’s Motions to Seal filed in connection with the Motion

18 to Stay (ECF Nos. 50, 53, 57) are GRANTED.

19 3. Defendant’s Motion to Stay (ECF No. 39) is GRANTED IN PART. This

20 action is STAYED pending the issuance of the last of the PTAB’s institution

21 decisions on the Patents-in-Suit. The parties SHALL FILE a joint status

22 report within fourteen (14) days of the issuance of the last of the PTAB’s

23 decisions on whether to institute IPRs, informing the Court of the PTAB’s

24 decisions. At that time, the Court will issue an order addressing further

25 proceedings in this case.

26 ///

27 ///

28 ///

1 4. Defendant’s Motion to Dismiss and associated motion to seal (ECF Nos. 20,

2 22) are DENIED WITHOUT PREJUDICE.

3 IT IS SO ORDERED.

4 ||Dated: March 8, 2021 . tt

5 jen Janis L. Sammartino

6 United States District Judge

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