Security First Innovations, LLC v. Google LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Norfolk Division

SECURITY FIRST INNOVATIONS,

LLC,

Plaintiff,

v. Case No. 2:23-cv-97

GOOGLE LLC,

Defendant.

MEMORANDUM OPINION & ORDER

Before the Court is the Motion to Stay Pending Inter Partes Review, filed by

Defendant Google LLC (“Google”). ECF Nos. 159 (motion), 160 (memorandum). The

Court has considered the arguments in the parties’ briefing and concluded there is no

need to hold a hearing on the motion. See Fed. R. Civ. P. 18; E.D. Va. Civ. R. 7(J). For

the reasons stated herein, the motion is GRANTED.

I. BACKGROUND

A. District Court Proceedings

Plaintiff Security First Innovations, LLC (“SFI”) filed the Complaint in this

case on March 10, 2023. ECF No. 1. The Complaint alleges that the Google Cloud

service infringes the four asserted patents—U.S. Patent Nos. 10,452,854 (“the ’854

patent”), 11,068,609 (“the ’609 patent”), 11,178,116 (“the ’116 patent”), and 9,338,140

(“the ’140 patent”). Id.

Google filed a motion to dismiss on April 28, 2023. ECF Nos. 37 (motion), 38

(memorandum). On August 21, 2023, SFI filed a motion for leave to amend the

complaint to add claims of willful infringement. ECF Nos. 73 (motion), 74

(memorandum). On November 15, 2023, the Court denied Google’s motion to dismiss

and granted SFI’s motion for leave to amend allowing SFI to proceed with its claim

for willful infringement as to the ’140 patent, but not as to the remaining asserted

patents. ECF No. 125. The First Amended Complaint contains the same infringement

allegations as the Complaint.

Google filed the instant Motion to Stay Pending Inter Partes Review on

December 1, 2023. SFI filed its opposition on December 15, 2023. ECF No. 207. Google

replied on December 21, 2023. ECF No. 227.

B. Inter Partes Review Proceedings

Persons who are not owners of a patent may challenge the validity of a patent

before the Patent Trial and Appeal Board (“PTAB”) through inter partes review

(“IPR”). 35 U.S.C. § 311. An IPR petition requests that one or more claims of a patent

be canceled as unpatentable under 35 U.S.C. § 102 (novelty) or 35 U.S.C. § 103

(obviousness). Id. The PTAB will authorize review of the patent claims if “there is a

reasonable likelihood that the petitioner would prevail with respect to at least [one]

of the claims challenged in the petition.” 35 U.S.C. § 314. If IPR is instituted, the

PTAB must execute a final written decision within a year, but that deadline can be

extended by six months for “good cause.” 35 U.S.C. § 316.

Between November 22 and November 27, 2023, Google filed a total of four IPR

petitions seeking review of claims relating to all four of SFI’s asserted patents. ECF

No. 160 at 5. The PTAB is scheduled to decide by late May or early June 2024 whether

to institute review. Id.

II. LEGAL STANDARD

“The power to stay proceedings is incidental to the power inherent in every

court to control disposition of the causes on its docket with economy of time and effort

for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254

(1936). When a party other than the patent owner or a real party in interest files an

IPR petition, the decision to stay district court proceedings “is left to the district

court’s discretion.” Sharpe Innovations, Inc. v. T-Mobile USA, Inc., No. 2:17-cr-351,

2018 WL 11198604, at *2 (E.D. Va. Jan. 10, 2018) (quotation marks and citation

omitted). When determining whether to stay patent litigation pending IPR, district

courts consider the following three factors:

(1) the stage of the litigation;

(2) whether the stay would simplify the issues before the

court; and

(3) whether the stay would unduly prejudice the

nonmoving party.

Centripetal Networks, LLC v. Keysight Tech., Inc., No. 2:22-cv-2, 2023 WL 5127163,

at *3 (E.D. Va. Mar. 20, 2023) (collecting cases).

III. ANALYSIS

For the reasons stated below, the Court finds that the balance of the relevant

factors ultimately weighs in favor of granting a stay. The Court will address each

factor in turn.

A. The Stage of the Litigation

The first factor—the stage of litigation—is neutral. “The stage of litigation

weighs in favor of a stay when the motion is filed early in its proceedings—before the

trial date or Markman hearing is set—and discovery has not been substantially

completed.” Keysight Tech., Inc., 2023 WL 5127163, at *4 (emphasis added). “As for

the proper timing to measure the stage of litigation, district courts have adopted the

date of the filing of the motion to stay.” VirtualAgility Inc. v. Salesforce.com, Inc., 759

F.3d at 1307, 1316 (Fed. Cir. 2014). Thus, the Court must consider the stage of

litigation at the time the motion to stay was filed.

The Court finds that on the operative date—December 1, 2023—the stage of

the instant case was neither early nor advanced. As is this Court’s practice in all

cases, a scheduling order had been entered pursuant to Fed. R. Civ. P. 16(b), and a

trial date had been set, but trial was not scheduled to begin for seven months. The

Markman hearing was set to begin two months from the operative date; however,

neither party had yet submitted their claim construction briefing. As SFI correctly

points out, the parties had engaged in substantial discovery, and fact discovery was

scheduled to close in two months. But the parties were still producing documents,

had not yet taken any depositions, and had just started to identify expert witnesses.

ECF No. 161 ¶ 2; ECF No. 207 at 13.

It is undoubtedly true that both the Court and the parties have invested

considerable resources in this case. But it is also undoubtedly true that a significant

amount of work remains to be done. Thus, the stage of litigation is a neutral factor

that weighs neither for nor against granting a stay. See Segin Sys., Inc. v. Stewart

Title Guaranty Co., 30 F. Supp. 3d 476, 482 (E.D. Va. 2014) (determining that this

factor is neutral when the case has been pending for nearly a year but remains in the

early stages of discovery); Sharpe Innovations, Inc., 2018 WL 11198604, at *3 (finding

this factor neutral when a Fed. R. Civ. P. 16(b) scheduling order had been entered,

trial was not scheduled to begin for eight months, discovery had barely begun, and a

Markman hearing was one month away, but the claim construction briefing had not

been substantially completed).

B. Simplification of the Issues

The second factor—whether a stay would simplify the issues in the case—

weighs heavily in favor of granting a stay. “A stay pending the resolution of

administrative proceedings will simplify matters before the district court if the

administrative proceedings have the potential to dispose of claims entirely.” Keysight

Tech., Inc., 2023 WL 5127163, at *4 (citing VirtualAgility Inc., 759 F.3d at 1314).

Even if the administrative proceeding is unlikely to dispose of claims, a stay may

simplify matters if it allows the administrative proceedings time to build a record

that assists the district court’s claim construction analysis. In re TLI Commc’ns, LLC,

No. 1:14-md-2534, 2014 WL 1265711, at *2 (E.D. Va. Aug. 11, 2014).

If IPR is instituted, such review would undoubtedly simplify the issues in this

case. Google’s IPR petitions challenge all the asserted claims across all the asserted

patents in the instant case. ECF No. 160 at 1. Therefore, if Google prevails with

respect to every claim, IPR could dispose of the entire case, which is “the ultimate

simplification of the issues.” VirtualAgility Inc., 759 F.3d at 1314; see also Sharpe

Innovations, Inc., 2018 WL 11198604, at *3 (finding that “the simplification factor

weighs heavily in favor of the stay when the petition challenges all patent claims

brought by the plaintiff”) (citation and quotation marks omitted).

Even if IPR does not dispose of every patent claim at issue, validity issues

would still be streamlined because final written PTAB decisions have preclusive

effect. Once the PTAB issues a final written decision on a patent claim, the petitioner

is barred from asserting “that the claim is invalid on any ground that the petitioner

raised or reasonably could have raised during that [IPR]” in a subsequent civil action.

35 U.S.C. § 315(e)(2). Therefore, even if some of SFI’s claims survive IPR, Google

cannot raise any claim that it “could have raised in the IPR petition or at the IPR

itself” in the litigation before this Court.1 Cobalt Boats, LLC v. Sea Ray Boats, Inc.,

No. 2:15-cv-21, 2017 WL 2605977, at *3 (E.D. Va. June 5, 2017)(quotation marks and

citation omitted).

SFI asserts that granting a stay is premature and speculative because the

PTAB has not yet instituted IPR. ECF No. 207 at 17–18. The Court disagrees. SFI

notes the relatively fast pace of litigation in this district, ECF No. 207-3, but that is

precisely why “this district does not disfavor stays before IPR is instituted.” Sharpe

1The Court also notes that should the PTAB decide not toinstitute Google’s petitions,

“statements made in the course of an IPR proceeding concerning the patent in issue

may also add to the patent’s prosecution history, which could assist this Court’s claim

construction analysis.” In re TLI Commc’ns, 2014 WL 1265711, at *2. Thus, any

possible outcome of Google’s IPR petitions will—albeit to varying degrees—simplify

the issues before the Court.

Innovations, Inc., 2018 WL 11198604, at *3 (collecting cases). Giventhis pace,“courts

are generally mindful that, in the months leading up to the PTAB’s decision whether

to grant IPR, the parties and the court would expend many resources in litigation

that could be rendered unnecessary by the outcome of IPR.” Id. (collecting cases); see

e.g., In re TLI Commc’ns LLC, 2014 WL 12615711, at *1 (granting a stay prior to

institution because “the pace of discovery and other events in this Court would

require a great deal of activity . . . some of which may be rendered unnecessary if IPR

is granted”).

If the Court waits to grant a stay until the PTAB institutes Google’s IPR

petitions, the parties will necessarily engage in litigation efforts that would be

duplicative of their efforts before the PTAB, which “is precisely what a stay seeks to

avoid.”2 Sharpe Innovations, Inc., 2018 WL 11198604, at *3. Thus, the fact that IPR

has not yet been instituted does not weigh against granting a stay in this case. See

Audio MPEG, Inc., et al v. Hewlett-Packard Comp., No. 2:15-cv-73, 2015 WL 5567085,

at *4 (E.D. Va. Sept. 21, 2015) (“[A]s the Federal Circuit noted in VirtualAgility, a

district court should not consider whether the PTAB will ultimately grant review

2 SFI spends a considerable amount of time discussing the PTAB’s six-factor Fintiv

test. If the question before the Court was whether the PTAB was likely to institute

review of Google’s IPR petitions, then the Fintiv factors would be relevant. But that

is not the question the Court must answer. The task here is to determine whether

this Court should grant a stay. Because “a district court should not consider whether

the PTAB will ultimately grant review when deciding a motion to stay,” the factors

that the PTAB considers when deciding to institute review are of little consequence

to the Court’s analysis. Audio MPEG, Inc., et al. v. Hewlett-Packard Comp., No. 2:15-

cv-73, 2015 WL 5567085, at *4 (E.D. Va. Sept. 21, 2015).

when deciding a motion to stay.”). Because Google has challenged every asserted

claim for all asserted patents, this factor weighs heavily in favor of a stay.

C. Prejudice to the Non-Moving Party

The third factor—whether the nonmoving party would be unduly prejudiced or

unfairly disadvantaged—weighs in favor of granting a stay. “Whether the patentee

will be unduly prejudiced by a stay in the district court litigation . . . focuses on the

patentee’s need for an expeditious resolution of its claim.” VirtualAgility Inc., 759 F.

3d at 1318 (emphasis omitted). To show undue prejudice, a patentee must

demonstrate that monetary damages will be insufficient to remedy their losses. Id.at

1318–19. The Court finds that SFI will not be unduly prejudiced for at least three

reasons.

First, as Google argues, SFI is a non-producing entity that does not directly

compete with Google. ECF No. 160 at 11. Thus, SFI “has no reasonable basis for

requesting or recovering anything other than monetary damages in this case, which

of course, can be determined regardless of any delay attributable to a stay.”3 In re

TLI Commc’ns, LLC, 2014 WL 12615711, at *2.

Second, the evidence does not establish that Google possessed a “dilatory

motive” in moving for a stay. VirtualAgility Inc., 759 F.3d at 1319. SFI highlights

3 The Court also notes that SFI has not moved for a preliminary injunction, nor has

SFI sought any form of relief other than damages. ECF No. 126 at 60–61. While not

dispositive, this fact suggests that monetary damages will be sufficient to remedy

SFI’s losses. See VirtualAgility Inc., 759 F.3d at 1319 (finding that the plaintiff’s

failure to pursue a preliminary injunction was not dispositive,but “contradict[ed] [the

plaintiff]’s assertion that it need[ed] injunctive relief as soon as possible”).

that Google filed its IPR petitions between November 22 and November 27, 2024—

just one week after the Court denied Google’s motion to dismiss on November 15,

2024. The Court agrees with SFI that the timing of the instant motion is curious and

raises concerns that Google intentionally delayed its IPR petitions until after the

Court ruled on its motion to dismiss. However, timing alone is insufficient to establish

that Google is engaging in delay tactics to gain an advantage. Ultimately, Google filed

its IPR petitions within eight months of the complaint and filed the instant motion to

stay just four days after filing its last IPR petition—neither of which suggests dilatory

tactics. ECF No. 160 at 5.

Finally, SFI argues that it “will suffer evidentiary prejudice because relevant

witnesses’ memories will fade, and relevant documents may be lost.”4 ECF No. 207

at 28. The Federal Circuit has made clear that by itself, the passage of time is not

sufficient to conclude that the non-moving party will suffer evidentiary prejudice.

VirtualAgility Inc., 759 F.3d at 1319 (“It is undoubtedly true, as many courts have

observed, that with age and the passage of time, memories may fade and witnesses

may become unavailable. Without more, however, these assertions . . . are not

sufficient to justify a conclusion of undue prejudice.”). Further, two rules—Fed. R.

Civ. P. 27 and 37(e)—address SFI’s concerns. VirtualAgility Inc., 759 F.3d at 1319

(finding that Fed. R. Civ. P. 27, which allows for the perpetuation of testimony, cuts

4 The Court notes that SFI’s argument for the first factor seems to cut against its

argument here. SFI avers that because fact discovery is set to close on February 16,

2024, the case is in an advanced stage. That also necessarily suggests that Google

has produced the documents relevant to litigation, which at the very least lowers—if

not eliminates—the risk that relevant documents may be lost.

against an argument against a stay); Fed. R. Civ. P. 37(e) (allowing courts to cure

prejudice when a party fails to take steps to preserve electronically stored information

in anticipation of litigation).

In sum, two of the three factors weigh in favor of a stay: simplification of the

issues and a lack of undue prejudice. The stage of litigation is neutral—it neither

weighs in favor nor against a stay. Thus, the Court will grant Google’s motion to stay.

IV. CONCLUSION

For the foregoing reasons, Defendant Google, LLC’s Motion to Stay Pending

Inter Partes Review (ECF No. 159) is GRANTED.

Accordingly, itis ORDERED that the case is STAYED.

The parties are DIRECTED to contact the Court to schedule a status

conference within seven days of the PTAB issuing its initial determination.

The Clerk is DIRECTED to send a copy of this Memorandum Opinion and

Order to all counsel of record.

IT IS SO ORDERED. Kp

/s/

Jamar K. Walker

United States District Judge

Norfolk, Virginia

January 19, 2024

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