Murata MacHinery USA, Inc. v. Daifuku Co., Ltd.

United States Court of Appeals

for the Federal Circuit

______________________

MURATA MACHINERY USA, MURATA

MACHINERY, LTD.,

Plaintiffs-Appellants

v.

DAIFUKU CO., LTD., DAIFUKU AMERICA CORP.,

Defendants-Appellees

______________________

2015-2094

______________________

Appeal from the United States District Court for the

District of Utah in No. 2:13-cv-00866-DAK-BCW, Senior

Judge Dale A. Kimball.

______________________

Decided: August 1, 2016

______________________

DAVID HESKEL BEN-MEIR, Norton Rose Fulbright US

LLP, Los Angeles, CA, argued for plaintiffs-appellants.

Also represented by MARK EMERY, JONATHAN S.

FRANKLIN, Washington, DC; MARK BETTILYON, Thorpe

North & Western, Salt Lake City, UT.

JEFFREY K. SHERWOOD, Blank Rome LLP, Washing-

ton, DC, argued for defendants-appellees. Also represent-

ed by DIPU A. DOSHI, CHARLES J. MONTERIO, JR., MARK J.

THRONSON, MEGAN R. WOOD.

______________________

2 MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD.

Before REYNA, CHEN, and STOLL, Circuit Judges.

STOLL, Circuit Judge.

This is an interlocutory appeal from a patent in-

fringement lawsuit that Murata Machinery USA and

Murata Machinery, Ltd. (collectively “Murata”) filed

against Daifuku Co., Ltd. and Daifuku America Corp.

(collectively “Daifuku”) in the United States District

Court for the District of Utah. Daifuku petitioned for

inter partes review of all of the asserted patents, and the

district court then stayed the litigation. Murata moved to

lift the stay and for entry of a preliminary injunction, but

the district court denied the motions in a single order. We

hold that the district court did not err in refusing to lift

the stay, but that its cursory denial of the preliminary

injunction did not satisfy Rule 52(a)(2) of the Federal

Rules of Civil Procedure, which requires that a court state

findings and conclusions supporting denial of a prelimi-

nary injunction. Thus, we affirm the district court’s order

as it pertains to the stay, but vacate the order with re-

spect to the preliminary injunction and remand for pro-

ceedings consistent with this opinion.

BACKGROUND

Murata and Daifuku are direct competitors in the

manufacture and maintenance of automated material

handling systems (“AMHS”). AMHS use robotic vehicles

suspended on tracks from the ceilings of semiconductor

cleanrooms to move and manipulate semiconductor com-

ponents. In September 2013, Murata sued Daifuku in the

United States District Court for the District of Utah

alleging infringement of three of its patents: U.S. Patent

Nos. 7,165,927, 7,771,153, and 8,197,172 (collectively, the

“Original Patents”). One year later, in September 2014,

Murata moved to amend its complaint to further assert

U.S. Patent Nos. 6,113,341 and 6,183,184 (collectively, the

“Additional Patents”). Shortly thereafter, Daifuku peti-

MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD. 3

tioned the Patent Trial and Appeals Board of the Patent

and Trademark Office for inter partes review (“IPR”) of

the Original Patents and concurrently moved to stay the

district court litigation pending the outcome of the IPR

proceedings. Daifuku relied on the traditional three-

factor test district courts use in stay determinations:

(1) stage of the proceedings; (2) potential for the stay to

simplify issues in case; and (3) undue prejudice to the

non-moving party or a clear tactical advantage for the

moving party resulting from stay. Murata responded,

opposing the stay and advocating that the district court

consider a fourth factor in addition to the three Daifuku

had briefed: potential for a stay to reduce the burden of

litigation on the parties and the court.

On February 12, 2015, the district court, relying on

the four-factor test advocated by Murata, stayed the case

pending the Board’s resolution of Daifuku’s IPR petitions.

The court’s order also granted leave for Murata to amend

its complaint to add the Additional Patents, but made

clear that it was staying the entire case, including any

proceedings involving the Additional Patents if Murata

chose to add them. The district court justified staying the

entire case based on Murata’s assertion in its motion to

amend that litigating the Original and Additional Patents

piecemeal would make little sense due to a significant

overlap in discovery. The district court also stated, how-

ever, that Murata could file a motion to lift the stay

regarding the Additional Patents if a legitimate reason for

doing so materialized.

Murata amended its complaint on February 19, 2015,

to include the Additional Patents. After the Board insti-

tuted an IPR proceeding on each of the Original Patents,

on May 28, 2015, Murata moved to lift the stay only with

regard to the Additional Patents, this time relying on the

three-factor test Daifuku had first introduced and without

mentioning the additional “burden of litigation” factor it

advocated when it opposed issuance of the stay. Amidst

4 MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD.

motions practice regarding lifting the stay, Daifuku filed

IPR petitions on the Additional Patents. 1 Before the

district court decided Murata’s pending motion to lift the

stay, Murata moved for a preliminary injunction against

Daifuku based on purported infringement of the Addi-

tional Patents.

The district court denied Murata’s motion to lift the

stay, relying on the same four-factor test it applied when

it issued the stay and finding that every factor that

weighed in favor of granting the stay continued to do so.

The district court again cited Murata’s earlier argument,

made in its motion for leave to amend the complaint to

include the Additional Patents, that litigating the Origi-

nal Patents and Additional Patents separately would

make “no sense.” Murata Mach. USA, Inc. v. Daifuku Co.

(Dist. Ct. Order), No. 2:13-cv-00866, 2015 WL 5178456, at

*1 (D. Utah Sept. 4, 2015). The court reasoned that lifting

the stay for only the Additional Patents might cause

duplicative discovery and mentioned that, indeed, the

Additional Patents now faced potential IPR proceedings.

Thus, the district court denied Murata’s motion to lift the

stay. The court then held that Murata untimely filed its

motion for preliminary injunction and concluded that

“[b]ecause the court has now declined to lift the stay, the

Motion for Preliminary Injunction is denied without

1 We take notice that the Board instituted IPR pro-

ceedings for the Additional Patents after the parties

completed briefing in this appeal. See Daifuku Co. v.

Murata Mach., Ltd., IPR2015–01538, Paper No. 11

(P.T.A.B. January 19, 2016); Daifuku Co. v. Murata

Mach., Ltd., IPR2015–01539, Paper No. 11 (P.T.A.B.

Jan. 19, 2016); Oral Argument at 6:45–8:31, available at

http://oralarguments.cafc.uscourts.gov/default.aspx?fl=

2015-2094.mp3.

MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD. 5

prejudice to renew at a later date, if appropriate.” Id.

at *2.

Murata appeals the district court’s refusal to lift the

stay and its denial of the preliminary injunction.

DISCUSSION

“It is axiomatic that the initial inquiry in any appeal

is whether the court to which appeal is taken has jurisdic-

tion to hear the appeal.” Arlington Indus., Inc. v. Bridge-

port Fittings, Inc., 759 F.3d 1333, 1336 (Fed. Cir. 2014)

(internal citation omitted) (quoting Woodard v. Sage

Prods., Inc., 818 F.2d 841, 844 (Fed. Cir. 1987) (en banc)).

We first recognize that we have jurisdiction to review an

interlocutory order denying a preliminary injunction in a

patent infringement lawsuit under 28 U.S.C. § 1292(a)(1)

& (c)(1). “[I]f the trial court’s stay order had the practical

effect of denying [appellant]’s motion for a preliminary

injunction,” we have interlocutory jurisdiction. Procter &

Gamble Co. v. Kraft Foods Glob., Inc., 549 F.3d 842, 846

(Fed. Cir. 2008).

We typically do not have interlocutory jurisdiction

over a district court’s decision to stay or not stay a case.

See Intellectual Ventures II LLC v. JPMorgan Chase &

Co., 781 F.3d 1372, 1375 (Fed. Cir. 2015) (explaining that

“decisions on motions to stay ordinarily are not immedi-

ately appealable under the final judgment rule” (citing

Gulfstream Aerospace Corp. v. Mayacamas Corp., 485

U.S. 271, 277–78 (1988))). During interlocutory review,

however, certain “orders, which ordinarily would be

nonappealable standing alone, may be reviewed” under

the doctrine of pendent jurisdiction, at the court’s discre-

tion. Procter & Gamble, 549 F.3d at 846 (quoting Inter-

medics Infusaid, Inc. v. Regents of Univ. of Minn., 804

F.2d 129, 134 (Fed. Cir. 1986)). Considering that the

district court in this case maintained the stay and denied

the preliminary injunction concurrently in a single order,

those decisions are inextricably linked and we exercise

6 MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD.

our discretion to consider the district court’s stay decision

along with its denial of a preliminary injunction. See id.

(“Because we have jurisdiction to review the effective

denial of [appellant]’s motion for a preliminary injunction,

we also have jurisdiction over the trial court’s decision to

stay this case pending . . . proceedings before the PTO.”);

Intermedics Infusaid, Inc., 804 F.2d at 134 (“Whether an

appellate court exercises this ‘doctrine of pendent jurisdic-

tion at the appellate level’ is a matter of discretion.”).

I. Motion to Lift Stay

We first consider the district court’s denial of Mura-

ta’s motion to lift the stay with regard to the Additional

Patents. We hold that the district court did not err in

refusing to lift the stay entered in this case.

The ability to stay cases is an exercise of a court’s in-

herent power to manage its own docket. See Procter &

Gamble, 549 F.3d at 848–49 (citing Landis v. N. Am. Co.,

299 U.S. 248, 254–55 (1936)). Thus, we review the dis-

trict court’s refusal to lift a stay pending IPR for an abuse

of discretion. See id. at 845.

A court may lift a stay if the circumstances supporting

the stay have changed such that the stay is no longer

appropriate. Canady v. Erbe Elektromedizin GmbH, 271

F. Supp. 2d 64, 74 (D.D.C. 2002). District courts typically

analyze stays under a three-factor test: “(i) whether a

stay would unduly prejudice or present a clear tactical

disadvantage to the non-moving party; (ii) whether a stay

will simplify the issues in question and trial of the case;

and (iii) whether discovery is complete and whether a

trial date has been set.” Nokia Corp. v. Apple Inc., No.

C.A. 09-791, 2011 WL 2160904, at *1 (D. Del. June 1,

2011) (quoting Xerox Corp. v. 3Com Corp., 69 F. Supp. 2d

404, 406 (W.D.N.Y. 1999)). Murata’s principal argument

is that the district court should have relied on this three-

factor test and that it abused its discretion by considering

an additional, fourth factor—the burden of litigation on

MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD. 7

the court and the parties—that Murata itself urged the

court to adopt earlier in the case. In support of its posi-

tion, Murata points out that Congress has specifically

required district courts to apply the four-factor variant of

the test—i.e., to include the “burden of litigation” factor as

part of their analysis—for stay requests pending covered

business method (“CBM”) review by the Board. See

America Invents Act (“AIA”), Pub. L. No. 112-29,

§ 18(b)(1), 125 Stat. 284, 331 (2011). Congress did not

likewise prescribe a set of factors that district courts must

consider when they decide whether to stay a case pending

IPR. The inference Murata would have us draw is that

the “burden of litigation” factor is “applicable solely to

stays pending CBM review . . . .” Appellant Br. 48. Put

another way, Murata argues that the CBM statute im-

putes a negative restriction on district courts, prohibiting

them from considering the burden of litigation unless

Congress has explicitly required that they do so. Thus,

Murata argues it was legal error for the district court to

have considered the burden of litigation in this case as the

stay centered around IPRs rather than CBM reviews.

We disagree. Besides the fact that it was Murata that

first advocated that the court consider the “burden of

litigation” factor, we nonetheless hold that consideration

of this factor is well within the district court’s discretion.

“The Supreme Court has long recognized that district

courts have broad discretion to manage their dockets,

including the power to grant a stay of proceedings.”

Procter & Gamble, 549 F.3d at 848–49 (citing Landis, 299

U.S. at 254–55); see also Gould v. Control Laser Corp., 705

F.2d 1340, 1341 (Fed. Cir. 1983). Indeed, we have noted

that with respect to a similar PTO post-grant proceeding,

reexamination, the authorizing statute need not even

grant district courts the power to stay related proceedings

because “‘such power already resides with the Court’[,] . . .

including the authority to order a stay pending conclusion

of a PTO reexamination.” Ethicon, Inc. v. Quigg, 849 F.2d

8 MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD.

1422, 1426–27 (Fed. Cir. 1988) (quoting 1980 U.S. Code

Cong. & Admin. News at 6463).

Attendant to the district court’s inherent power to

stay proceedings is the court’s discretionary prerogative to

balance considerations beyond those captured by the

three-factor stay test. The burden litigation places on the

court and the parties when IPR proceedings loom is one

such consideration that district courts may rightfully

choose to weigh. See, e.g., NFC Tech. LLC v. HTC Am.,

Inc., No. 2:13-cv-1058, 2015 WL 1069111, at *5 (E.D. Tex.

Mar. 11, 2015) (Bryson, J.) (noting that “whether a stay

will reduce the burden of litigation on the parties and the

court [] is a consideration that courts often take[] into

account in determining whether to grant a stay pending

inter partes review”). The AIA § 18(b)(1) requirement

that district courts must consider the burden of litigation

when faced with a CBM stay request does not bar courts

from choosing to consider it in the IPR context. Indeed,

legislative history confirms that “Congress’s desire to

enhance the role of the PTO and limit the burden of

litigation on courts and parties was not limited to the

CBM review context.” Id. (citing AIA legislative history).

As such, district courts might consider this factor relevant

and therefore do not abuse their discretion by weighing it

as part of an IPR-based stay determination.

We have considered Murata’s remaining arguments

that the district court abused its discretion in analyzing

the traditional three factors and find them unpersuasive.

Having determined that the district court did not abuse

its discretion in its overall analysis or by considering the

burden of litigation, we do not disturb the district court’s

decision not to lift the stay with respect to the Additional

Patents.

II. Motion for Preliminary Injunction

After denying Murata’s motion to lift the stay, the

district court found Murata’s preliminary injunction

MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD. 9

motion untimely and concluded that, “[b]ecause the court

has now declined to lift the stay, the Motion for Prelimi-

nary Injunction is denied without prejudice to renew at a

later date, if appropriate.” Dist. Ct. Order, 2015 WL

5178456, at *2. The district court included no additional

discussion or rationale supporting its denial of Murata’s

motion. Murata argues that the district court erred by

summarily denying its motion for preliminary injunction.

We agree, for the reasons stated below.

In general, we review a grant or denial of a prelimi-

nary injunction using the law of the regional circuit, here

the Tenth Circuit. Trebro Mfg., Inc. v. Firefly Equip.,

LLC, 748 F.3d 1159, 1165 (Fed. Cir. 2014). “However, the

Federal Circuit has itself built a body of precedent apply-

ing the general preliminary injunction considerations to a

large number of factually variant patent cases, and gives

dominant effect to Federal Circuit precedent insofar as it

reflects considerations specific to patent issues.” Id.

(quoting Mikohn Gaming Corp. v. Acres Gaming, Inc.,

165 F.3d 891, 894 (Fed. Cir. 1998) (internal quotation

marks and alterations omitted)). Both the Tenth Circuit

and the Federal Circuit review the denial of a preliminary

injunction motion for an abuse of discretion. Little v.

Jones, 607 F.3d 1245, 1250 (10th Cir. 2010); see also

Procter & Gamble, 549 F.3d at 845. “A district court

would necessarily abuse its discretion if it based its ruling

on an erroneous view of the law or on a clearly erroneous

assessment of the evidence.” Highmark Inc. v. Allcare

Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748 n.2 (2014)

(quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384,

405 (1990)).

A preliminary injunction is a “drastic and extraordi-

nary remedy” which, to obtain, a “moving party must

demonstrate a reasonable likelihood of success on the

merits, irreparable harm in the absence of a preliminary

injunction, a balance of hardships tipping in its favor, and

the injunction’s favorable impact on the public interest.”

10 MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD.

Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., 357 F.3d 1319,

1324–25 (Fed. Cir. 2004) (internal citations omitted).

Rule 52(a)(2) of the Federal Rules of Civil Procedure

specifically requires that “[i]n granting or refusing an

interlocutory injunction, the court must . . . state the

findings and conclusions that support its action.” This

rule reflects the exigency and gravity underlying a motion

for preliminary injunction, as it departs from Federal

Rule of Civil Procedure 52(a)(3)’s more general rule that

“[t]he court is not required to state findings or conclusions

when ruling on a motion under Rule 12 or 56 or, unless

these rules provide otherwise, on any other motion.” We

take particular note, as have our sister circuits, that the

text of Rule 52 is drawn not only to a district court’s grant

of a preliminary injunction motion, but also to a denial.

See, e.g., Ali v. Quarterman, 607 F.3d 1046, 1048 (5th Cir.

2010) (“When denying a motion for a preliminary injunc-

tion, a district court must offer findings of fact and con-

clusions of law to justify the denial” under Federal Rule of

Civil Procedure 52(a)(2). (emphasis added) (citing Fed. R.

Civ. P. 52(a)(2))).

Here, the sum and substance of the district court’s

decision regarding Murata’s preliminary injunction mo-

tion is found in a single paragraph, which concluded:

“Because the court has now declined to lift the stay, the

Motion for Preliminary Injunction is denied without

prejudice to renew at a later date, if appropriate.” Dist.

Ct. Order, 2015 WL 5178456, at *2. This cursory treat-

ment of Murata’s preliminary injunction motion does not

satisfy the Rule 52(a)(2) requirement that the deciding

court must state factual findings and legal conclusions

supporting its action. See Prairie Band of Potawatomi

Indians v. Pierce, 253 F.3d 1234, 1246 (10th Cir. 2001)

(citing Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 15

F.3d 1222, 1228 (1st Cir. 1994)) (explaining that “conclu-

sory findings are not sufficient compliance” with Federal

Rule of Civil Procedure 52(a)(2)). While “[t]here are

MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD. 11

times . . . when a district court’s failure to comply with

Rule 52(a) will not necessitate a remand for clarification,”

if, for example, it can be “ascertain[ed] from the record

that one party or the other was clearly entitled to judg-

ment in its favor,” this is not one of those instances. Id.

Daifuku argues that the district court effectively consid-

ered the merits of Murata’s preliminary injunction motion

when it concluded that a stay would not unduly prejudice

Murata. See Oral Argument at 31:29–35:41. But the

district court did not state as much in its opinion; nor did

it suggest that this was its reasoning. In the absence of

any analysis whatsoever, we cannot review the opinion for

an abuse of discretion. See, e.g., H & R Block Tax Servs.

LLC v. Acevedo-Lopez, 742 F.3d 1074, 1076 (8th Cir. 2014)

(vacating and remanding order denying preliminary

injunction because “the district court’s failure to make

specific findings and explain its ruling, as Fed. R. Civ. P.

52(a)(2) requires, results in a record that does not suffi-

ciently inform this court of the basis for the trial court’s

decision on the material issue” (internal citation and

quotation marks omitted)).

We hold that when a district court denies a prelimi-

nary injunction motion, it must provide an adequate

reason for its decision beyond merely noting that the case

has been stayed. In so holding, we maintain our view

that “[a] preliminary injunction should not be granted if

there is a substantial issue of patent validity.” Procter &

Gamble, 549 F.3d at 849. Likewise, we recognize that

“both a preliminary injunction and a stay ordinarily

should not be granted at the same time.” Id. We do not

ask, nor do the Federal Rules of Civil Procedure require,

that the district court conduct a preliminary injunction

hearing, or even request a responsive brief from Daifuku.

See Bradley v. Pittsburgh Bd. of Educ., 910 F.2d 1172,

1175 (3d Cir. 1990) (explaining that “[t]he applicable

Federal Rule does not make a hearing a prerequisite for

ruling on a preliminary injunction.”). Indeed, a “limited

12 MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD.

analysis may support a trial court’s denial of a prelimi-

nary injunction” so long as the district court concludes

that some of the requisite preliminary injunction factors

disfavor the movant. Polymer Techs., Inc. v. Bridwell, 103

F.3d 970, 973–74 (Fed. Cir. 1996); see also Prairie Band,

253 F.3d at 1246 (explaining that “Rule 52(a) does not

require over-elaboration of detail or particularization of

facts” so long as the findings are not “conclusory” (internal

citation and quotation marks omitted)). We simply ask

that the district court explain its views on why a prelimi-

nary injunction would or would not be appropriate in this

case. Bradley, 910 F.2d at 1178 (explaining that for

preliminary injunctions, “conclusions of law are . . . essen-

tial” under Federal Rule of Civil Procedure 52(a)(2) and

that even when there has been no hearing held, “the

factual bases on which the conclusions are predicated . . .

serve to permit evaluation of the legal conclusions

reached by the district court”). Thus, we vacate the

district court’s order to the extent it denies Murata’s

motion for a preliminary injunction and we remand for

further proceedings consistent with this opinion. See id.

at 1179 (“Because of the court’s failure to comply with

Rule 52, we are unable to determine why the district

court rejected a preliminary injunction on this aspect of

[movant’s] claim. It follows that we must return this

matter to the district court which should have the oppor-

tunity to make the requisite findings and conclusions.”);

see also H & R Block, 742 F.3d at 1078; Ali, 607 F.3d at

1048.

CONCLUSION

For the foregoing reasons, we affirm the district

court’s denial of Murata’s motion to lift the stay, vacate

the district court’s denial of Murata’s motion for a prelim-

inary injunction, and remand for the court to address the

motion in light of this opinion.

MURATA MACHINERY USA, INC. v. DAIFUKU CO., LTD. 13

AFFIRMED-IN-PART, VACATED-IN-PART, AND

REMANDED

COSTS

No costs.