Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-01278/USCOURTS-casd-3_13-cv-01278-2/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-1278-GPC-JMA

ORDER:

(1) GRANTING DEFENDANT’S

MOTION TO STAY PENDING

COVERED BUSINESS METHOD

PATENT REVIEW;

(2) VACATING HEARING DATE

[ECF No. 55]

v.

LIFE TECHNOLOGIES

CORPORATION; LELAND

STANFORD JUNIOR

UNIVERSITY; UNIVERSITY OF

CALIFORNIA AT LOS ANGELES;

UNIVERSITY OF CALIFORNIA AT

SAN DIEGO; UNIVERSITY OF SAN

DIEGO; SAN DIEGO STATE

UNIVERSITY; HARVARD

UNIVERSITY; PENNSYLVANIA

STATE UNIVERSITY; NOVARTIS

CORPORATION; And DOES 1

through 300, inclusive,

Defendants.

I. INTRODUCTION

On June 3, 2013, Plaintiff Unisone Strategic IP, Inc. (“Plaintiff”) filed a

complaintfor patent infringement, alleging defendant Life Technologies Corporation’s

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

Plaintiff allegedly owns by assignment. (ECF No. 1.) On November 15, 2013, after

Plaintiff filed the currently operative First Amended Complaint (“FAC”). (ECF No.

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21.) On April 2, 2014, the Court stayed this case pending reexamination proceedings.

(ECF No. 35.) On November 24, 2014, reexamination proceedings concluded with the

certificate reflecting amended claims. (ECF No. 50.) On January 7, 2015, the Court

lifted the stay pursuant to the conclusion of reexamination proceedings. (ECF No. 53.)

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

Method Review. (ECF No. 55.) Plaintiff opposes. (ECF No. 58.) 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. 55, 58, 59.) The Court

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

Rule 7.1(d)(1). Upon review ofthe moving 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

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patent. (ECF No. 58-4, 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. 58, 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)

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

Additionally, CBM review precludes a petitioner from raising invalidity arguments in

federal courts that it raises during CBM review. AIA § 18(a)(1)(D). Thus, because a

determination by the USPTO of Defendant’s 35 U.S.C. § 101 invalidity argument will

preclude Defendant from making that argument to this Court, a stay pending CBM

review will simplify the issues in this case.

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. 35, at 2.)

C. Prejudice

The third factor considers 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. 58, 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. 59, 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. 58, at 8.) As an initial matter, it is unclear whether

Frequentz or TradeMotion is a subsidiary orlicensee 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

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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.

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, in a separate case involving the same patent, the defendant in that case will

not be estopped, by CBM review, from making certain arguments. (ECF No. 58, at 13.)

However, it is undisputed that the defendant in this case will be precluded frommaking

such arguments and thus the Court finds that a stay would reduce the litigation burden

on the parties and the Court in this case. 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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