In re Papst Licensing GMBH & Co. KG Patent Litig.

• Decision Date: 15 August 2018
• Docket Number: MDL No. 1880,Misc. Action No. 07-493 (RDM)
• Citation: 320 F.Supp.3d 132
• Parties: IN RE PAPST LICENSING GMBH & CO. KG PATENT LITIGATION
• Court: U.S. District Court — District of Columbia

320 F.Supp.3d 132

IN RE PAPST LICENSING GMBH & CO. KG PATENT LITIGATION

Misc. Action No. 07-493 (RDM)

MDL No. 1880

United States District Court, District of Columbia.

Signed August 15, 2018

MEMORANDUM OPINION AND ORDER

RANDOLPH D. MOSS, United States District Judge

This matter is before the Court on the Camera Manufacturers' request for a stay of proceedings. Dkt. 686 at 2. The U.S. Patent and Trademark Office ("PTO") has found unpatentable all asserted claims of three of the four patents-in-suit—the '399, '746, and '144 patents (hereinafter "the IPR patents").¹ Those decisions are now on appeal to the Court of Appeals for the Federal Circuit. Although the PTO also instituted inter partes review ("IPR") proceedings regarding the asserted claims of the fourth patent-in-suit—the '449 patent —it terminated those proceedings because Papst Licensing GMBH & Co. ("Papst") settled with each of the IPR petitioners.² In light of the PTO's decisions concerning the '399, '746, and '144 patents, and the substantial overlap between the claims that the PTO found unpatentable in those patents and the asserted claims of the '449 patent, the Camera Manufacturers contend that a stay of proceedings until completion of the Federal Circuit appeals will "conserve judicial resources and lead to the most efficient conclusion of this matter." Dkt. 686 at 2. Papst does not oppose staying this action with respect to the IPR patents. Dkt. 684 at 1. It does, however, oppose a stay of proceedings concerning the '449 patent. Dkt. 685 at 5. In its view, "there is little to no commonality between the issues on appeal concerning the IPR patents and the specific claim construction issues before the Court regarding the '449 patent," and a stay will substantially prejudice Papst, which has waited over a decade for a final resolution of its infringement claims. Dkt. 685 at 5.

For the reasons explained below, the Court will GRANT the Camera Manufacturers' request for a stay, Dkt. 686, and will STAY these proceedings pending the completion of the Federal Circuit appeals of the IPR decisions or until further order of the Court.

I. BACKGROUND

A. Inter Partes Review

Congress created the inter partes review procedure as a "timely, cost-effective alternative to litigation" and to establish "a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs." Changes to Implement Inter Partes Review Proceedings, 77 Fed. Reg. 48,680 (Aug. 14, 2012) (codified at 37 C.F.R. § 42.100 et seq. ). Inter partes review allows a party other than the patentee to bring an adversarial proceeding before the PTO seeking "to cancel as unpatentable 1 or more claims of a patent ... on a ground that could be raised under" 35 U.S.C. § 102 (novelty) or § 103 (nonobviousness) "on the basis of prior art consisting of patents or printed publications." 35 U.S.C. § 311. The PTO may institute review proceedings if there is a "reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition." 35 U.S.C. § 314(a). If the PTO grants review, a final determination must generally be issued "not later than 1 year" after the petition for review is granted. 35 U.S.C. § 316(a)(11). The patentability determination is made by a panel of the Patent Trial and Appeal Board ("PTAB") consisting of Administrative Patent Judges, 35 U.S.C. § 318, who must have relevant "legal knowledge and scientific ability," 35 U.S.C. § 6(a). PTAB decisions are appealable directly to the Federal Circuit. 35 U.S.C. § 141(c).

If the PTAB finds that a claim is unpatentable, and the patent holder fails to file a timely appeal or the appeal is unsuccessful, then the PTO is required to issue a certificate cancelling the claim, and the patent holder may no longer assert that claim in litigation or otherwise. 35 U.S.C. § 318(b). But, because the PTO has adopted its own rules and standards for claim construction, see Cuozzo Speed Techs., LLC v. Lee , ––– U.S. ––––, 136 S.Ct. 2131, 2146, 195 L.Ed.2d 423 (2016), a claim construction adopted by the PTO in an IPR proceeding is not binding on the federal district courts, see SkyHawke Techs., LLC v. Deca Int'l Corp. , 828 F.3d 1373, 1376 (Fed. Cir. 2016).

B. Factual Background

Papst initiated this multidistrict litigation over a decade ago. Its current iteration, however, dates back to only 2015. After years of litigation, this Court granted summary judgment in favor of the "First Wave Camera Manufacturers" and entered final judgment with respect to those defendants pursuant to Federal Rule of Civil Procedure 54(b). Dkt. 560. On appeal, the Federal Circuit disagreed with the Court's claims construction and, accordingly, set aside the judgment in favor of the Camera Manufacturers. In re Papst Licensing Dig. Camera Patent Litig. , 778 F.3d 1255 (Fed. Cir. 2015). After the case was remanded, Papst filed new lawsuits against the Camera Manufacturers asserting two additional patents—the '746 and '144 patents —which were subsequently transferred to this Court pursuant to 28 U.S.C. § 1407. Dkt. 598; Dkt. 606.

In November and December 2016, the Court held a four-day claims construction hearing. Shortly thereafter, the Camera Manufacturers notified the Court that the PTO has instituted eight IPR proceedings regarding the '144 and '746 patents. Dkt. 663. In response, the Court directed that the parties inform the Court of the status of those proceedings and indicate whether the Court should await a decision from the PTO before issuing a claims construction decision with respect to those patents. Minute Order (June 20, 2017). At that point, the Camera Manufacturers (but not Papst) notified that Court that the PTO had subsequently initiated IPR proceedings regarding the two other patents-in-suit, the '399 and '449 patents. Dkt. 672. In response to the Court's question, the Camera Manufacturers declined to take a position, noting that they had "not reached a consensus" among themselves. Id. at 4. Papst, for its part, urged the Court to press forward with the claims construction as to all four of the patents-in-suit. Dkt. 671.

In December 2017, the Camera Manufacturers notified the Court that the PTO had found all of the asserted claims of the '144 and '746 patents to be unpatentable, Dkt. 679, and, a few days later, Papst notified the Court that it had settled with the IPR petitioners who had challenged the '449 patent and that, as a result, the IPR proceedings regarding that patent were "likely to be terminated," Dkt. 680. Finally, in March 2018, the Camera Manufacturers notified the Court that the PTO had found all of the asserted claims in the remaining patent-in-suit, the '399 patent, to be unpatentable. Dkt. 682. In light of these developments, the Court again raised the question of whether and how the IPR proceedings might affect this proceeding, and, in particular, asked for the parties' views on whether the Court should stay proceedings with respect to each of the patents-in-suit pending the Federal Circuit's review of the IPR dispositions. Minute Order (Apr. 5, 2018). In response, the Camera Manufacturers took the position that the Court should stay the case with respect to all four patents-in-suit. Dkt. 683. Papst did not oppose a stay of the action with respect to the IPR patents, but opposed staying proceedings relating to the '449 patent. Dkt. 684. Although the Court had already requested the parties' views on whether to stay proceedings, Papst requested the opportunity to brief the issue, "if the Court [was] inclined to stay the case." Id. at 3.

The Court granted that request and provided the parties with an opportunity to submit supplemental briefs addressing whether the Court should stay the case. Minute Order (Apr. 17, 2018). As they had already done, the Camera Manufacturers responded that the Court should stay the case with respect to all four patents-in-suit, Dkt. 686, while Papst argued that a stay was only warranted with respect to the IPR patents, Dkt. 685. In the view of the Camera Manufacturers, a stay of the entire case is warranted because the Federal Circuit's decisions respecting the patentability of the asserted claims in the IPR patents are likely to shed substantial light on the construction and patentability of the asserted claims in the '449 patent. Dkt. 686. Papst disagrees with that premise and adds that, in its view, a stay would cause it undue prejudice. Dkt. 685.

The parties have brought two final developments to the Court's attention. First, in another case brought by Papst involving the '399, '449, '746, and '144 patents, the United States District Court for the Eastern District of Texas stayed proceedings regarding the IPR patents but not the '449 patent. Dkt. 688-1 at 2; Papst Licensing GmbH & Co. KG v. Apple Inc. , No. 6:15-cv-1095, 2018 WL 3656491, at *1 (E.D. Tex. Aug. 9, 2018). Second, on August 1, 2018, several of the Camera Manufacturers filed a request with the PTO for reexamination of the '449 patent. Dkt. 689.

II. ANALYSIS

"Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination." Ethicon, Inc. v. Quigg , 849 F.2d 1422, 1426–27 (Fed. Cir. 1988) (citation omitted). When deciding whether to grant a stay pending inter partes review, courts apply the same framework applicable to motions to stay proceedings pending reexamination. See Universal Elecs., Inc. v. Universal Remote Control, Inc. , 943 F.Supp.2d 1028, 1030 (C.D. Cal. 2013). Under that approach, courts typically consider three factors: (1) the stage of the proceeding and, in particular, whether discovery is complete and whether a trial date has been set; (2) whether a stay will simplify the case; and (3) whether a stay would unduly prejudice the nonmoving party. Id. at 1030–31 ; In re Cygnus Telecomms. Tech., LLC, Patent Litig. , 385 F.Supp.2d 1022, 1023 (N.D. Cal. 2005) ; ...