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Benefit Funding Systems LLC v. Advance America, Cash Advance Centers, Inc.

United States District Court, Third Circuit

June 28, 2013



LEONARD P. STARK, District Judge.

1. Having reviewed the parties' letters and other submissions relating to discovery disputes (D.I. 44-50), and having heard argument during a telephone conference on this same date, IT IS HEREBY ORDERED that:

(a) Plaintiffs' request to compel Defendant to produce documents responsive to the requests for production of documents and substantive answers to interrogatories is GRANTED, subject to Defendant's right to articulate specific objections on a request-by-request and interrogatory-by-interrogatory basis. Defendant's effort to essentially grant itself a stay by resisting discovery due only to its pending motion for a stay is improper.

(b) Defendant's request for a protective order is DENIED as Defendant has failed to demonstrate good cause, given the Court's decision to deny Defendant's motion for a stay.

2. IT IS FURTHER ORDERED that Plaintiffs' Motion for Leave to File Amended Complaint (D.I. 29) is GRANTED. The decision to grant or deny leave to amend lies within the discretion of the Court, see Bjorgung v. Whitetail Resort, LP, 550 F.3d 263, 266 (3d Cir. 2008), and "the court should freely give leave when justice so requires, " Fed. R. Civ. Proc. 15(a)(2). The Court is persuaded that CashNetUSA is a proper Defendant, whom Plaintiffs seek to add to this case in a timely manner, consistent with the schedule set by the Court ( see D.I. 16), and for a proper purpose, particularly as it is undisputed that Defendant has entered into a contract with CashNetUSA for the purpose of offering the service Plaintiffs accuse of patent infringement. Defendant offers a portal into the CashNetUSA system, does not have possession, custody, or control of core technical documents for CashNetUSA's system, and has been unable to persuade CashNetUSA to produce such documents voluntarily. (D.I. 48) The Court is not persuaded by Defendant's contention that it would be unduly prejudiced by the filing of the Amended Complaint. Nor does the record reveal any evidence of undue delay, bad faith, dilatory motive, or futility. Plaintiffs shall file their Amended Complaint no later than July 5, 2013.

3. IT IS FURTHER ORDERED that Defendant's Motion to Stay Proceedings Pursuant to Section 18(b) of the America Invents Act ("AIA") (D.I. 30) is DENIED WITHOUT PREJUDICE to renew in the event that the Patent Trial and Appeal Board ("PTAB") grants the requested review. On March 29, 2013, Defendant U.S. Bancorp (a defendant in a related case pending in this District, see 12-803-LPS) filed a Petition for Post-Grant Review ("Petition") under the Transitional Program for Covered Business Method Patents ("CBM Review"). Under the circumstances presented here, the Court believes the proper exercise of its discretion is to maintain this case on the schedule previously ordered (D.I. 16, 41)[1] and not delay its resolution pending the outcome of a potential administrative proceeding.[2] The PTAB has not yet determined whether to undertake CBM Review as requested by the Petition and may not do so for another three months.

In exercising its discretion, the Court has considered the four factors specified in Section 18(b)[3] and finds that: (i) if the PTAB decides to undertake CBM Review, a stay would simplify the issues for trial, but - unless all asserted claims are invalidated - after that review is completed there will remain numerous issues to be litigated in Court (e.g., other invalidity defenses, equitable defenses, infringement, remedies); (ii) while this case is in its relatively early stages, the Court has invested resources in (today) resolving two discovery disputes and two motions, discovery has begun (and would be more advanced but-for Defendant's resistance to discovery during pendency of its motion to stay), and the CBM Review is at an even earlier stage than the litigation (in part because U.S. Bancorp waited more than 10 months after suit was initiated to file its request for CBM Review); (iii) Plaintiffs will suffer some prejudice from a stay, due to loss of their chosen forum, the possibility of necessary witnesses' memories fading, and negative impact on their ability to license the patent-in-suit; and (iv) while staying the litigation would somewhat reduce the burden of litigation on the parties and the Court, in the present posture the Court is not confident the reduction would be substantial.

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