Source: http://wa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180508_0003126.WWA.htm/qx
Timestamp: 2019-04-18 15:26:28+00:00

Document:
APPIAN WAY SALES, INC., et al., Defendants.
Before the court is Appian Way Sales, Inc. (“Appian”) and Puget Lite-Pavers, Inc.'s (“Puget”) (collectively, “Defendants”) motion to stay proceedings against Puget. (Mot. (Dkt. # 35).) In addition, Plaintiff Tile Tech, Inc. (“Tile Tech”) filed a surreply in which it asks the court to strike certain material in Defendants' reply. (Surreply (Dkt. # 45).) The court has reviewed the motion and the surreply, all of the parties' submissions related to each document, the relevant portions of the record, and the applicable law. Being fully advised,  the court GRANTS Defendants' motion to stay the proceedings against Puget and GRANTS in part and DENIES in part Tile Tech's request to strike.
Defendants move to stay this matter against Puget based on the “customer suit” doctrine. (See generally Mot.) Under this doctrine, district courts have the authority to stay certain patent infringement claims. See Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir. 1990). The “customer suit” doctrine acts as an exception “to the general rule that favors the forum of the first-filed action.” Tegic Commc'ns Corp. v. Bd. of Regents of Univ. of Tex. Sys., 458 F.3d 1335, 1343 (Fed. Cir. 2006). Traditionally, “[w]hen a patent owner files an infringement suit against a manufacturer's customer and the manufacturer then files an action of noninfringement or patent invalidity, the suit by the manufacturer generally take precedence.” In re Nintendo of Am., Inc., 756 F.3d 1363, 1365 (Fed. Cir. 2014); see also Spread Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349, 1357 (Fed. Cir. 2011); Katz, 909 F.2d at 1464. The justification for this exception “is based on the manufacturer's presumed greater interest in defending its actions against charges of patent infringement; and to guard against [the] possibility of abuse.” Kahn v. Gen. Motors Corp., 889 F.2d 1078, 1081 (Fed. Cir. 1989). Furthermore, the manufacturer is often considered “the true defendant . . . [and] must protect its customers, either as a matter of contract, or good business, or in order to avoid the damaging impact of an adverse ruling against its products.” Katz, 909 F.2d at 1464 (quoting Codex Corp. v. Milgo Elec. Corp., 553 F.2d 735, 738 (1st Cir. 1977)). A stay is appropriate when the litigation against the manufacturer alone will “resolve the ‘major issues' concerning the claims against the customer.” Spread Spectrum Screening, 657 F.3d at 1358 (quoting Katz, 909 F.2d at 1464). The stay “facilitate[s] [a] just, convenient, efficient, and less expensive determination, ” and does not burden the customer with unnecessary litigation. Nintendo, 756 F.3d at 1365.
Traditionally, district courts limited the “customer suit” doctrine to cases in which a plaintiff brought suit against the customer and the manufacturer in different districts. See, e.g., Privasys, Inc. v. Visa Int'l, No. C 07-03257SI, 2007 WL 3461761, at *3 (N.D. Cal. Nov. 14, 2007) (citing Lifelink Pharm., Inc. v. NDA Consulting, Inc., No. 5:07-CV-785, 2007 WL 2459879, at *3 (N.D. Ohio Aug. 24, 2007)) (explaining that a stay against the customer “would run counter to the goal of fostering judicial economy without enhancing the product source defendant's ability to litigate the issue of patent infringement”); Naxon Telesign Corp. v. GTE Info. Sys., Inc., 89 F.R.D. 333, 339 (N.D. Ill. 1980) (“In this action, where the suit against the manufacturer and customer would take place simultaneously . . . the problem addressed in [the ‘customer suit doctrine'] is not presented.”).
However, in Nintendo, the Federal Circuit held that the principles underlying the “customer suit” doctrine-facilitating a “just, convenient, efficient, and less expensive determination”-included cases in which both the manufacturer and the customer were joined in a single action. 756 F.3d at 1365. In Nintendo, the manufacturer and the customer were named in the same proceeding, and the district court denied Nintendo's motion to sever and stay the claims against the customers. Id. at 1364. The Federal Circuit, however, held that “[w]hile the circumstances of this case differ from those of the customer-suit exception, we agree . . . that the same general principles govern in that Nintendo is the true defendant.” Id. at 1365. The issues of infringement and validity were common to Nintendo and the customers. Thus, if the plaintiff recovered from Nintendo, they could not recover from the customers. Id. at 1366. Because “Nintendo's liability is predicate to recovery from any of the defendants, ” the Federal Circuit held that “the case against Nintendo must proceed first, in any forum.” Id.
Several district courts have followed Nintendo and similarly extended the principles underlying the “customer suit” doctrine to cases in which the manufacturer and the customer are joined in the same action for the same infringement claims. See, e.g., WP Banquet, LLC v. Target Corp., No. LACV1602082JAKJPRX, 2016 WL 9450448, at *4-6 (C.D. Cal. Dec. 15, 2016); Opticurrent, LLC v. Power Integrations, Inc., No. 2:16-CV-325-JRG, 2016 WL 9275395, at *4-5 (E.D. Tex. Oct. 19, 2016); Werteks Closed Joint Stock Co. v. GNC Corp., No. 6-60688-CIV, 2016 WL 8739846, at *4-6 (S.D. Fla. Aug. 4, 2016), report and recommendation adopted as modified, No. 16-60688-CIV, 2016 WL 8809716 (S.D. Fla. Aug. 23, 2016); Capital Sec. Sys., Inc. v. NCR Corp., No. 1:14-CV-1516-WSD, 2015 WL 3819336, at *2-3 (N.D.Ga. June 18, 2015).

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