Court Opinion

ID: 4020381
Source: CourtListenerOpinion
Date Created: 2016-08-01 16:01:12.910329+00
Date Added: 2024-06-11T09:17:01.539724
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

       MURATA MACHINERY USA, MURATA
             MACHINERY, LTD.,
              Plaintiffs-Appellants

                           v.

 DAIFUKU CO., LTD., DAIFUKU AMERICA CORP.,
              Defendants-Appellees
            ______________________

                      2015-2094
                ______________________

    Appeal from the United States District Court for the
District of Utah in No. 2:13-cv-00866-DAK-BCW, Senior
Judge Dale A. Kimball.
                 ______________________

                Decided: August 1, 2016
                ______________________

    DAVID HESKEL BEN-MEIR, Norton Rose Fulbright US
LLP, Los Angeles, CA, argued for plaintiffs-appellants.
Also represented by MARK EMERY, JONATHAN S.
FRANKLIN, Washington, DC; MARK BETTILYON, Thorpe
North & Western, Salt Lake City, UT.

    JEFFREY K. SHERWOOD, Blank Rome LLP, Washing-
ton, DC, argued for defendants-appellees. Also represent-
ed by DIPU A. DOSHI, CHARLES J. MONTERIO, JR., MARK J.
THRONSON, MEGAN R. WOOD.
                ______________________
2           MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.

     Before REYNA, CHEN, and STOLL, Circuit Judges.
STOLL, Circuit Judge.
     This is an interlocutory appeal from a patent in-
fringement lawsuit that Murata Machinery USA and
Murata Machinery, Ltd. (collectively “Murata”) filed
against Daifuku Co., Ltd. and Daifuku America Corp.
(collectively “Daifuku”) in the United States District
Court for the District of Utah. Daifuku petitioned for
inter partes review of all of the asserted patents, and the
district court then stayed the litigation. Murata moved to
lift the stay and for entry of a preliminary injunction, but
the district court denied the motions in a single order. We
hold that the district court did not err in refusing to lift
the stay, but that its cursory denial of the preliminary
injunction did not satisfy Rule 52(a)(2) of the Federal
Rules of Civil Procedure, which requires that a court state
findings and conclusions supporting denial of a prelimi-
nary injunction. Thus, we affirm the district court’s order
as it pertains to the stay, but vacate the order with re-
spect to the preliminary injunction and remand for pro-
ceedings consistent with this opinion.
                        BACKGROUND
    Murata and Daifuku are direct competitors in the
manufacture and maintenance of automated material
handling systems (“AMHS”). AMHS use robotic vehicles
suspended on tracks from the ceilings of semiconductor
cleanrooms to move and manipulate semiconductor com-
ponents. In September 2013, Murata sued Daifuku in the
United States District Court for the District of Utah
alleging infringement of three of its patents: U.S. Patent
Nos. 7,165,927, 7,771,153, and 8,197,172 (collectively, the
“Original Patents”). One year later, in September 2014,
Murata moved to amend its complaint to further assert
U.S. Patent Nos. 6,113,341 and 6,183,184 (collectively, the
“Additional Patents”). Shortly thereafter, Daifuku peti-
MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.        3

tioned the Patent Trial and Appeals Board of the Patent
and Trademark Office for inter partes review (“IPR”) of
the Original Patents and concurrently moved to stay the
district court litigation pending the outcome of the IPR
proceedings. Daifuku relied on the traditional three-
factor test district courts use in stay determinations:
(1) stage of the proceedings; (2) potential for the stay to
simplify issues in case; and (3) undue prejudice to the
non-moving party or a clear tactical advantage for the
moving party resulting from stay. Murata responded,
opposing the stay and advocating that the district court
consider a fourth factor in addition to the three Daifuku
had briefed: potential for a stay to reduce the burden of
litigation on the parties and the court.
    On February 12, 2015, the district court, relying on
the four-factor test advocated by Murata, stayed the case
pending the Board’s resolution of Daifuku’s IPR petitions.
The court’s order also granted leave for Murata to amend
its complaint to add the Additional Patents, but made
clear that it was staying the entire case, including any
proceedings involving the Additional Patents if Murata
chose to add them. The district court justified staying the
entire case based on Murata’s assertion in its motion to
amend that litigating the Original and Additional Patents
piecemeal would make little sense due to a significant
overlap in discovery. The district court also stated, how-
ever, that Murata could file a motion to lift the stay
regarding the Additional Patents if a legitimate reason for
doing so materialized.
    Murata amended its complaint on February 19, 2015,
to include the Additional Patents. After the Board insti-
tuted an IPR proceeding on each of the Original Patents,
on May 28, 2015, Murata moved to lift the stay only with
regard to the Additional Patents, this time relying on the
three-factor test Daifuku had first introduced and without
mentioning the additional “burden of litigation” factor it
advocated when it opposed issuance of the stay. Amidst
4           MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.

motions practice regarding lifting the stay, Daifuku filed
IPR petitions on the Additional Patents. 1 Before the
district court decided Murata’s pending motion to lift the
stay, Murata moved for a preliminary injunction against
Daifuku based on purported infringement of the Addi-
tional Patents.
    The district court denied Murata’s motion to lift the
stay, relying on the same four-factor test it applied when
it issued the stay and finding that every factor that
weighed in favor of granting the stay continued to do so.
The district court again cited Murata’s earlier argument,
made in its motion for leave to amend the complaint to
include the Additional Patents, that litigating the Origi-
nal Patents and Additional Patents separately would
make “no sense.” Murata Mach. USA, Inc. v. Daifuku Co.
(Dist. Ct. Order), No. 2:13-cv-00866, 2015 WL 5178456, at
*1 (D. Utah Sept. 4, 2015). The court reasoned that lifting
the stay for only the Additional Patents might cause
duplicative discovery and mentioned that, indeed, the
Additional Patents now faced potential IPR proceedings.
Thus, the district court denied Murata’s motion to lift the
stay. The court then held that Murata untimely filed its
motion for preliminary injunction and concluded that
“[b]ecause the court has now declined to lift the stay, the
Motion for Preliminary Injunction is denied without

    1    We take notice that the Board instituted IPR pro-
ceedings for the Additional Patents after the parties
completed briefing in this appeal. See Daifuku Co. v.
Murata Mach., Ltd., IPR2015–01538, Paper No. 11
(P.T.A.B. January 19, 2016); Daifuku Co. v. Murata
Mach., Ltd., IPR2015–01539, Paper No. 11 (P.T.A.B.
Jan. 19, 2016); Oral Argument at 6:45–8:31, available at
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=
2015-2094.mp3.
MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.           5

prejudice to renew at a later date, if appropriate.”       Id.
at *2.
    Murata appeals the district court’s refusal to lift the
stay and its denial of the preliminary injunction.
                        DISCUSSION
    “It is axiomatic that the initial inquiry in any appeal
is whether the court to which appeal is taken has jurisdic-
tion to hear the appeal.” Arlington Indus., Inc. v. Bridge-
port Fittings, Inc., 759 F.3d 1333, 1336 (Fed. Cir. 2014)
(internal citation omitted) (quoting Woodard v. Sage
Prods., Inc., 818 F.2d 841, 844 (Fed. Cir. 1987) (en banc)).
We first recognize that we have jurisdiction to review an
interlocutory order denying a preliminary injunction in a
patent infringement lawsuit under 28 U.S.C. § 1292(a)(1)
& (c)(1). “[I]f the trial court’s stay order had the practical
effect of denying [appellant]’s motion for a preliminary
injunction,” we have interlocutory jurisdiction. Procter &
Gamble Co. v. Kraft Foods Glob., Inc., 549 F.3d 842, 846
(Fed. Cir. 2008).
    We typically do not have interlocutory jurisdiction
over a district court’s decision to stay or not stay a case.
See Intellectual Ventures II LLC v. JPMorgan Chase &
Co., 781 F.3d 1372, 1375 (Fed. Cir. 2015) (explaining that
“decisions on motions to stay ordinarily are not immedi-
ately appealable under the final judgment rule” (citing
Gulfstream Aerospace Corp. v. Mayacamas Corp., 485
U.S. 271, 277–78 (1988))). During interlocutory review,
however, certain “orders, which ordinarily would be
nonappealable standing alone, may be reviewed” under
the doctrine of pendent jurisdiction, at the court’s discre-
tion. Procter & Gamble, 549 F.3d at 846 (quoting Inter-
medics Infusaid, Inc. v. Regents of Univ. of Minn., 804
F.2d 129, 134 (Fed. Cir. 1986)). Considering that the
district court in this case maintained the stay and denied
the preliminary injunction concurrently in a single order,
those decisions are inextricably linked and we exercise
6           MURATA MACHINERY USA, INC.    v. DAIFUKU CO., LTD.

our discretion to consider the district court’s stay decision
along with its denial of a preliminary injunction. See id.
(“Because we have jurisdiction to review the effective
denial of [appellant]’s motion for a preliminary injunction,
we also have jurisdiction over the trial court’s decision to
stay this case pending . . . proceedings before the PTO.”);
Intermedics Infusaid, Inc., 804 F.2d at 134 (“Whether an
appellate court exercises this ‘doctrine of pendent jurisdic-
tion at the appellate level’ is a matter of discretion.”).
                   I. Motion to Lift Stay
    We first consider the district court’s denial of Mura-
ta’s motion to lift the stay with regard to the Additional
Patents. We hold that the district court did not err in
refusing to lift the stay entered in this case.
     The ability to stay cases is an exercise of a court’s in-
herent power to manage its own docket. See Procter &
Gamble, 549 F.3d at 848–49 (citing Landis v. N. Am. Co.,
299 U.S. 248, 254–55 (1936)). Thus, we review the dis-
trict court’s refusal to lift a stay pending IPR for an abuse
of discretion. See id. at 845.
    A court may lift a stay if the circumstances supporting
the stay have changed such that the stay is no longer
appropriate. Canady v. Erbe Elektromedizin GmbH, 271
F. Supp. 2d 64, 74 (D.D.C. 2002). District courts typically
analyze stays under a three-factor test: “(i) whether a
stay would unduly prejudice or present a clear tactical
disadvantage to the non-moving party; (ii) whether a stay
will simplify the issues in question and trial of the case;
and (iii) whether discovery is complete and whether a
trial date has been set.” Nokia Corp. v. Apple Inc., No.
C.A. 09-791, 2011 WL 2160904, at *1 (D. Del. June 1,
2011) (quoting Xerox Corp. v. 3Com Corp., 69 F. Supp. 2d
404, 406 (W.D.N.Y. 1999)). Murata’s principal argument
is that the district court should have relied on this three-
factor test and that it abused its discretion by considering
an additional, fourth factor—the burden of litigation on
MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.           7

the court and the parties—that Murata itself urged the
court to adopt earlier in the case. In support of its posi-
tion, Murata points out that Congress has specifically
required district courts to apply the four-factor variant of
the test—i.e., to include the “burden of litigation” factor as
part of their analysis—for stay requests pending covered
business method (“CBM”) review by the Board. See
America Invents Act (“AIA”), Pub. L. No. 112-29,
§ 18(b)(1), 125 Stat. 284, 331 (2011). Congress did not
likewise prescribe a set of factors that district courts must
consider when they decide whether to stay a case pending
IPR. The inference Murata would have us draw is that
the “burden of litigation” factor is “applicable solely to
stays pending CBM review . . . .” Appellant Br. 48. Put
another way, Murata argues that the CBM statute im-
putes a negative restriction on district courts, prohibiting
them from considering the burden of litigation unless
Congress has explicitly required that they do so. Thus,
Murata argues it was legal error for the district court to
have considered the burden of litigation in this case as the
stay centered around IPRs rather than CBM reviews.
     We disagree. Besides the fact that it was Murata that
first advocated that the court consider the “burden of
litigation” factor, we nonetheless hold that consideration
of this factor is well within the district court’s discretion.
“The Supreme Court has long recognized that district
courts have broad discretion to manage their dockets,
including the power to grant a stay of proceedings.”
Procter & Gamble, 549 F.3d at 848–49 (citing Landis, 299
U.S. at 254–55); see also Gould v. Control Laser Corp., 705
F.2d 1340, 1341 (Fed. Cir. 1983). Indeed, we have noted
that with respect to a similar PTO post-grant proceeding,
reexamination, the authorizing statute need not even
grant district courts the power to stay related proceedings
because “‘such power already resides with the Court’[,] . . .
including the authority to order a stay pending conclusion
of a PTO reexamination.” Ethicon, Inc. v. Quigg, 849 F.2d
8           MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.

1422, 1426–27 (Fed. Cir. 1988) (quoting 1980 U.S. Code
Cong. & Admin. News at 6463).
     Attendant to the district court’s inherent power to
stay proceedings is the court’s discretionary prerogative to
balance considerations beyond those captured by the
three-factor stay test. The burden litigation places on the
court and the parties when IPR proceedings loom is one
such consideration that district courts may rightfully
choose to weigh. See, e.g., NFC Tech. LLC v. HTC Am.,
Inc., No. 2:13-cv-1058, 2015 WL 1069111, at *5 (E.D. Tex.
Mar. 11, 2015) (Bryson, J.) (noting that “whether a stay
will reduce the burden of litigation on the parties and the
court [] is a consideration that courts often take[] into
account in determining whether to grant a stay pending
inter partes review”). The AIA § 18(b)(1) requirement
that district courts must consider the burden of litigation
when faced with a CBM stay request does not bar courts
from choosing to consider it in the IPR context. Indeed,
legislative history confirms that “Congress’s desire to
enhance the role of the PTO and limit the burden of
litigation on courts and parties was not limited to the
CBM review context.” Id. (citing AIA legislative history).
As such, district courts might consider this factor relevant
and therefore do not abuse their discretion by weighing it
as part of an IPR-based stay determination.
    We have considered Murata’s remaining arguments
that the district court abused its discretion in analyzing
the traditional three factors and find them unpersuasive.
Having determined that the district court did not abuse
its discretion in its overall analysis or by considering the
burden of litigation, we do not disturb the district court’s
decision not to lift the stay with respect to the Additional
Patents.
          II. Motion for Preliminary Injunction
    After denying Murata’s motion to lift the stay, the
district court found Murata’s preliminary injunction
MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.          9

motion untimely and concluded that, “[b]ecause the court
has now declined to lift the stay, the Motion for Prelimi-
nary Injunction is denied without prejudice to renew at a
later date, if appropriate.” Dist. Ct. Order, 2015 WL
5178456, at *2. The district court included no additional
discussion or rationale supporting its denial of Murata’s
motion. Murata argues that the district court erred by
summarily denying its motion for preliminary injunction.
We agree, for the reasons stated below.
    In general, we review a grant or denial of a prelimi-
nary injunction using the law of the regional circuit, here
the Tenth Circuit. Trebro Mfg., Inc. v. Firefly Equip.,
LLC, 748 F.3d 1159, 1165 (Fed. Cir. 2014). “However, the
Federal Circuit has itself built a body of precedent apply-
ing the general preliminary injunction considerations to a
large number of factually variant patent cases, and gives
dominant effect to Federal Circuit precedent insofar as it
reflects considerations specific to patent issues.” Id.
(quoting Mikohn Gaming Corp. v. Acres Gaming, Inc.,
165 F.3d 891, 894 (Fed. Cir. 1998) (internal quotation
marks and alterations omitted)). Both the Tenth Circuit
and the Federal Circuit review the denial of a preliminary
injunction motion for an abuse of discretion. Little v.
Jones, 607 F.3d 1245, 1250 (10th Cir. 2010); see also
Procter & Gamble, 549 F.3d at 845. “A district court
would necessarily abuse its discretion if it based its ruling
on an erroneous view of the law or on a clearly erroneous
assessment of the evidence.” Highmark Inc. v. Allcare
Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748 n.2 (2014)
(quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384,
405 (1990)).
    A preliminary injunction is a “drastic and extraordi-
nary remedy” which, to obtain, a “moving party must
demonstrate a reasonable likelihood of success on the
merits, irreparable harm in the absence of a preliminary
injunction, a balance of hardships tipping in its favor, and
the injunction’s favorable impact on the public interest.”
10          MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.

Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., 357 F.3d 1319,
1324–25 (Fed. Cir. 2004) (internal citations omitted).
Rule 52(a)(2) of the Federal Rules of Civil Procedure
specifically requires that “[i]n granting or refusing an
interlocutory injunction, the court must . . . state the
findings and conclusions that support its action.” This
rule reflects the exigency and gravity underlying a motion
for preliminary injunction, as it departs from Federal
Rule of Civil Procedure 52(a)(3)’s more general rule that
“[t]he court is not required to state findings or conclusions
when ruling on a motion under Rule 12 or 56 or, unless
these rules provide otherwise, on any other motion.” We
take particular note, as have our sister circuits, that the
text of Rule 52 is drawn not only to a district court’s grant
of a preliminary injunction motion, but also to a denial.
See, e.g., Ali v. Quarterman, 607 F.3d 1046, 1048 (5th Cir.
2010) (“When denying a motion for a preliminary injunc-
tion, a district court must offer findings of fact and con-
clusions of law to justify the denial” under Federal Rule of
Civil Procedure 52(a)(2). (emphasis added) (citing Fed. R.
Civ. P. 52(a)(2))).
     Here, the sum and substance of the district court’s
decision regarding Murata’s preliminary injunction mo-
tion is found in a single paragraph, which concluded:
“Because the court has now declined to lift the stay, the
Motion for Preliminary Injunction is denied without
prejudice to renew at a later date, if appropriate.” Dist.
Ct. Order, 2015 WL 5178456, at *2. This cursory treat-
ment of Murata’s preliminary injunction motion does not
satisfy the Rule 52(a)(2) requirement that the deciding
court must state factual findings and legal conclusions
supporting its action. See Prairie Band of Potawatomi
Indians v. Pierce, 253 F.3d 1234, 1246 (10th Cir. 2001)
(citing Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 15
F.3d 1222, 1228 (1st Cir. 1994)) (explaining that “conclu-
sory findings are not sufficient compliance” with Federal
Rule of Civil Procedure 52(a)(2)). While “[t]here are
MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.        11

times . . . when a district court’s failure to comply with
Rule 52(a) will not necessitate a remand for clarification,”
if, for example, it can be “ascertain[ed] from the record
that one party or the other was clearly entitled to judg-
ment in its favor,” this is not one of those instances. Id.
Daifuku argues that the district court effectively consid-
ered the merits of Murata’s preliminary injunction motion
when it concluded that a stay would not unduly prejudice
Murata. See Oral Argument at 31:29–35:41. But the
district court did not state as much in its opinion; nor did
it suggest that this was its reasoning. In the absence of
any analysis whatsoever, we cannot review the opinion for
an abuse of discretion. See, e.g., H & R Block Tax Servs.
LLC v. Acevedo-Lopez, 742 F.3d 1074, 1076 (8th Cir. 2014)
(vacating and remanding order denying preliminary
injunction because “the district court’s failure to make
specific findings and explain its ruling, as Fed. R. Civ. P.
52(a)(2) requires, results in a record that does not suffi-
ciently inform this court of the basis for the trial court’s
decision on the material issue” (internal citation and
quotation marks omitted)).
    We hold that when a district court denies a prelimi-
nary injunction motion, it must provide an adequate
reason for its decision beyond merely noting that the case
has been stayed. In so holding, we maintain our view
that “[a] preliminary injunction should not be granted if
there is a substantial issue of patent validity.” Procter &
Gamble, 549 F.3d at 849. Likewise, we recognize that
“both a preliminary injunction and a stay ordinarily
should not be granted at the same time.” Id. We do not
ask, nor do the Federal Rules of Civil Procedure require,
that the district court conduct a preliminary injunction
hearing, or even request a responsive brief from Daifuku.
See Bradley v. Pittsburgh Bd. of Educ., 910 F.2d 1172,
1175 (3d Cir. 1990) (explaining that “[t]he applicable
Federal Rule does not make a hearing a prerequisite for
ruling on a preliminary injunction.”). Indeed, a “limited
12          MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.

analysis may support a trial court’s denial of a prelimi-
nary injunction” so long as the district court concludes
that some of the requisite preliminary injunction factors
disfavor the movant. Polymer Techs., Inc. v. Bridwell, 103
F.3d 970, 973–74 (Fed. Cir. 1996); see also Prairie Band,
253 F.3d at 1246 (explaining that “Rule 52(a) does not
require over-elaboration of detail or particularization of
facts” so long as the findings are not “conclusory” (internal
citation and quotation marks omitted)). We simply ask
that the district court explain its views on why a prelimi-
nary injunction would or would not be appropriate in this
case. Bradley, 910 F.2d at 1178 (explaining that for
preliminary injunctions, “conclusions of law are . . . essen-
tial” under Federal Rule of Civil Procedure 52(a)(2) and
that even when there has been no hearing held, “the
factual bases on which the conclusions are predicated . . .
serve to permit evaluation of the legal conclusions
reached by the district court”). Thus, we vacate the
district court’s order to the extent it denies Murata’s
motion for a preliminary injunction and we remand for
further proceedings consistent with this opinion. See id.
at 1179 (“Because of the court’s failure to comply with
Rule 52, we are unable to determine why the district
court rejected a preliminary injunction on this aspect of
[movant’s] claim. It follows that we must return this
matter to the district court which should have the oppor-
tunity to make the requisite findings and conclusions.”);
see also H & R Block, 742 F.3d at 1078; Ali, 607 F.3d at
1048.
                       CONCLUSION
    For the foregoing reasons, we affirm the district
court’s denial of Murata’s motion to lift the stay, vacate
the district court’s denial of Murata’s motion for a prelim-
inary injunction, and remand for the court to address the
motion in light of this opinion.
MURATA MACHINERY USA, INC.   v. DAIFUKU CO., LTD.   13

  AFFIRMED-IN-PART, VACATED-IN-PART, AND
                REMANDED
                        COSTS
   No costs.