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Ioengine, LLC v. Paypal Holdings, Inc.

United States District Court, D. Delaware

August 21, 2019

IOENGINE, LLC, Plaintiff,
v.
PAYPAL HOLDINGS, INC., Defendant. INGENICO INC., Plaintiff,
v.
IOENGINE, LLC, Defendant. IOENGINE, LLC, Counterclaim Plaintiff,
v.
INGENICO INC., INGENICO CORP., and INGENICO GROUP, S.A., Counterclaim Defendants. IPR Petition Number Challenged Patent Challenged Claims Filing Date Institution Decision Date/Due Date Final Written Decision Due Date IPR Petition Number Challenged Patents Challenged Claims Filing Date Institution Decision Date/Due Date Final Written Decision Due Date

          MEMORANDUM OPINION AND ORDER

          WILLIAM C. BRYSON, UNITED STATES CIRCUIT JUDGE.

         Before this Court are motions by Ingenico Inc., Ingenico Corp., and Ingenico Group S.A. (collectively, “Ingenico”) and by PayPal Holdings, Inc., (“PayPal”) for stays of Civil Action Nos. 18-452 and 18-826 pending inter partes review (“IPR”) in IPR2019-00416 by the Patent Trial and Appeal Board (“PTAB”). The motions are granted.

         BACKGROUND

         IOENGINE, LLC (“IOENGINE”) is the assignee of U.S. Patent Nos. 8, 539, 047 (“the '047 patent”), 9, 059, 969 (“the '969 patent”), and 9, 774, 703 (“the '703 patent”), each of which is entitled “Apparatus, Method and System for a Tunneling Client Access Point.” IOENGINE LLC v. PayPal Holdings, Inc., No. 18-cv-452 (“PayPal Action”), Dkt. No. 1, at 4. The applications that led to the '047, '969, and '703 patents were continuation applications from U.S. Patent Application No. 10/807, 731, which issued as U.S. Patent No. 7, 861, 006 (“the '006 patent”). Id.; PayPal Action, Dkt. No. 60, at 1 n.1.

         On March 23, 2018, IOENGINE filed a complaint against PayPal in a case designated as Civil Action No. 18-452. The complaint alleged that PayPal had infringed the '047, '969, and '703 patents in connection with mobile credit card reader products that included products that Ingenico, Inc., had supplied to PayPal. PayPal Action, Dkt. No. 1, at 4; Ingenico Inc. v. IOENGINE LLC, Inc., No. 18-cv-826 (“Ingenico Action”), Dkt. No. 1, at 2-3. The filing of the complaint against PayPal triggered an indemnity request by PayPal to Ingenico Inc. Ingenico Action, Dkt. No. 1, at 3.

         In response, on June 1, 2018, Ingenico Inc. filed a declaratory judgment action against IOENGINE, in a case designated as Civil Action No. 18-826. Ingenico Inc. sought a declaration of non-infringement of the three patents-in suit in the PayPal Action. IOENGINE filed an answer to Ingenico Inc.'s declaratory judgment complaint on August 17, 2018, and included counterclaims alleging infringement of the same three patents not only by Ingenico Inc., but also by two related companies, Ingenico Corp. and Ingenico Group S.A.

         The three asserted patents contain a total of 189 claims. IOENGINE's infringement contentions, served on March 1, 2019, asserted 20 of those 189 claims: claims 1-2, 4, 12, and 25 of the '047 patent; claims 2-4 and 7 of the '969 patent; and claims 55-57, 61, 100, 104-06, 110-11, and 123 of the '703 patent. Ingenico Action, Dkt. No. 104, at 2.

         Between December 2018 and April 2019, PayPal and Ingenico separately filed a total of 12 petitions for inter partes review. Collectively, the petitions challenged all the asserted claims of the three patents in suit and certain other claims of those patents as well. The tables below summarize the subject matter and timeline for each of those IPR petitions:

         Ingenico IPRs

IPR Petition Number
Challenged Patent
Challenged Claims
Filing Date
Institution Decision Date/Due Date
Final Written Decision Due Date

IPR2019-00416

'047 patent

1-21, 23-25, 27, 28

12/17/2018

07/15/2019

07/15/2020

IPR2019-00584

'703 patent

1-54

01/22/2019

08/12/2019

08/12/2020

IPR2019-00879

'969 patent

1-8, 10-16, 19-21, 24-29

03/25/2019

10/16/2019

10/16/2020

IPR2019-00929

'703 patent

55-63, 65-72, 74, 75, 77, 78, 81-87, 89, 90, 92-98, 100, 101, 103-112, 114-121, 123, 124, 126-129

04/05/2019

10/10/2019

10/10/2020

         PayPal IPRs

IPR Petition Number
Challenged Patents
Challenged Claims
Filing Date
Institution Decision Date/Due Date
Final Written Decision Due Date

IPR2019-00884

'047 patent

1-9, 12-16, 18-31

03/29/2019

10/17/2019

10/17/2020

IPR2019-00885

'047 patent

1, 7, 9-11, 14, 16-17

03/29/2019

10/17/2019

10/17/2020

IPR2019-00886

'047 patent

1-4, 6-9, 12-16, 18-31

03/29/2019

11/10/2019

11/10/2020

IPR2019-00887

'047 patent

5, 10-11, 17

03/29/2019

11/10/2019

11/10/2020

IPR2019-00906

'969 patent

1-22, 24-29

04/04/2019

12/06/2019

12/06/2020

IPR2019-00907

'969 patent

1-22, 24-29

04/04/2019

12/06/2019

12/06/2020

IPR2019-00930

'703 patent

55-72, 74-75, 77-79, 81-87, 89-90, 92-98, 100-101, 103-121, 123-124, 126-129

04/08/2019

11/15/2019

11/15/2020

IPR2019-00931

'703 patent

55-72, 74-75, 77-79, 81-87, 89-90, 92-98, 100-101, 103-121, 123-124, 126-129

04/08/2019

11/15/2019

11/15/2020

         The PTAB has already acted on two of Ingenico's IPR petitions. On July 15, 2019, the PTAB granted the petition in IPR2019-00416, and on August 12, 2019, it denied the petition in IPR2019-00584.[1]

         In its decision instituting review in IPR2019-00416, the PTAB construed the terms “interactive user interface” and “communicate through the terminal network interface with the communications network node”/ “cause a communication to be sent through the terminal network interface to a communications network node, ” which are two of the eight terms that the parties identified as disputed terms in their Joint Claim Construction Chart in the district court cases. Ingenico Inc. v. IOENGINE, LLC, No. IPR2019-00416, Paper 20 (P.T.A.B. July 15, 2019); PayPal Action, Dkt. No. 91, at 1-2.

         On July 17, 2019, Ingenico moved for a stay of the Ingenico Action pending the resolution of IPR2019-00416. Ingenico Action, Dkt. No. 103. Thereafter, on July 30, 2019, PayPal moved for a stay of the PayPal Action pending the resolution of the same IPR. PayPal Action, Dkt. No. 93. At the current stage of the proceeding, the parties are engaged in claim construction briefing and have conducted a significant amount of discovery. The following case milestones, however, lie ahead:

(1) a claim construction hearing is scheduled for August 29, 2019;
(2) fact discovery is continuing and does not close until October 30, 2019;
(3) all depositions remain to be taken;
(4) expert discovery has yet to begin; it is scheduled to close on February 18, 2020;
(5) a pretrial conference is scheduled for July 20, 2020; and
(6) trials in the two cases are scheduled to be conducted in July and August 2020.

See PayPal Action, Dkt. No. 49; Ingenico Action, Dkt. No. 57; see also PayPal Action, Dkt. No. 94, at 5; Ingenico Action, Dkt. No. 104, at 2.

         DISCUSSION

         The question whether a stay of district court proceedings should be granted when inter partes review is instituted on some or all of the claims at issue in the district court litigation has arisen frequently since the enactment of the Leahy-Smith America Invents Act (“AIA”) in 2011. The principles governing the question whether to stay the case pending inter partes review have been developed by courts in numerous decisions since that time.

         A district court has inherent power to control its own docket, including the power to stay the proceedings before it. See Clinton v. Jones, 520 U.S. 681, 706 (1997). In particular, the question whether to stay proceedings pending review by the Patent and Trademark Office (“PTO”) of the validity of the patent or patents at issue in the lawsuit is a matter committed to the district court's discretion. See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (request for a stay pending inter partes reexamination). A stay is particularly justified when “the outcome of a PTO proceeding is likely to assist the court in determining patent validity or eliminate the need to try infringement issues.” NFC Tech. LLC v. HTC Am., Inc., No. 2:13-cv-1058, 2015 WL 1069111, at *1 (E.D. Tex. Mar. 11, 2015) (citing cases).

         District courts typically consider three factors when determining whether to grant a stay pending inter partes review of the patent in suit: “(1) whether granting the stay will simplify the issues for trial; (2) the status of the litigation, particularly when 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.” Princeton Dig. Image Corp. v. Konami Dig. Entm't Inc., No. CV 12-1461, 2014 WL 3819458, at *2 (D. Del. Jan. 15, 2014) (citing cases).

         The related context of Covered Business Methods (“CBM”) review provides guidance as to the principles that apply to stay applications in the IPR setting. In the uncodified portion of the AIA that was directed to CBM review proceedings, Congress set forth four factors that govern whether a stay should be granted pending CBM review proceedings before the PTAB. Those four factors are:

(A) whether a stay, or the denial thereof, will simplify the issues in question and ...

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