Stay Before Things Take Off? Evolutionary Intelligence v. Facebook, Case No. 13-4202 (Judge Illston)
Timing is everything – except perhaps when it comes to asking for a stay of litigation pending an inter partes review ("IPR"). Northern District courts time and again have shown a willingness to stay litigation pending the completion of review. Most recently, the extent of this District's willingness to grant stays pending completion of an IPR was tested by motions to stay filed by multiple defendants sued by Evolutionary Intelligence, based on IPR petitions that the PTO had yet even to rule on.
Underlying the motions for stay is a series of patent infringement lawsuits filed by Evolutionary Intelligence against nine companies, including Facebook and Groupon, in the Eastern District of Texas. Within weeks of all nine litigations being transferred to Northern California, a few of these companies, including Facebook, collectively filed eight petitions in October 2013 for inter partes review of all claims in the two asserted patents, followed by motions to stay the underlying litigations pending the results of the IPR.
Both the Facebook and Groupon litigations ended up in front of Judge Illston, while parallel cases were considered by other Northern District courts. On January 23, Judge Illston granted motions by Facebook and Groupon to stay their cases pending IPR proceedings. (Case Nos. 13-4202, 4204.) That decision came on the heels of the granting of stays by Judge Illstron's colleagues on the bench in four of the parallel cases. (Case Nos. 13-3587, 4201, 4203, 4205.) Motions to stay are pending in the three remaining cases. (Case Nos. 13-4206, 4207,4513.)
Judge Illston, like her colleagues, was not dissuaded from granting what plaintiff called "premature" motions to stay. In reaching her decision, Judge Illston still considered the standard three-question approach to deciding motions to stay pending PTO review: (1) What is the stage of the litigation? (2) Will a stay simplify the issues? (3) Will a stay result in undue prejudice or tactical disadvantage? However, if anything, for each of these factors, the early stage of the proceeding tipped decidedly towards grant of the stay, with Illston noting that the actions are "in their infancy" and cancellation of claims could "render[] all of Evolutionary Intelligence's claims for infringement moot."
Judge Illston further noted that because the PTO "must issue its decision on whether to grant the petitions within six months," plaintiff's concern was alleviated by such a "short time frame of the initial stay." Finally, Judge Illston applied a practical approach to alleviating the plaintiff's concern by articulating the court's "willingness to reevaluate the stay if inter partes review is not instituted for all of the asserted claims."
Judge Illston further found lack of evidence that a stay would result in spoliation of evidence, and discounted plaintiff's purported need to exclude others from practicing the invention because plaintiff "is a mere licensor of the patents and does not practice the claimed inventions." Considering these and related issues, "[a]ll factors weigh in favor of staying the actions pending inter partes review of the patents in suit," according to Judge Illston.
What sets these cases apart from many other "stay" cases is the filing of motions before the PTO has granted a patent reexamination or review. However, in light of the relatively high petition grant rate, which, despite a 6% drop in the past nine months compared to the first six, remains high at about 90%, the most surprising thing about this decision may be not that it was made, but that grant of a stay under these facts was still rare enough to be worth noting.
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