Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-01743/USCOURTS-casd-3_13-cv-01743-1/pdf.json

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

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

UNISONE STRATEGIC IP, INC.,

Plaintiff,

CASE NO. 3:13-cv-1743-GPC-JMA

ORDER:

(1) GRANTING DEFENDANT’S

MOTION TO STAY PENDING

COVERED BUSINESS METHOD

PATENT REVIEW;

(2) VACATING HEARING DATE

[ECF No. 54]

v.

TRACELINK, INC., and DOES 1

through 10, inclusive, 

Defendants.

I. INTRODUCTION

On July 25, 2013, Plaintiff Unisone Strategic IP, Inc. (“Plaintiff”) filed a

complaint for patent infringement, alleging Defendant Tracelink, Inc.’s (“Defendant”)

software infringed U.S. Patent No. 6,996,538 (the “’538 patent”), which Plaintiff

allegedly owns by assignment. (ECF No. 1.) On January 6, 2014, Plaintiff filed the

current operative First Amended Complaint (“FAC”). (ECF No. 21.) On April 2, 2014,

the Court stayed this case pending ex parte reexamination proceedings. (ECF No. 34.)

On November 24, 2014, reexamination proceedings concluded with the certificate

reflecting amended claims. (ECF No. 49.) On January 7, 2015, the Court lifted the stay

pursuant to the conclusion of ex parte reexamination proceedings. (ECF No. 53.)

Before the Court is Defendant’s Motion to Stay Pending Covered Business

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Method Review. (ECF No. 54.) Plaintiff opposes. (ECF No. 57.) The Leahy-Smith

America Invents Act (the “AIA”) provides a “transitional program” to review covered

business method (“CBM”) patents. AIA § 18. The AIA further grants district courts

authority to stay proceedings, pending CBM review before the U.S. Patent and

Trademark Office (the “USPTO”), upon the consideration of four factors:

(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.

Id. § 18(b)(1); VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1310 (Fed.

Cir. 2014). The parties have fully briefed the motion. (ECF Nos. 54, 57, 58.) The Court

findsthe motion suitable for disposition without oral argument pursuant to Civil Local

Rule 7.1(d)(1). Upon review ofthemoving papers, admissible evidence, oral argument,

and applicable law, the Court GRANTS Defendant’s Motion to Stay Pending CBM

Review.

II. DISCUSSION

A. Simplification

The first factor considers whether a stay will simplify the issues. AIA §

18(b)(1)(A). The CBM review in this case challenges 15 of the 96 claims in the ’538

patent. (ECF No. 57-4, Ex. B, at 1.) Plaintiff argues that this factor does not favor a

stay because: (1) “only 18%” of the claims are being challenged, and (2) the CBM

review challenges the claims based on patentability. (ECF No. 57, at 3.) However,

CBM review of less than all of a patent’s claims can still simplify the issues. Versata

Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, 1371–73 (Fed. Cir. 2014)

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vacated on other grounds by — F.3d —, 2015 WL 981523 (Fed. Cir. Feb. 27, 2015).

Moreover, Defendant contendsthat the challenged claims are “representative” of other

claims in the ’538 patent and thus CBM review will bear on more than 18% of the

claims. (ECF No. 58, at 1–3.) Thus the Court findsthat the USPTO’s CBM review will

simplify issues in this case and this factor favors a stay.

B. Discovery and Trial Date

The second factor considers whether discovery is complete and a trial date has

been set. AIA § 18(b)(1)(B). Discovery has not commenced in this case and a trial date

has not been set. (ECF No. 34, at 2.)

C. Prejudice

The third factor is whether the nonmoving party would be unduly prejudiced or

the moving party would gain a tactical advantage. AIA § 18(b)(1)(C). Plaintiff first

argues that Defendant’s delay in bringing CBM review shows that it was “tactically

driven.” (ECF No. 57 at 5.) However, as Defendant correctly points out, during that

period of delay, an ex parte reexamination was pending which could have resulted, and

did result, in amended claims (ECF No. 58, at 6.) Because the claims could change, it

would have been premature to petition for CBM review prior to the conclusion of ex

parte reexamination. Plaintiff next argues that its subsidiaries would be prejudiced by

a stay. (ECF No. 57, at 8.) As an initial matter, it is unclear whether Frequentz or

TradeMotion is a subsidiary or licensee of Plaintiff. Defendant argues that Frequentz

“appears to offer its products in the same or similar biotech and pharmaceutical

industries.” (ECF No. 58, at 8.) For there to potentially be undue prejudice, two

companies must be direct competitors and Plaintiff has failed to show that, though they

may be in the same industries, Frequentz and TradeMotion are direct competitors with

Defendant. See Segin Sys., Inc. v. Stewart Title Guar. Co., 30 F. Supp. 3d 476, 483

(E.D. Va. 2014). Accordingly, the Court finds that Plaintiff has not shown that it will

suffer undue prejudice or that Defendant would gain a tactical advantage.

/ /

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D. Litigation Burden

The fourth factor considers whether a stay would reduce the litigation burden.

AIA § 18(b)(1)(D). Plaintiff contends that the litigation burden will not be reduced

because Defendant can raise those same issues in this case. (ECF No. 58, at 13.)

However, addressing patentability at the outset can reduce the litigation burden on this

Court and the parties. See Ultramercial Inc. v. HULU, LLC, 772 F.3d 709, 718–19

(Fed. Cir. 2014) (Mayer, J., concurring). As all four factors favor a stay, the Court

GRANTS Defendant’s Motion to Stay Pending CBM Review.

III. CONCLUSION AND ORDER

For the reasons stated above, IT IS HEREBY ORDERED that:

1. Defendant’s Motion to Stay Pending CBM Review, (ECF No. 55), is

GRANTED. This case is therefore STAYED pending a final outcome of

the CBM review before the USPTO;

2. Beginning May 1, 2015, Defendant is directed to file monthly reports as

to the status of the CBM review proceedings; and

3. The hearing set for April 10, 2015, is VACATED.

DATED: April 8, 2015

HON. GONZALO P. CURIEL

United States District Judge

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