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In re Bear Creek Technologies Inc. '722 Patent Litigation

United States District Court, Third Circuit

July 17, 2013

IN RE BEAR CREEK TECHNOLOGIES INC. '722 PATENT LITIGATION MDL No. 12-md-2344 GMS
v.
BEAR CREEK TECHNOLOGIES, INC., Defendant. COMCAST CABLE COMMUNICATIONS, LLC, Plaintiff, CHARTER COMMUNICATIONS, INC., Plaintiff,
v.
BEAR CREEK TECHNOLOGIES, INC., Defendant. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
VONAGE HOLDINGS CORPORATION, VONAGE AMERICA, INC., and VONAGE MARKETING, LLC, Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
CSC HOLDINGS, INC., Defendant. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
MEDIACOM COMMUNICATIONS CORPORATION and MEDIACOM BROADBAND, LLC, Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
QWEST COMMUNICATIONS INTERNATIONAL, INC. and QWEST COMMUNICATIONS CO., LLC, Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
T-MOBILE USA, INC., Defendant. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
8X8, INC., BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
AT&T, INC.; SBC INTERNET SERVICES, INC. d/b/a AT&T INTERNET SERVICES; and AT&T TELEHOLDINGS, INC., Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
TIME WARNER CABLE, INC. and BRIGHT HOUSE NETWORKS, LLC, Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
COX COMMUNICATIONS, INC. and COX VIRGINIA TELECOM LLC, Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
APTELA, INC., Defendant. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
PRIMUS TELECOMMUNICATIONS, INC. and LINGO, INC., Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
RCN CORPORATION and RCN TELECOM SERVICES, LLC, Defendants. BEAR CREEK TECHNOLOGIES, INC., Plaintiff,
v.
VERIZON SERVICES CORPORATION, VERIZON BUSINESS NETWORK SERVICES, INC., and MCI COMMUNICATIONS SERVICES, ' INC., Defendants.

ORDER

WHEREAS, on May 11, 2012, the Judicial Panel on Multidistrict Litigation filed a Conditional Transfer Order (D.I. 5), transferring the above-captioned actions to the U.S. District Court for the District of Delaware as a Multidistrict Litigation ("MDL");

WHEREAS, Bear Creek Technologies, Inc. ("Bear Creek") filed suit against the defendants in the above-captioned actions and their affiliates on February 22, 2011 in the Eastern District of Virginia, claiming that these defendants (or affiliates) were directly infringing its U.S. Patent No. 7, 889, 722 ("the '722 Patent") by making, using, selling, offering for sale, operating, advertising, and/or marketing Voice over Internet Protocol ("VoIP") products, systems, or services" (see, e.g., ll-cv-721 (GMS), D.I. 1);

WHEREAS, Bear Creek originally joined these separate defendants together in one litigation in order to litigate the common issues of law and fact together and avoid inconsistent rulings (D.I. 62 a 4), until, on August 17, 2011, the defendants were severed and dismissed, with the exception of RCN Corporation, for misjoinder (id);

WHEREAS, in comparison to the other instant actions, the Bear Creek v. Verizon Services Corp. action ("Verizon action"), 12-cv-600 (GMS), proceeded relatively quickly, such that a Markman hearing was held—though no Markman construction order was issued—and the parties were scheduled to go to trial on May 1, 2012 (id. at 4-5);

WHEREAS, the Verizon action was ultimately stayed pending the Judicial Panel on Multidistrict Litigation's decision as to the MDL, despite no party in the Verizon action requesting a stay or to be joined in the proposed MDL (id. at 5);

WHEREAS, the Verizon action was transferred to the District of Delaware as part of the MDL on May 11, 2012;

WHEREAS, on March 1, 2013, the defendants in all but four of the above-captioned actions filed a Motion to Stay Pending Reexamination[1] (D.I. 54) with an accompanying brief in support (D.I. 55);

WHEREAS, defendants Aptela, Inc. (12-cv-566 (GMS)), Primus Telecommunications, Inc. and Lingo, Inc. (12-cv-567 (GMS)), RCN Corporation and RCN Telecom Services, LLC (12-cv-568 (GMS)), and Verizon Services Corporation, Verizon Business Network Services, Inc., and MCI Communications Services, Inc. (12-cv-600 (GMS)), did not join the other moving defendants' Motion to Stay Pending Reexamination (D.I. 54);

WHEREAS, despite not joining the moving defendants' motion to stay, it appears, based on the moving defendants' representation in their March 1, 2013 Opening Brief in support of the Motion to Stay Pending Reexamination, that the non-moving defendants do not oppose a stay (D.I. 55 at 1 ("No party other than Bear Creek opposes the relief requested herein."));

WHEREAS, the court further notes that the non-moving defendants have joined the moving defendants in their agreement, with respect to the reexamination, to be "estopped in these matters from challenging the validity of [asserted] claims as being obvious under 35 U.S.C. § 103, on the basis of any of the four combinations of prior art asserted by Cisco in its petition for reexamination and used by the PTO in its findings, " should the court "stay as to all defendants" pending the outcome of the '722 Patent's inter partes reexamination (D.I. 70 at 1; D.I. 69 at 2);

WHEREAS, Bear Creek argues that the defendants' Motion to Stay (D.I. 54) should be denied because: (1) the patent-in-suit has already been subjected to two ex partes reexaminations and the submitted claims were not canceled in either action (D.I. 62 at 1 -2); (2) at the time it submitted its Answering Brief, no Office Action had been issued in connection with the recently granted inter partes reexamination, reinforcing the fact that the court cannot infer whether issues will be simplified {id. at 2); (3) it will be "unduly prejudiced and will suffer a clear tactical disadvantage" should the stay be granted, particularly since Cisco—a non-party to this action and supplier of many of the defendants—did not seek the inter partes reexamination at issue until six months after these actions were initiated in February 2011; (4) the prejudice resulting from a stay will prove significant, as reexaminations often take thirty-six months to complete (Transcript of March 19, 2013 Office Conference ("Tr.") (D.I. 63) at 20:3-21:9); and (5) a stay would allow the defendants to "use the Cisco Reexam to test invalidity arguments and delay this litigation, and at the same time, will likely argue that they are not estopped by the Cisco Reexam" (D.I. 62 at 2);

WHEREAS, in response to Bear Creek's arguments, the moving defendants assert that a stay is appropriate in the above-captioned matter pending resolution of the Cisco inter partes reexamination because it would assist in simplifying the issues to be litigated in this forum and would not unduly burden or prejudice any party or present a tactical disadvantage in this litigation (D.I. 70);

WHEREAS, in support of these assertions, the moving defendants contend that a stay pending reexamination would achieve these ends because: (1) all defendants have agreed that should the "reexamination certificate be based on a finding that one or more of the original claims of the '722 Patent is valid over one or more of the four combinations of prior art asserted by Cisco under 35 U.S.C. § 103, " all defendants would be "estopped in these matters from challenging the validity of such claims as being obvious ... on the basis of any of the four combinations of prior art asserted by Cisco in its petition for reexamination and used by the PTO in its findings, "[2] thus negating Bear Creek's concern that it would be prejudiced by the defendants being able to "test" their validity arguments via the inter partes reexamination (D.I. 70 at 1-2); (2) the inter partes reexamination will likely result in a simplification of issues, in that the PTO has already found preliminarily that the '722 Patent is entitled to a priority date of February 22, 2004, seven years later than the priority date that Bear Creek alleges and several years after a number of the defendants were already practicing their allegedly infringing products[3]; (3) further simplification will likely result due to the fact that the PTO has separately and preliminarily found that there are four separate combinations of prior art that could invalidate all twenty-two claims of the patent and Bear Creek would have to prevail on all four for the patent to remain valid (D.I. 69 at 3); (4) simplification is also possible as, since Bear Creek filed its Answering Brief, the PTO issued a 91-page first Office Action rejecting all claims of the '722 Patent on each of the four separate grounds raised in the Request for Reexamination[4] {id. at 1-2); (5) Bear Creek's estimate that the reexamination will take approximately thirty-six months is questionable in light of the fact that the examiner here was involved in the ex parte reexaminations and is already familiar with the material (id. at 3-4); (6) Bear Creek is now a non-practicing entity comprised solely of the '722 Patent's inventor, undermining its prejudice assertions (id. at 5-6); and (7) the litigation is still in its early stages (id. at 7-8);

WHEREAS, a decision to stay a litigation lies within the sound discretion of the court and represents an exercise of the court's "inherent power to conserve judicial resources by controlling its own docket"[5] and it is well settled that this authority extends to patent cases in which a PTO review has been requested[6];

WHEREAS, courts assessing whether to grant a motion to stay are tasked with considering: "(1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether discovery is complete and whether a trial date has been set"[7];

WHEREAS, in consideration of the moving defendants' Motion to Stay Pending Reexamination, the parties submissions in connection therewith, the oral argument conducted at the March 19, 2013 hearing, and the relevant law, the court concludes that these factors, taken together, favor granting the defendants' Motion to Stay[8];

IT IS HEREBY ORDERED that:

inter partes [9]

2. Within thirty days of the conclusion of the '722 Patent inter partes reexamination, the parties shall notify the court of the status of the reexamination; and

inter partes [10]

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