Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-00056/USCOURTS-casd-3_15-cv-00056-2/pdf.json

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

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FILED 

FEB 03 2016 

CLERK US DISTRICT COURT 

SOUTRERN [lIS"1 RICT OF CALIFORNIA 

BY <A 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 (DRB) 

ORDER GRANTING MOTION TO 

STAY 

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

18 by Defendant Arcsoft. (Docket No. 50.) Plaintiff e.Digital Corporation filed an 

19 Opposition, and Defendant filed a Reply. (Docket Nos. 56, 59.) The motion was set for 

20 hearing on February 8, 2016. For the reasons stated below, the Motion is GRANTED 

21 and the hearing is vacated. 

22 BACKGROUND 

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

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

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

26 "System and Method for Managing Mobile Communications." (Compl. 'Il'll1O, 14-18.) 

27 On June 24, 2015, a party in an unrelated action proceeding in the Northem 

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

J5-cv-56-BEN (DHB) 

Case 3:15-cv-00056-BEN-DHB Document 60 Filed 02/03/16 Page 1 of 4
1 inter partes review ("IPR") of most ofthe claims at issue in the instant action. On 

2 October 1, 2015, this Court denied Defendant's first motion for a stay because the PTO 

3 had not yet decided whether to grant review, and four of the claims asserted in this action 

4 are not subject to IPR. (Docket No. 41.) 

5 LEGAL STANDARD 

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

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

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

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

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

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

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

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

14 actions concurrently pending before the court and PTO are "neither duplicative nor 

15 dependent on one another, there is neither any need nor any justification" for a stay). 

16 Courts consider the following three factors when deciding whether to stay proceedings: 

17 "(1) whether discovery is complete and whether a trial date has been set; (2) whether a 

18 stay will simplify the issues in question and trial of the case; and (3) whether a stay 

19 would unduly prejudice or present a clear tactical disadvantage to the nonmoving party." 

20 In re Cygnus, 385 F. Supp. 2d at 1023. 

21 DISCUSSION 

22 I. Stage of Litigation 

23 Since this Court's October 1 Order, the parties briefed and prepared for a Markman 

24 hearing scheduled for January 21,2016. In light of the instant motion, the hearing was 

25 continued to February 11,2016. In comparison to how much work the parties have left to 

26 do, not much else has transpired. This case is still in a fairly early stage ofiitigation. See 

27 Software Rights Archive, LLC v. Facebook, Inc., 2013 WL 55225522, at *3 (N.D. Cal. 

28 Sept. 17, 2013) (stage ofiitigation factor weighed in favor of stay even after "over 

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Case 3:15-cv-00056-BEN-DHB Document 60 Filed 02/03/16 Page 2 of 4
1 150,000 pages of documents" had been produced). Discovery is not complete and no 

2 trial date has been set. Thus, this factor still weighs in favor of a stay. 

3 II. Simplification of Issues 

4 Now that the PTO has granted review, the parties and the Court can benefit from 

5 the review process. See Gould v. Control Laser Corp., 705 F.3d 1340, 1342 (Fed. Cir. 

6 1983) ("One purpose ofthe reexamination procedure is to eliminate trial of [an] issue 

7 (when [a] claim is canceled) or to facilitate trial ... by providing the district court with 

8 the expert view of the PTO (when a claim survives the reexamination proceeding)."); see 

9 also DJO, LLC v. VitalWear, Inc., No. 09-cv-2872, 2010 WL 4065633, at *2-3 (S.D. Cal. 

10 Oct. 15,2010). And, to avoid the concern that Defendant may, if the claims are not 

11 canceled, argue again before this Court that the claims are invalid, Defendant has 

12 consented to a limited version of the estoppel provision found in 35 U.S.C. § 315(e). 

13 Accordingly, Defendant shall be estopped from raising any grounds "actually raised and 

14 finally adjudicated in the IPR proceedings." (Reply at 4 (citing Evolutionary 

15 Intelligence, LLC v. Sprint Nextel Corp., No. C-13-4513, 2014 WL 819277, at *5-6 (N.D. 

16 Cal. Feb. 28, 2014); Pi-Net Int'l, Inc. v. Focus Bus. Bank, No. C-12-4958, 2013 WL 

17 5513333, at *2 (N.D. Cal. Oct. 3,2013).) By applying this estoppel provision to 

18 Defendant, the IPR proceedings will certainly clarify and streamline the issues before this 

19 Court. This factor also weighs in favor of a stay. 

20 III. Undue Prejudice 

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

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

23 2014 WL 1350813, at *4 (N.D. Cal. Apr. 3, 2014) (quotingKLA-Tencor Corp. v. 

24 Nanometrics, Inc., No. 05-cv-31ll6, 2006 WL 708661, at *3 (N.D. Cal. Mar. 16,2006)). 

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

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

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

28 III 

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lS-cv-S6-BEN (DHB) 

Case 3:15-cv-00056-BEN-DHB Document 60 Filed 02/03/16 Page 3 of 4
· ' 

1 Although Defendant did not petition for IPR, Defendant acted quickly in moving 

2 for a stay once the PTO decided to grant review. And, as noted before, the parties are not 

3 competitors. 

4 Plaintiff argues it will be prejudiced by the stay because Defendant will align itself 

5 with the defendant in the Dropcam case, and Defendant will gain insight into Plaintiff's 

6 arguments and litigation strategies. This argument is speculative, and the Court is not 

7 persuaded that Plaintiff will suffer undue prejudice. As Plaintiff has said, a motion to 

8 stay is pending in the Dropcam case. Thus, it is possible that that case will also be 

9 stayed. It is also possible that the PTO will invalidate the claims under review. This 

10 factor weighs in favor of granting a stay. 

11 CONCLUSION 

12 The Court GRANTS Defendant's Renewed Motion to Stay. The action is 

13 STAYED pending resolution ofIPRproceedings. Defendant is ORDERED to notifY 

14 this Court within two days of a decision issued by the PTO. Accordingly, the February 8 

15 and 11 hearings are hereby vacated. Defendant's Ex Parte Motion to Postpone Markman 

16 Hearing is DENIED as moot. (Docket No. 51.) 

17 IT IS SO ORDERED. 

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19 Dated: February -A" 2016 

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United States District Court 

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JS-cv-S6-BEN (DRB) 

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