Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-01090/USCOURTS-casd-3_17-cv-01090-4/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

AMERICAN GNC CORP.,

Plaintiff,

Case No. 17-cv-01090-BAS-BLM

ORDER: 

(1) GRANTING MOTION TO 

STAY PROCEEDINGS [ECF No. 

99]; 

(2) IMPOSING A STAY OF ALL 

PROCEEDINGS;

AND

(3) TERMINATING OTHER 

MOTIONS AS MOOT (ECF Nos.

101, 103, 105, 106]

v.

LG ELECTRONICS INC., et al.,

Defendants.

Pending before the Court is a series of motions filed by the parties: (1) Plaintiff 

AGNC’s motion to stay the proceedings with respect to two patents-in-suit in light of 

inter partes review (“IPR”) requests filed by the Defendants1(ECF No. 99), to which 

Defendants have responded with a request for a full stay (ECF No. 104); (2) 

Plaintiff’s motion to stay the entire case pending resolution of a disqualification issue 

 

1 Defendants are LG Electronics, Inc., LG Electronics MobileComm U.S.A., 

Inc., and LG Electronics Mobile Research U.S.A., LLC (collectively “Defendants” 

or “LGE”). 

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it intends to assert against some of Defendants’ counsel (ECF No. 103) and a related 

request to file a version of the motion under seal (ECF No. 101); and (3) ex parte

motions filed by each side to authorize use of electronic equipment in the courtroom 

during the scheduled claim construction hearing (ECF Nos. 105, 106). For the 

reasons stated herein, the Court grants Plaintiff’s motion to stay due to the IPR 

requests and, under its inherent authority, the Court imposes a full stay of the 

proceedings. The Court vacates the currently scheduled claim construction hearing 

and terminates all other motions as moot.

I. RELEVANT BACKGROUND

On May 26, 2017, Plaintiff filed its complaint, alleging that Defendants have

infringed sixteen claims across seven patents. (See generally ECF No. 1.) Plaintiff 

filed a First Amended Complaint (“FAC”) on June 14, 2017. (ECF No. 6.) The seven 

patents-in-suit, which Plaintiff owns, are: 6,311,555 (’555 patent), 6,415,227 (’227 

patent), 6,508,122 (’122 patent), 6,516,283 (’283 patent), 6,671,648 (’648 patent), 

6,697,758 (’758 patent), and 6,792,353 (’353 patent). (Id. ¶28.)

On February 14, 2018, Defendants and Google filed IPR petitions with respect 

to the ’227 patent the ’353 patent. (ECF No. 104 at 2.) Defendants represent that the 

IPR petitions are: Google LLC v. American GNC Corp., IPR2018-00644, Paper 2 

(PTAB Feb. 14, 2018) (’644 Petition) and Google LLC v. American GNC Corp., 

IPR2018-00646, Paper 2 (PTAB Feb. 14, 2018) (’646 Petition). (ECF No. 104 at 2.) 

By statute, AGNC has three months from the PTO’s accord of filing date to respond 

to each respective petition. See 35 U.S.C. §313. LGE represents that AGNC may 

respond to the ’644 Petition by May 23, 2018 and the ’646 Petition by May 29, 2018. 

(ECF No. 104 at 2.) By statute, a decision by the PTO on whether to institute review 

must issue within three months of the time allotted for each of AGNC’s responses. 

See 35 U.S.C. §314(b). LGE represents that a PTO decision on whether to institute 

review of the pending IPR petitions would issue by late August 2018. If the PTO

accepts either IPR petition, a final determination must issue within one year of 

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acceptance of the respective petition. See 35 U.S.C. §316(a)(11). LGE represents 

that any final decisions by the PTO would issue by late August 2019. 

II. LEGAL STANDARD

“The power to stay proceedings is incidental to the power inherent in every 

court to control the disposition of the cases on its docket with economy of time and 

effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 

254–55 (1936). Flowing from this inherent power is a court’s “authority to order a 

stay pending conclusion of a PTO reexamination.” Ethicon, Inc. v. Quigg, 849 F.2d 

1422 1426–27 (Fed. Cir. 1988); see also Proctor & Gamble Co. v. Kraft Foods 

Global, Inc., 549 F.3d 842, 849 (Fed. Cir. 2008) (citations omitted). Although a court 

has the authority to issue a stay pending reexamination, there is no requirement that 

a court must impose a stay. Viskase Corp. v. Am. Nat’l Can Co., 261 F.3d 1316, 1328 

(Fed. Cir. 2001); In re Cygnus Telecommc’ns Tech. LLC, 385 F. Supp. 2d 1022, 1023 

(N.D. Cal. 2005) [hereinafter “In re Cygnus”]. Rather, the decision to do so is 

committed to a court’s discretion. Medichem, S.A. v. Rolabo, S.L., 353 F.3d 928, 936 

(Fed. Cir. 2003) (“On remand, a stay of proceedings in the district court pending the 

outcome of the parallel proceedings in the PTO remains an option within the district 

court’s discretion.”); Patlex Corp. v. Mossinghoff, 758 F.2d 594, 603 (Fed. Cir. 1985).

Courts generally consider three factors to determine whether to impose a stay 

pending reexamination: (1) whether discovery is complete and whether a trial date 

has been set; (2) whether a stay will simplify the issues in question and trial of the 

case; and (3) whether a stay would unduly prejudice or present a clear tactical 

disadvantage to the nonmoving party. Telemac Corp. v. Teledigital, Inc., 450 F. 

Supp. 2d 1107, 1111 (N.D. Cal. 2006); In re Cygnus, 385 F. Supp. 2d at 1023; see 

also TAS Energy, Inc. v. San Diego Gas & Elec. Co., No. 12-cv-2777-GPC(BGS), 

2014 WL 794215, at *3 (S.D. Cal. Feb. 26, 2014). Judicial consideration is not 

limited to these factors, but rather can include a review of the “totality of the 

circumstances.” Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. 

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Supp. 2d 1028, 1031 (C.D. Cal. 2013); Allergan Inc. v. Cayman Chemical Co., No. 

SACV 07-01316-JVS (RNBx), 2009 WL 8591844, at *1 (C.D. Cal. Apr. 9, 2009). A 

court’s consideration of a motion to stay should be guided by the “liberal policy in 

favor of granting motions to stay proceedings pending the outcome of USPTO 

reexamination or reissuance proceedings.” ASCII Corp v. STD Entm’t USA, Inc., 844 

F. Supp. 1378, 1381 (N.D. Cal. 1994). 

III. DISCUSSION 

A. Stage of the Proceedings

The first factor a court considers is the stage of the proceedings. A typical 

basis for denying a stay of a litigation is that the case has progressed through the bulk 

of pre-trial proceedings and is scheduled for trial shortly. See Verinata Health, Inc.

v. Ariosa Diagnostics, Inc., No. 12-cv-05501 SI, 2014 WL 121640, at *2 (N.D. Cal. 

Jan. 13, 2014) (“a trial date has been set for February 23, 2015 . . . and discovery is 

well underway”); Xerox Corp. v. 3Com Corp., 69 F. Supp. 2d 404, 407 (W.D.N.Y. 

1999). Courts will also deny a stay where the parties and the Court have expended 

substantial resources. See Interwoven. Inc. v. Vertical Computer Sys., Inc., No. C 10-

04645 RS, 2012 WL 761692, at *4 (N.D. Cal. Mar. 8, 2012) (denying stay because 

discovery was underway and “[m]ore importantly, the parties have fully briefed the 

issue of claim construction, attended a Markman hearing, and received a claim 

construction order). However, when a case remains in the early stages and no trial 

date is set, the case stage factor will generally weigh in favor of a stay. Nichia Corp. 

v. Vizio, Inc., SA CV 16-00545 SJO, 2017 U.S. Dist. LEXIS 183610, at *11 (C.D. 

Cal. Feb. 2, 2017); PersonalWeb Techs., LLC v. Facebook, Inc., No. 5:13-CV-01356-

EJD, 2014 WL 116340, at *3 (N.D. Cal. Jan. 13, 2014). The parties agree that this 

case has not progressed so far that a stay is unwarranted. (Compare ECF No. 99 at 2 

with ECF No. 104 at 3.) The Court agrees. 

The parties have met certain default benchmarks set by the Patent Local Rules, 

which streamline the timing of patent disclosures and the claim construction 

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procedure in patent litigation. See S.D. CAL. PATENT L.R. 3, 4. AGNC has provided 

its infringement contentions and served initial disclosures. (ECF No. 104 at 2.) The 

parties have submitted the Joint Hearing Statement, Claim Construction Chart, and 

Claim Construction Worksheet for the scheduled claim construction hearing (ECF 

No. 72) and claim construction briefing (ECF Nos. 91, 92, 87, 98). The fact that the 

parties have completed these benchmarks under the Patent Local Rules, however, 

does not mean that the case has progressed so significantly that a stay would be 

improper when all or some of the patents-in-suit are the subject of the IPR review 

process. 

Much remains for progression in this case, which has only been pending for 

nine months. Although the claim construction hearing is scheduled, it has not yet 

occurred and the Court has not construed any disputed terms. Moreover, a

“significant amount of work still remains such as expert discovery, summary 

judgment motions and trial.” TAS Energy, Inc., 2014 WL 794215, at *3; see also 

AT&T Intellectual Prop. I, 774 F. Supp. 2d 1049, 1052 (N.D. Cal. 2011) (noting that 

parties had not exchanged expert reports, conducted any depositions, or filed any 

dispositive motions). This remaining work will be costly to the parties. See, e.g., 

PersonalWeb Techs., LLC v. Apple Inc., 69 F. Supp. 3d 1022, 1026 (N.D. Cal. 2014) 

(“[W]hile much has been done, much remains, and the remaining work is costly. The 

Court has not set a fact discovery cutoff date. The parties have yet to submit expert 

reports, and the totality of expert discovery remains. The parties have not begun 

dispositive motion practice. Finally, the Court has not set a trial date.”). Although 

the case is not in its infancy, it has not yet progressed so far that a stay would be 

improper under this factor. See Tierravision, Inc. v. Google, Inc., No. 11-cv-2170 

DMS(BGS), 2012 WL 559993, at *2 (S.D. Cal. Feb. 21, 2012). Accordingly, the 

Court finds that this factor weighs in favor of a stay. 

B. Simplification of the Issues and Trial

The main dispute between the parties is the proper scope of the stay—whether 

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partial as to the two patents-in-suit subject to the IPR petitions or a full stay of all 

proceedings. Whereas AGNC requests a limited stay as to the patents-in-suit, LGE 

argues that a full stay is appropriate. The Court agrees with LGE. 

Ultimate resolution of the IPR petitions has the potential to simplify the issues 

in this case and for trial. “[W]aiting for the outcome of the reexamination could 

eliminate the need for trial if the claims are cancelled or, if the claims survive, 

facilitate trial by providing the court with expert opinion of the [US] PTO and 

clarifying the scope of the claims.” TAS Energy, Inc., 2014 WL 794215, at *4 

(quoting Target Therapeutics, Inc. v. SciMed Life Sys., Inc., 33 U.S.P.Q.2d 2022, 

2023 (1995)). On balance, patents claims that are reviewed appear more likely to be 

either amended or canceled. See Tierravision, Inc. v. Google, Inc., 2012 WL 559993,

at *2. However, even if they are not amended or canceled, there are benefits to 

pending litigation from the review process. For example, even if the two patents-insuit survive IPR review, the case could be simplified because LGE would be bound 

by the estoppel provisions for IPR review and could not raise any argument it raised 

or reasonably could have raised at the PTO in its petitions. See Evolutionary 

Intelligence, LLC v. Facebook, Inc., Nos. C 13–4202 SI, C 13–4204 SI, 2014 WL 

261837, at *2 (N.D. Cal. Jan.23, 2014) (citing 35 U.S.C. §315(e)(2)); see also TAS

Energy, Inc., 2014 WL 794215, at *4. Even if the PTO affirms the claims in the 

patents, the PTO’s decision “is strong evidence that the court must consider in 

assessing whether the party asserting invalidity has met its burden of clear and 

convincing evidence.” Id. These are significant benefits to simplifying the issues in 

this case and trial. Neither AGNC, nor LGE disputes that these are likely benefits 

from the IPR process if the petitions are granted. (ECF No. 99 at 2; ECF No. 104 at 

4–7). 

Although the PTO has not yet decided whether to institute IPR proceedings 

and could decline to do so, this does not mean a stay is improper. “[I]t is not 

uncommon for [courts] to grant stays pending reexamination prior to the PTO 

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deciding to reexamine the patent.” Pragmatus AV, 2011 WL 4802958, at *3; see also

Advanced Micro Devices, Inc., 2015 WL 545534, at *2 (granting stay prior to grant 

of IPR petition by PTO). The risks of not granting a stay are clear. If the Court were 

to wait for the PTO to accept the IPR petitions to determine the propriety of a stay, 

the Court risks needlessly wasting its resources, particularly given that the claim 

construction hearing is currently scheduled to occur some five months before a 

decision on whether to accept the IPR petitions is due. Avoidance of “the needless 

waste of judicial resources” counsels in favor of a stay. Advanced Micro Devices, 

Inc. v. LG Elecs., Inc., No. 14-cv-01012-SI, 2015 WL 545534, at *2 (N.D. Cal. Feb. 

9, 2015); Pragmatus AV, LLC v. Facebook, Inc., No. 11-CV-02168-EJD, 2011 WL 

4802958, at *2 (N.D. Cal. Oct. 11, 2011). If the PTO declines to institute 

proceedings, the stay would last six months at most. Assuming that the PTO does 

decline to institute IPR proceedings, the limited nature of a stay in such circumstances 

far outweighs the risk of unnecessary expenditure of judicial resources before that 

determination. TAS Energy, Inc., 2014 WL 794215, at *4 (imposing stay where IPR 

petitions had been filed and noting that “[i]f the USPTO rejects the inter partes

request, the stay will be short”); Semiconductor Energy Laboratory Co., Ltd. v. 

Chimei Innolux Corp., No. SACV 12–21–JST (JPRx), 2012 WL 7170593 (C.D. Cal. 

Dec. 19, 2012) (same). 

Further, although only two of the seven patents-in-suit are the subjects of the 

pending IPR petitions, multiple courts have found that a full stay is appropriate even 

when only some of the patents-in-suit are the subject of IPR petitions. See, e.g., 

Telebrands Corp. v. Seasonal Specialties, LLC, No. 17-cv-4161 (WMW/HB), 2018 

WL 1027452, at *5 (D. Minn. Feb. 23, 2018) (imposing a stay of entire case although 

only two of patents-in-suit were subject to reexamination); Card Tech. Corp. v. 

Datacard Corp., Civil No. 05-2546 (MJD / SRN), 2007 WL 2156320, at *3, 5 (D. 

Minn. July 23, 2007) (imposing stay of entire case although only two of the three 

patents-in-suit were subject to reexamination). The rationale for a full stay is simple. 

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“Moving forward only a subset of the [patents-in-suit] would create significant 

inefficiencies,” including the possibility of “multiple trials on multiple timelines with 

duplicative discovery, claim construction, and dispositive motions, burdening both 

the parties and the Court.” Black Hills Media, LLC v. Pioneer Elecs. (USA) Inc., CV 

14-00471 SJO (PJWx), 2014 U.S. Dist. LEXIS 133664, at *19 (C.D. Cal. May 8, 

2014). Here, the Court finds that it is proper to impose a full stay because of these 

inefficiencies. Without a full stay, the proceedings risk devolving into what would 

be effectively two different cases in the guise of one—different claim construction 

hearings, different discovery timelines, and, under the worst case scenario, different 

trials. These pose substantial inefficiencies and burdens on the Court and the parties. 

Accordingly, the Court finds that this factor weighs in favor of a stay and, in 

particular, one that encompasses all proceedings.

C. Undue Prejudice to the Nonmoving Party

The inquiry a court makes in assessing prejudice is “whether a stay would 

unduly prejudice or present a clear tactical disadvantage to the nonmoving party.”

Medicis Pharm. Corp. v. Upsher-Smith Labs., Inc., 486 F.Supp.2d 990, 993–94 (D. 

Ariz. 2007) (citing In re Cygnus, 385 F. Supp. 2d at 1023) (emphasis added). 

Consideration of tactical disadvantage arises from the concern that the request for 

reexamination is being used a “tactical tool in litigation.” See e.g., Select Comfort 

Corp. v. Tempur Sealy Int’l, No. 14-cv-245 (JNE/JSM), 2014 U.S. Dist. LEXIS 

183450, at *7–8 (D. Minn. Oct. 10, 2014) (“A request for reexamination has the 

potential of becoming a tactical tool in litigation, and therefore the Court must 

carefully weigh such requests.”); cf. Fresenius USA, Inc. v. Baxter Int’l., Inc., 582 

F.3d 1288, 1305 (Fed. Cir. 2009) (Newman, J., concurring) (“[R]eexamination . . . 

can be a useful and powerful tool for the benefit of both patentees and those interested 

in restricting or eliminating adversely held patents. However, if routinely available 

to delay the judicial resolution of disputes, the procedure is subject to inequity, if not 

manipulation and abuse, through the delays that are inherent in PTO activity.”). The 

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Court does not find clear tactical disadvantage here by permitting a stay. AGNC does 

not assert, nor does it present evidence showing, that LGE requested IPR review for 

the purpose of delaying these judicial proceedings. See AT&T Intellectual Prop. I, 

774 F. Supp. 2d at 1054 (“[C]ourts . . . consider evidence of dilatory motives or 

tactics, such as when a party unduly delays in seeking reexamination of a patent.” 

(quoting KLA-Tencor Corp. v. Nanometrics, Inc., No. C 05-03116 JSW, 2006 WL 

708661 at *3 (N.D. Cal. 2006))). Accordingly, the Court finds that this factor does 

not weigh against a stay. 

D. Other Considerations

In addition to these three factors, the Court finds that a full stay of proceedings 

is warranted in view of other considerations. AGNC has moved for a full stay of 

proceedings pending the resolution of a disqualification issue with some of LGE’s 

counsel. (ECF No. 103.) AGNC believes that this issue needs to be resolved because 

it bears upon whether that counsel can represent LGE at any future claim construction 

hearing. (ECF No. 104 at 2.) Although AGNC’s second stay request is not premised 

on the IPR petitions, the Court believes that, viewing the “totality of the 

circumstances,” there is no fundamental disagreement between the parties that a full 

stay is warranted. This further counsels in favor of granting the requested stay and

modifying that request to encompass generally all proceedings. Because both sides 

agree that the disqualification issues should be resolved notwithstanding a stay (ECF 

No. 104 at 4 n.7; ECF No. 107 at 2), the Court further determines that the stay of 

proceedings does not affect the disqualification issue AGNC intends to raise. 

IV. CONCLUSION & ORDER

For the foregoing reasons, the Court ORDERS as follows: 

1. The Court GRANTS Plaintiff’s motion to stay (ECF No. 99) and 

MODIFIES the request to impose a STAY OF ALL PROCEEDINGS. This stay 

shall not affect any disqualification issue that Plaintiff may intend to raise. 

2. The claim construction hearing currently scheduled for March 15, 2018 

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is VACATED. 

3. The parties are ORDERED to provide the Court with a joint notice of 

whether the PTO has accepted or declined the petitions concerning the ’227 and ’353 

patents. The parties shall provide this joint notice no later than five (5) days from 

the date of decision for each respective IPR petition. If neither petition is accepted 

for review, any party may move for a lift of the stay.

4. The Court TERMINATES AS MOOT:

a. Plaintiff’s motion to stay the case pending resolution of the 

disqualification issue it intends to raise (ECF No. 103). 

b. Plaintiff’s related motion to seal (ECF No. 101). The proposed 

sealed lodgment shall not be filed on the public docket.

c. Each side’s respective ex parte motion to authorize use of 

electronic equipment in the courtroom at the claim construction hearing. (ECF Nos. 

105, 106). 

IT IS SO ORDERED.

DATED: March 12, 2018

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