United States: Give Them An Inch: When Some Patents Stayed By Concession, Court Favors Staying More Patents Pending IPR

Last Updated: October 28 2014
Article by Diana Rutowski and Lillian J. Mao

Order Granting Motion To Stay, Cypress Semiconductor Corp. v. GSI Technology, Inc., Case No. 13-02013 (Judge Jon Tigar)

Judge Tigar's recent decision to stay portions of the case between Cypress and GSI reinforces ND Cal judges' inclination to grant stays pending inter partes review: Cypress, the patentee, conceded that the case should be stayed as to two out of seven patents-in-suit, but the case was set to proceed with respect to three patent. Before the court was what to do with the other two patents subject to IPR. In light of the undisputed stay of two patents, Judge Tigar discounted some of Cypress' arguments and granted defendant GSI's motion, adding the remaining two patents to the stay bucket.

In reaching his decision, Judge Tigar considered the now-familiar three factors of: (1) stage of the case, (2) simplification of issues, and (3) undue prejudice or tactical disadvantage. While the facts were not as clear-cut as in some early-stage non-competitor cases, Judge Tigar ultimately found the first two factors weighed in favor of a stay and the third factor was neutral.

On the first factor, the court found that the case was still in a relatively early stage, with no set dates for the close of discovery or trial, no depositions taken or scheduled, and little expert discovery conducted. Although claim construction had been fully briefed, the court noted that it had only construed patents that were not subject to the motion to stay. Cypress tried to persuade Judge Tigar to follow his earlier decision denying a stay in Asetek v. Cooler Master, but, even though the parties had exchanged "numerous" discovery documents, the court found the case "is not in the same 'late stage of the proceedings' that Asetek was, where construction of all claims was complete, fact discovery was nearly complete, and expert discovery was underway."

On the second factor, the court found that IPR was likely to simplify infringement issues due to the possibility that claims would be canceled. The court noted that all asserted claims (from the four patents subject to the motion) were under review, the higher standard for instituting inter partes review versus inter partes reexamination, and the estoppel effect of inter partes reviews. The court acknowledged Cypress' argument that a stay could lead to overlapping and duplicative discovery because the patents subject to a stay had the same inventors as the patents on which the court was proceeding, and that such a consideration had supported denial of a stay in Asetek. Nevertheless, here the court found that, because Cypress had already conceded a partial stay should be granted, some risk of duplicative discovery existed whether the court stayed two patents or four patents.

The court found the third factor was neutral. On this factor the court applied four sub-factors: (1) timing of the petition for review, (2) timing of the request for a stay, (3) status of IPR proceedings, and (4) relationship of the parties. The court found no prejudice from the first three sub-factors, which favored a stay. The court found that the parties' relationship weighed against a stay, however, since they were direct competitors. In the end that could not carry the day, for two primary reasons. First, though Cypress argued it would suffer competitive injury, the court found no evidence that such injury had actually occurred, e.g., no evidence that customers had purchased allegedly infringing GSI parts instead of Cypress parts, or that Cypress had lost market share to GSI. Second, once again Cypress' willingness to stay the case as to two patents came back to haunt: "having conceded that a stay is appropriate as to at least some patents, Cypress is hard-pressed to argue that it will suffer unfair competitive injury if the stay is extended to others. To make the argument successfully would require showing how the latter stay imposes competitive harm while the former stay does not, and Cypress has not made that showing."

Judge Tigar's decision suggests that, at least in the Northern District, patent plaintiffs may not have the luxury to choose the scope of a partial stay. If they give an inch and agree to stay any part of the case, the defendant may take a mile and achieve a broader stay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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