Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-00056/USCOURTS-casd-3_15-cv-00056-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:0271 Patent Infringement

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OCT 0 1 2015 

GI .. rF .~. 1.1 .••. rX.:·~T COURT 

SOUTHC',j' ~',i,.;·; i"..:., (Of,' C/.UFORNIll. 

. BY __ . __ .• __ .. _ ....... _. _____ A..t. C;..DEPUTY ___ .•. ___ .... . 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

E.DIGITAL CORPORATION, 

Plaintiff, 

v. 

ARCSOFT, INC. d/b/a CLOSELI and 

SIMPLICAM, 

Defendant. 

Case No.: 15-cv-56-BEN (DHB) 

ORDER DENYING MOTION TO 

STAY 

17 Before this Court is a Motion to Stay Pending Inter Partes Review, filed by 

18 Defendant Arcsoft. (Docket No.3 7.) Plaintiff e.Digital Corporation filed an Opposition, 

19 and Defendant a reply. (Docket Nos. 39, 40.) The motion was set for hearing on October 

20 5,2015. For the reasons stated below, the Motion is DENIED and the hearing is vacated. 

21 BACKGROUND 

22 On January 12,2015, Plaintiff brought this patent infringement action against 

23 Defendant ArcSoft, Inc. (Docket No.1.) Plaintiff alleges that Defendant's simplicam 

24 branded wireless camera systems infringe upon five of Plaintiffs patents entitled, 

25 "System and Method for Managing Mobile Communications." (Compl. ~~ 10, 14-18.) 

26 On June 24, 2015, a party in an unrelated action proceeding in the Northern 

27 District of California filed petitions with the Patent and Trademark Office ("PTO") for 

28 inter partes review ("IPR") of most of the claims at issue in the instant action. As a 

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Case 3:15-cv-00056-BEN-DHB Document 41 Filed 10/01/15 Page 1 of 4
1 result, Defendant filed the instant motion for a stay on August 31, 2015. 

2 LEGAL STANDARD 

3 Courts have discretion to stay proceedings pending conclusion of a PTO 

4 reexamination. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). A stay 

5 is appropriate where "the outcome of the reexamination would be likely to assist the court 

6 in determining patent validity and, if the claims were canceled in the reexamination, 

7 would eliminate the need to try the infringement issue." In re Cygnus Telecomms. Tech., 

8 LLC Patent Litig., 385 F. Supp. 2d 1022, 1023 (N.D. Cal. 2005) (citing Gouldv. Control 

9 Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983». However, a stay is not automatic. 

10 Slip Track Sys., Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1341-42 (Fed. Cir. 1998) (actions 

11 concurrently pending before the court and PTO are "neither duplicative nor dependent on 

12 one another, there is neither any need nor any justification" for a stay). Courts consider 

13 the following three factors when deciding whether to stay proceedings: "(1) whether 

14 discovery is complete and whether a trial date has been set; (2) whether a stay will 

15 simplify the issues in question and trial of the case; and (3) whether a stay would unduly 

16 prejudice or present a clear tactical disadvantage to the nonmoving party." In re Cygnus, 

17 385F.Supp.2datl023. 

18 DISCUSSION 

19 I. Stage of Litigation 

20 This case is still in a fairly early stage oflitigation. The parties attended an Early 

21 Neutral Evaluation conference on May 8, 2015. The parties also participated in a Case 

22 Management Conference on June 15. Afterwards, the magistrate judge issued a 

23 scheduling order. As a result, the parties have exchanged initial disclosures and are now 

24 beginning the claim construction process. Discovery is not complete and no trial date has 

25 been set. Thus, this factor weighs in favor of a stay. 

26 II. Simplification of Issues 

27 Certainly, the PTO's review of the patents-in-suit will clarify and streamline the 

28 issues before this Court. If IPR is granted, the PTO will either (1) invalidate the asserted 

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1 claims and reduce the number of issues before this Court, or (2) find the claims valid, in 

2 which case Defendant will be estopped from asserting those invalidity contentions here. 

3 However, the PTO has yet to decide whether it will institute review. And, ifIPR is 

4 granted, not every claim asserted against Defendant will be reexamined. Cf 

5 Virtual Agility, Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1314 (Fed. Cir. 2014) 

6 (concluding the simplification factor weighs heavily in favor of stay when all claims of 

7 all patents are under review, and noting decisions denying stays where not all claims 

8 were submitted for review). Although Defendant argues that the likelihood that review 

9 will be granted is probable, it is not guaranteed. The Court is not inclined to stay this 

10 case after it has been pending for nearly nine months, and when there is no indication that 

11 the PTO will review the claims. Given the fact that proceedings must go forward in any 

12 event for the four claims that are not subject to review, this factor weighs against a stay. 

13 III. Undue Prejudice 

14 When considering the "undue prejudice" factor, courts look for evidence of 

15 "dilatory motives or tactics." Asetek Holdings, Inc. v. Cooler Master Co., No. 13-cv-457, 

16 2014 WL 1350813, at *4 (N.D. Cal. Apr. 3, 2014) (quotingKLA-Tencor Corp. v. 

17 Nanometrics, Inc., No. 05-cv-31116, 2006 WL 708661, at *3 (N.D. Cal. Mar. 16,2006)). 

18 In making this evaluation, courts have considered factors which include: (1) the timing of 

19 the reexamination request; (2) the timing of the request for stay; (3) the status of 

20 reexamination proceedings; and (4) the relationship of the parties. Id. (citation omitted). 

21 Although this case was filed in January 2015, Defendant did not petition for IPR. 

22 Rather, a third party sought review in June 2015. Then, Defendant moved to stay 

23 approximately six weeks after learning of the IPR petitions. As mentioned above, the 

24 PTO has not decided whether to grant IPR. However, the parties are not competitors. 

25 And, Plaintiff contends that it will be prejudiced by the delay alone, which is insufficient 

26 to tilt this factor against a stay. See id. This factor weighs in favor of granting a stay. 

27 III 

28 III 

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1 CONCLUSION 

2 The Court has considered the relevant factors. The IPR petitions have been 

3 pending before the PTO since June and the PTO has not yet decided to grant review. In 

4 light of the fact that the remaining four claims will likely proceed with litigation, the 

5 Court is not inclined to delay this case until the PTO makes a decision. These 

6 considerations outweigh the benefit of granting a stay at this time. Thus, based on the 

7 particular facts of this case and the stage ofIPR proceedings, the Court DENIES 

8 Defendant's Motion to Stay. The October 5, 2015 he ing is hereby vacated. 

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IT IS SO ORDERED. 

Dated: September..Jt2, 2015 

HOI g 1'T. Benitez 

United States Disbict Judge 

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