Opinion

Touchstream Technologies, Inc. v. Altice USA, Inc.

Court
District Court, E.D. New York
Filed
Sep 18, 2024
Cited by
0 cases
Authority
More cited than 31.6%

The opinion

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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TOUCHSTREAM TECHNOLOGIES, INC.,

Plaintiff, MEMORANDUM

AND ORDER

-against- 24-cv-3186 (GRB)(SIL)

ALTICE USA, INC., CEQUEL

COMMUNICATIONS, LLC, CSC HOLDINGS,

LLC, and FRIENDSHIP CABLE OF TEXAS,

INC.,

Defendants.

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STEVEN I. LOCKE, United States Magistrate Judge:

Presently before the Court in this patent infringement action is Defendant

Altice USA Inc.’s (“Altice” or “Defendant”) motion to stay this action pending inter

partes review (“IPR”) by the Patent Trial and Appeals Board (“PTAB”). See

Defendant’s Motion to Stay Pending Inter Partes Review (“Defendants’ Motion” or

“Def. Mot.”), Docket Entry (“DE”) [190]. Plaintiff Touchstream Technologies, Inc.

(“Touchstream” or “Plaintiff”) opposes. See Response in Opposition to Defendant’s

Motion (“Opposition” or “Opp.”), DE [191]. For the reasons set forth below,

Defendant’s Motion is granted, and this action is stayed pending the outcome of the

IPR proceedings.

I. BACKGROUND

Unless otherwise indicated, the following facts are taken from the memoranda

of law, declarations and exhibits submitted in connection with Defendant’s Motion,

and are accepted as true for the purposes of this Memorandum and Order. By way

of Complaint dated February 17, 2023, later modified by an Amended Complaint

dated May 12, 2023, in the Eastern District of Texas, Plaintiff asserted claims against

Altice, Cequel Communications, Inc., CSC Holdings, Inc., and Friendship Cable of

Texas, Inc. (the “Altice Defendants”) for infringement of three patents: U.S. Patent

Nos. 8,356,215 (the “‘251 patent”), 11,048,751 (the “‘751 patent”), and 11,086,934 (the

“‘934 patent”). See Complaint, DE [1]; Amended Complaint, DE [43]. The Altice

Defendants moved to transfer the action to the Eastern District of New York on April

17, 2023. DE [17]. The following day, the litigation was consolidated for pretrial

issues with similar lawsuits brought by Touchstream against Comcast Cable

Communications, LLC (“Comcast”) and Charter Communications, Inc. (“Charter”).

DE [19]. In December 2023, Comcast filed six petitions for IPR – two for each of

Plaintiff’s asserted patents – with PTAB. Opp., 2.

Touchstream filed a motion for leave to amend its infringement contentions on

February 16, 2024. See DE [142]. The parties conducted some venue-related

discovery, including two depositions and written and document discovery. See

Defendant’s Memorandum and of Law in Support of Defendant’s Motion

(“Defendant’s Memorandum” or “Def. Mem.”), 2. The Altice Defendants’ motion to

transfer this action was granted on March 4, 2024. See DE [148].1 On March 14,

2024, via joint stipulation, all case deadlines were stayed pending the transfer,

1 The actions against Comcast and Charter remain in the Eastern District of Texas and are scheduled

for trial in October of this year. See Opp., 2.

including the briefing of Plaintiff’s motion to leave to amend its infringement

contentions, which had not been completed. DE [157].

The action was transferred to this district and assigned to the Honorable

Judges Gary R. Brown and Anne Y. Shields on April 29, 2024. DE [161]. Following

Judge Shields’s recusal, the case was reassigned to this Court. DE [164]. Judge

Brown held an introductory conference with the parties on July 16, 2024. See Minute

Entry dated July 16, 2024. On July 18 and 24, 2024, respectively, PTAB instituted

IPR proceedings with respect to the ‘251 and ‘751 patents. See Def. Mem., 2. PTAB

declined to institute IPR with respect to the ‘934 patent on July 26, 2024. Id.

Touchstream requested director review of the IPR for the ‘251 patent and rehearing

of the IPR for the ‘751 patent, and as of the date of this Memorandum and Order

PTAB has not ruled on either request. See Opp., 2.2

On July 31, 2024, the parties conferred regarding Defendant’s Motion, which

Plaintiff indicated it would oppose. See Def. Mem., 3. This Court held a scheduling

conference on August 6, 2024, during which the Court set a briefing schedule for

Defendant’s Motion. See DEs. [188] – [189]. The Court also adopted the Altice

Defendants’ proposed schedule for the remainder of the litigation, including, inter

alia, a January 7, 2025 deadline to commence claim construction briefing, a tentative

February 20, 2025 date for the Markman claim construction hearing, and deadlines

2 According to Altice, requests for director review are granted 2.3% percent of the time, and requests

for rehearing are granted between ten and eighteen percent of the time. Defendant’s Reply

Memorandum in Support of Defendants’ Motion (“Def. Reply.”), DE [192], 9 (citing James M. Glass et

al., How patent office director review has reshaped the rehearing landscape, REUTERS,

https://www.reuters.com/legal/legalindustry/how-patent-office-director-review-has-reshaped-

rehearing-landscape-2024-02-07/.

for the conclusion of fact and expert discovery dependent upon the timing of the

Markman ruling. See DE [189], 6-10. Defendant’s Motion was filed on August 13,

2024. See Def. Mot. For the reasons set forth below, Defendant’s Motion is granted,

and this action is stayed pending the outcome of the IPR proceedings.

II. LEGAL STANDARD

“[IPR] is an administrative process in which a patent challenger may ask

[PTAB] to reconsider the validity of earlier granted patent claims.” Thryv, Inc. v.

Click-To-Call Tech., LP, 590 U.S. 45, 47, 140 S. Ct. 1367, 1370 (2020). This

mechanism, “like other post-issuance review proceedings, was designed to give

[PTAB] an opportunity to correct its mistakes, to give courts the benefit of the

agency’s consideration of the effect of prior art on patents being asserted in litigation,

and to reduce the burden of litigation on the parties and the courts.” In re Intel Corp.,

No. 2021-168, 2021 WL 4427875, at *2 (Fed. Cir. Sept. 27, 2021). A party may petition

PTAB for IPR within one year of being served with a complaint alleging patent

infringement. 35 U.S.C. § 315(b). Once IPR is instituted, a final determination must

issue within one year, but may be “extended by up to six months for good cause by

the Chief Administrative Patent Judge.” 37 C.F.R. § 42.100.

“A federal district court has inherent power to stay an action pending inter

partes review.” Goodman v. Samsung Elecs. Am., Inc., No. 17-CV-5539 (JGK), 2017

WL 5636286, at *2 (S.D.N.Y. Nov. 22, 2017). Whether to grant a stay is within the

court’s discretion. Straight Path IP Grp., Inc. v. Verizon Commc’ns Inc., No. 16-CV-

4236, 2016 WL 6094114, at *2 (S.D.N.Y. Oct. 18, 2016) (citation omitted).

Courts typically consider three factors in deciding a motion to stay pending

review by PTAB: (1) whether the stay would unduly prejudice or present a clear

tactical disadvantage to the non-moving party; (2) whether a stay will simplify the

issues for trial; and (3) the status of the case, including whether discovery is complete

and a trial date set. See, e.g., Rovi Guides, Inc. v. Comcast Corp., No. 16-CV-9278,

2017 WL 4876305, at *3 (S.D.N.Y. Oct. 27, 2017); SurfCast, 2014 WL 6388489, at *1;

Princeton Digital Image Corp. v. Konami Digital Entm’t Inc., No. 12-CV-1461, 2014

WL 3819458, at *2 (D. Del. Jan. 15, 2014); TouchTunes Music Corp. v. Rowe Int’l

Corp., 676 F. Supp. 2d 169, 177 (S.D.N.Y. 2009). Courts conducting an undue

prejudice review consider four sub-factors: (1) the timing of the request for inter

partes review; (2) the timing of the request for a stay; (3) the status of the review

proceeding; and (4) the relationship of the parties. See Metrom Rail, LLC v. Siemens

Mobility, Inc., No. 23-CV-3057, 2024 WL 323374, at *4 (S.D.N.Y. Jan. 29, 2024)

(applying these factors to decide whether to stay a non-patent claim alongside a

patent claim pending PTAB’s inter partes review). The burden is on the movant to

demonstrate that a stay is appropriate. Unicorn Glob., Inc. v. DGL Grp., Ltd., No.

21-CV-1443-MKB-SJB, 2023 WL 2019092, at *1 (E.D.N.Y. Feb. 15, 2023).

III. DISCUSSION

Altice argues that a stay is warranted because: (1) there is no danger of

prejudice to Plaintiff, (2) regardless of the outcome, IPR will simplify the issues, and

(3) this litigation is in the early stages. See Def. Mem., 1. Touchstream counters that:

(1) Plaintiff will be prejudiced if it is prevented from timely enforcing its patents

against Defendant’s infringement, (2) the IPR proceedings do not concern all the

claims in this action, and (3) significant progress has been made towards resolution

since February 2023. See Opp., 1. The Court concludes that each of the three relevant

factors favors a stay. Accordingly, Defendant’s Motion is granted, and this action is

stayed pending the outcome of the IPR proceedings.

A. Prejudice to Plaintiff

With respect to the first factor, there is no evidence that Touchstream will be

prejudiced by Altice’s requested stay. For one, “[m]ere delay does not establish undue

prejudice.” Rensselaer Polytechnic Inst. v. Apple Inc., No. 1:13-CV-0633 DEP, 2014

WL 201965, at *4 (N.D.N.Y. Jan. 15, 2014) (internal quotation marks omitted); see

SurfCast, 2014 WL 6388489, at *3 (“mere delay does not rise to the level of undue

prejudice”); Internet Patents Corp. v. eBags, Inc., No. C 12-03385, 2013 WL 4609533,

at *4 (N.D. Cal. Aug. 28, 2013) (“courts have refused to find undue prejudice based

solely on delay caused by the reexamination process”).

As to the first two subfactors, the IPRs here were filed within the one-year

statutory deadline and Defendant indicated its intent to file a motion to stay less than

one week after PTAB’s decisions to institute proceedings. See Molo Design, Ltd. v.

Chanel, Inc., No. 21-CV-01578 (VEC), 2022 WL 2135628, at *3 (S.D.N.Y. May 2, 2022)

(finding a stay was appropriate where IPR was instituted three weeks before the one-

year deadline); Rovi Guides, 2017 WL 4876305, at *4 (noting request for stay was

“sufficiently prompt” coming just days after institution decision). With respect to the

third subfactor, while Plaintiff is correct in identifying that a final decision by PTAB

may be eighteen months away, see 37 C.F.R. § 42.100, this delay alone is insufficient

to justify a stay. See e.g., Nike, Inc. v. Lululemon USA Inc., No. 22CV00082RAOTW,

2023 WL 2214884, at *3 (S.D.N.Y. Feb. 24, 2023) (granting stay despite uncertainty

as to when IPR proceedings would conclude); Unicorn Global, 2023 WL 2019092, at

*3 (noting that the fact that IPR process may be “lengthy” is insufficient to constitute

prejudice). The Court agrees that the better course is to allow PTAB to apply its

expertise to these proceedings before considerable judicial resources are expended.3

Regarding the final subfactor, Plaintiff does not contest Defendant’s assertion that

the parties are not direct competitors. Given that the parties are not direct

competitors, Touchstream, “does not risk irreparable harm by defendants’ continued

use of the accused technology and can be fully restored to the status quo ante with

monetary relief.” Software Rights Archive LLC v. Facebook, Inc., No. C-12-3970, 2013

WL 5225522, at *6 (N.D. Cal. Sept. 17, 2013).

In short, each of the four subfactors supports the imposition of a stay. Nor does

Plaintiff point to any other source of prejudice or tactical advantage – apart from

delay. See Unicorn Global, 2023 WL 2019092, at *3 (granting stay where non-moving

party failed to point to any evidence of concrete financial harm such as sales data).

3 Plaintiff also argues that the conclusion of the IPR proceedings will be further delayed given

Touchstream’s requests for rehearing and director review, thus increasing the potential for prejudice.

See Opp., 10. Given that any such delay is of Plaintiff’s own making, the Court declines to conclude

Touchstream will be prejudiced as a result.

Accordingly, the Court concludes that Touchstream will not be subject to undue

prejudice in the event of a stay.

B. Simplification of Issues

Further, the issues in this litigation will be simplified by PTAB’s decision.

Plaintiff argues that because IPR was not instituted as to all patents at issue and the

scope of the issues PTAB will consider differs from those in this action – an assertion

Altice contests – a stay is not appropriate. See Opp., 4-6. One purpose of IPR

proceedings, however, “is to eliminate trial of an issue (when a claim is canceled) or

to facilitate trial by providing the district court with the expert view of [PTAB] (when

a claim survives the reexamination proceeding).” Evolutionary Intelligence LLC v.

Yelp Inc., No. C-13-03587-DMR, 2013 WL 66672451, at *5 (N.D. Cal. Dec. 18, 2023)

(internal quotation marks and alterations omitted). “Even if the IPR proceeding does

not result in any cancelled or modified claims, this court will receive the benefit of

[PTAB’s] expertise and guidance on these claims.” Evolutionary Intel., LLC v.

Millenial Media, Inc., No. 5:13-CV-04206-EJD, 2014 WL 2738501, at *4 (N.D. Cal.

June 11, 2014). As a result, courts in this Circuit have concluded that this factor

favors a stay even where, as here, the IPR proceedings will not “resolve all of the

asserted patents or claims in a case.” Kannuu Pty Ltd. v. Samsung Elecs. Co., No. 19

CIV. 4297 (ER), 2021 WL 195163, at *8 (S.D.N.Y. Jan. 19, 2021), aff’d, 15 F.4th 1101

(Fed. Cir. 2021) (collecting cases).4

4 Plaintiff argues that in order to justify a stay, the movant “must show that the PTAB is likely to

invalidate every asserted claim.” Opp., 4 (quoting Sonrai Memory Ltd. v. LG Elecs. Inc., No 6:21-cv-

00168-ADA, 2022 WL 2307475, at *4 (W.D. Tex. June 27, 2022) (emphasis in original). As noted

herein, however, courts in this Circuit have rejected this requirement and granted stays where fewer

Moreover, the Court will benefit from PTAB’s expert guidance concerning the

technology at issue. In addition, the IPR proceedings – regardless of their outcome –

are likely to “garner additional prosecution history that may be relevant to claim

construction.” Nike, 2023 WL 2214884, at *1. This factor therefore weighs in favor

of a stay.

C. Stage of the Litigation

Lastly, the current stage of this litigation favors a stay. The earlier the stage

of proceedings, the greater the reason to grant a stay.” SurfCast, , 2014 WL 6388489,

at *2. While the range of what qualifies as an early stage may vary, “there is a

general consensus that where the parties have fully briefed the issue of claim

construction, attended a Markman hearing, and received a claim construction order,

and discovery is well underway, this second factor counsels against granting a stay.”

Rovi Guides, 2017 WL 4876305, at *3 (internal quotation marks and alterations

omitted). By contrast, “courts in this Circuit have concluded that a suit is at an early

enough stage to favor a stay where there has been limited to no discovery, and neither

a claim construction hearing nor a trial has been scheduled.” Kannuu, 2021 WL

195163, at *10 (internal quotation marks omitted). “Granting such a stay early in a

case can be said to advance judicial efficiency and maximize the likelihood that

neither the Court nor the parties expend their assets addressing invalid claims.”

than all of the asserted patents are subject to IPR proceedings. See e.g., Kannuu, 2021 WL 195163, at

*8 (stay granted where two of five patents were under review); Rovi Guides, 2017 WL 4876305, at *3

(stayed granted where four out of five patents were reviewed). The Court declines to depart from this

precedent and determines that PTAB’s decision will simplify the issues in this litigation.

Princeton Digital Image Corp. v. Konami Digital Ent. Inc., No. CV 12-1461-LPS-CJB,

2014 WL 3819458, at *3 (D. Del. Jan. 15, 2014) (internal quotation marks omitted).

Here, while some discovery has been conducted, it largely took place prior to

the transfer and in the context of the Altice Defendants’ motion to change venue. The

operative scheduling order was entered less than one month prior to the filing of

Defendant’s Motion. See DE [188]. Pursuant to that schedule, claim construction

briefing is not set to begin until January 2025 and the Markman hearing is

tentatively scheduled for February 2025. DE [189]. The remainder of the case

deadlines – including the completion of fact and expert discovery and the submission

of dispositive motions and pretrial filings – are all dependent upon the timing of the

Court’s decision on claim construction. See id. Accordingly, this litigation is still in

the early stages, and this factor warrants a stay.

IV. CONCLUSION

Given that each of the three relevant factors favors a stay, Defendant’s Motion

is granted, and this action is stayed pending the outcome of the IPR proceedings. The

parties shall file a status report no more than 30 days from the issuance of PTAB’s

final decisions.

SO ORDERED

Dated: Central Islip, New York

September 18, 2024

/s/ Steven I. Locke

STEVEN I. LOCKE

United States Magistrate Judge

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

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