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British Telecommunications PLC v. Iac/Interactivecorp

United States District Court, D. Delaware

September 27, 2019

BRITISH TELECOMMUNICATIONS PLC, Plaintiff,
v.
IAC/INTERACTIVECORP, MATCH GROUP, INC., MATCH GROUP, LLC, and VIMEO, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          WILLIAM C. BRYSON UNITED STATES CIRCUIT JUDGE.

         Before the Court is a motion by defendants IAC/InterActiveCorp and Vimeo, Inc., (collectively, “the Vimeo defendants”) to stay the action in which plaintiff British Telecommunications PLC (“British Telecom”) has accused them of infringing claims 1 and 3–12 of U.S. Patent No. 7, 974, 200 (“the ’200 patent”). Dkt. No. 125.

         On August 27, 2019, the Patent Trial and Appeal Board (“PTAB”) instituted inter partes review (“IPR”) of claims 1–7 and 10–12 of the ’200 patent. The Vimeo defendants have asked the Court to stay the action against them until the conclusion of that inter partes review proceeding, including any appeals. The Court will GRANT the request for a stay, but only until the completion of the proceedings before the PTAB. It is not necessary at this point to decide whether the stay should be extended beyond that date.

         BACKGROUND

         On March 8, 2018, British Telecom filed a complaint alleging that Vimeo and several other parties (referred to as the “Match defendants”) infringed six patents owned by the British Telecom, including the ’200 patent. On February 4, 2019, the Court granted the defendants’ motions to dismiss with respect to four of the patents at issue: U.S. Patent Nos. 6, 240, 450; 6, 397, 040; 6, 578, 079; and 9, 177, 297. See Dkt. No. 61. The Court subsequently issued an order severing the case against the Match defendants from the case against the Vimeo defendants for purposes of trial, but continuing to treat the cases as consolidated for purposes of pretrial proceedings. Dkt. No. 96. At the same time, the Court granted British Telecom’s motion to sever Count II of the first amended complaint and to enter final judgment on that claim so that British Telecom could take an immediate appeal from the disposition of that claim, which involved U.S. Patent No. 6, 397, 040. Dkt. No. 97; see Dkt. No. 98. British Telecom noticed an appeal from the dismissal of that claim, Dkt. No. 104, and that appeal is now pending before the Federal Circuit as No. 19-1917 (Fed. Cir. docketed May 24, 2019).

         Although the parties in the Vimeo case have served preliminary infringement and invalidity contentions, completed initial document production, and filed claim construction briefs, much of the pretrial process remains undone. Document discovery and fact discovery has not closed; no interrogatories have been responded to; no depositions have been taken; expert reports have not been submitted; and dispositive motions have not been filed. Trial is not scheduled to begin until an as-yet-unspecified date in November 2020.

         On March 22, 2019, the Vimeo defendants filed a petition seeking inter partes review of claims 1–7 and 10–12 of the ’200 patent. The Vimeo defendants contend that they did not seek inter partes review of asserted claims 8 and 9 because their position is that those claims are indefinite, and inter partes review is not available to adjudicate claims of indefiniteness. Dkt. No. 126, at 3. In its institution decision, the PTAB found that it was likely that claims 1–3, 5–7, and 10–12 would be found invalid. Vimeo, Inc. v. British Telecomm. PLC, No. IPR2019-00833, 2019 WL 4050160, at *18 (P.T.A.B. Aug. 27, 2019). A decision in the inter partes review proceeding is expected within one year of the date of institution (i.e., by late August 2020).

         Shortly after the institution of the inter partes review proceeding, the Vimeo defendants filed this motion to stay the proceedings in the district court pending the resolution of the inter partes review.

         DISCUSSION

         The question whether a stay of district court proceedings should be granted when inter partes review is instituted on some or all 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 answer to that question have been developed by courts in numerous decisions since then.

         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); Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936). 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). 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 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.” 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); St. Clair Intellectual Property v. Sony Corp., 2003 WL 25283239, at *1 (D. Del. Jan. 30, 2003).

         The related context of Covered Business Methods (“CBM”) review proceedings 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 streamline the trial;
(B) whether discovery is complete and whether a trial date has been set;
(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

Pub. L. No. 112-29, ยง 18(b)(1), 125 Stat. 284, 331 (2011). Those statutory factors largely track the three factors traditionally used by courts in determining whether to grant stays pending post-grant review proceedings, with a fourth factor added. The fourth factor, which requires an inquiry into whether a stay will reduce the burden of litigation on the parties and the court, ...


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