United States: District Court Denies Grant Of Partial Stay Pending IPR Due To Defendants' Delay

In 3G Licensing, S.A. et al v. HTC Corporation, the Honorable Christopher J. Burke of the District of Delaware denied Defendants' motion for partial stay pending resolution of inter partes review (IPR) because of the lack of potential simplification of issues, the late stage of the case and prejudice to Plaintiffs weighed against a stay.

On January 30, 2017, 3G Licensing, S.A. ("3G Licensing") and Koninklijke KPN N.V. ("KPN") (collectively, "Plaintiffs") filed their initial complaint against HTC Corporation and HTC America, Inc. (collectively, "HTC" or "Defendants"), alleging the infringement of U.S. Patent Nos. 6,212,662 ("'662 patent"); 9,014,667 ("'667 patent"); 7,933,564 ("'564 patent"); 7,995,091 ("'091 patent"); and 6,856,818 ("'818 patent") (collectively, the "Asserted Patents"). HTC filed a petition for inter partes review of the '667 Patent on February 1, 2018; the Patent Trial and Appeals Board (PTAB) instituted proceedings on August 3, 2018. Defendants moved to stay the district court litigation on March 1, 2019, based on the institution of the '667 Patent IPR nearly seven months earlier. By that time, however, the court had already issued an order on claim construction, resolved various discovery disputes and set a jury-trial date. The court evaluated the motion for stay under the typical three factors: (1) whether a stay will simplify the issues for trial; (2) the status of the litigation, particularly whether discovery is complete and a trial date has been set; and (3) whether a stay would cause the non-movant to suffer undue prejudice from any delay or allow the movant to gain a clear tactical advantage.

HTC argued that a stay would simplify issues for trial by removing the '667 patent from the case, reducing the number of technical matters and likely eliminating KPN's claims for relief. The Plaintiffs responded that HTC's argument was speculative and ignored the fact that there was considerable overlap in accused products and infringement proofs across the Asserted Patents. The district court sided with the Plaintiffs, finding that "even if the Court denies the Motion now and then the [PTAB] were to subsequently find the single asserted claim of the '667 patent to be invalid in or around August 2019, the Court would almost certainly grant a stay at that time . . . [and] that patent would not be at issue at the summary judgment and trial stages."

HTC argued that the case was in an early stage of litigation because fact discovery was still ongoing, expert discovery had not yet begun and no depositions had occurred. Plaintiffs, on the other hand, argued that the parties had already served nearly 500 discovery requests and by the time briefing on the motion to stay closed, many of the scheduled depositions would have already occurred. In addition, the court had already issued a Markman ruling and addressed a variety of motions, including multiple motions to dismiss, motions to transfer, a previous motion to stay and a variety of discovery disputes. The court agreed with Plaintiffs, finding that the case was "at a relatively advanced stage, as [it had] heard and resolved numerous motions and [had] issued a claim construction opinion."

HTC argued that a stay would not create undue prejudice for Plaintiffs or a clear tactical advantage for Defendants because the '667 IPR petition was timely, HTC had timely moved for a stay under the circumstances, the PTAB's final decision was expected within six months and the parties were not direct competitors. Plaintiffs responded by pointing out that HTC failed to request an IPR within the one-year window of when the complaint was filed and waited seven months after institution to request a stay. Further, although the PTAB could issue a decision by August 2019, either the Plaintiffs or Defendants would likely appeal the decision such that the IPR process would not be complete before late 2020. The court agreed with the Plaintiffs, identifying Defendants' delay in filing the motion to stay as well as a lack of a compelling reason for the delay as "the most significant subfactor" in its analysis.

The district court also expressed concern "as to whether the parties could integrate the '667 patent back into the case schedule without experiencing some expert discovery inefficiencies and/or disruption to the [court]'s pre-trail and trial schedule" if the court stayed the case as to the '667 patent, but the PTAB later ruled the sole asserted claim of the patent was valid. That concern, added to the findings on the three factors, counseled the court to deny HTC's motion to stay.

Practice Tip: Any delay in seeking a stay may weigh heavily against the grant of a stay, particularly as the case advances to its later stages.

3G Licensing, SA et al v. HTC Corporation et al, 1-17-cv-00083 (DED 2019-04-16, Order) (Christopher J. Burke)

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