Case 6:15-cv-00060-JRG Document 61 Filed 05/12/16 Page 1 of 7 PageID #: 834

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
Intellectual Ventures II LLC,

Plaintiff,

v.

BITCO General Insurance Corporation, et. al.,

Defendants.

Intellectual Ventures II LLC,

Plaintiff,

v.

Great West Casualty Company,

Defendant.

Case No. 6:15-cv-59

(LEAD CASE)

Case No. 6:15-cv-60

MEMORANDUM OPINION AND ORDER

Before the Court is Defendants 1 Motion for Stay Pending Resolution of Inter Partes
Review of the Patents-In-Suit (Motion, Dkt. No. 131). Having considered the same, and for the
reasons below, the Court finds that the motion should be GRANTED-IN-PART.
I.

BACKGROUND

On January 20, 2015, Plaintiff Intellectual Ventures II LLC (Plaintiff) filed suit against
Defendants alleging infringement of U.S. Patent No. 7,516,177 (the 177 Patent). (Dkt. No. 1 2;
Dkt. No. 1 in Case No. 6:15-cv-60.) On April 9, 2015, Plaintiff amended its complaint to

Defendants collectively refers to Defendants BITCO General Insurance Corp., BITCO National Insurance Co.,
and Great West Casualty Company.
2
Unless otherwise noted, all citations refer to Lead Case No. 6:15-cv-59.

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additionally allege infringement of U.S. Patent No. 8,929,555 (the 555 Patent) against
Defendants. (Dkt. No. 24; Dkt. No. 23 in Case No. 6:15-cv-60.) The Court consolidated the two
above-captioned cases on April 30, 2015, and held a claim construction hearing on December 9,
2015. Jury selection is currently set to begin on October 3, 2016.
Defendants filed two petitions with the PTAB requesting inter partes review of the 177
Patent on August 12, 2015. (Motion at 2.) Defendants subsequently filed a petition with the
PTAB on September 18, 2015, requesting inter partes review of the 555 Patent. (Id.) On
February 9, 2016, the PTAB granted Defendants initial petitions as to claims 1113 and 1520
of the 177 Patent, but the PTAB did not institute review on claim 14 3 of the 177 Patent. 4 (Id. at
3.) On March 22, 2016, the PTAB granted Defendants petition as to the 555 Patent and
instituted review of claims 1, 7, and 1315 of the 555 Patent. (Id.) Defendants filed the present
motion to stay pending resolution of the PTABs review proceedings one week later, asserting
that [a]s a result of these institutions, twelve of the remaining thirteen asserted claims in this
case are now undergoing inter partes review. 5 (Id.)
In response, Plaintiff represents that it no longer asserts the 555 Patent against
Defendants. (Response, Dkt. No. 138 at 1.) On May 11, 2016, the parties filed a Stipulation of
Dismissal as to the asserted claims of the 555 Patent. (Dkt. No. 143.) Thus, nine of the
remaining ten asserted claims of the 177 Patent are currently undergoing inter partes review. See
(Reply, Dkt. No. 139 at 2.)

Claim 14 is dependent on claim 11, which is under review.

On January 11, 2016, Defendants filed an additional petition for inter partes review with the PTAB that in
response to claim construction arguments that IV presented in response to the 177 IPR petitions . . . more fully
addresses the single asserted claim that is not currently pending in IPR. (Motion at 23.) Defendants represent that
the PTAB will issue a decision on institution of this petition by July 11, 2016. (Id. at 3.)
5
Throughout pre-trial proceedings, Plaintiff disclaimed claims 110 of the 177 Patent, and the Court in its claim
construction order found multiple claims of the 555 Patent to be invalid as indefinite. (Dkt. No. 103-1; Dkt. No. 116
at 4655.)
4

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II.

LEGAL STANDARD

A district court has the inherent power to control its own docket, including the power to
stay proceedings before it. See Clinton v. Jones, 520 U.S. 681, 706 (1997) (The District Court
has broad discretion to stay proceedings as an incident to its power to control its own docket.).
How to best manage the courts docket calls for the exercise of judgment, which must weigh
competing interests and maintain an even balance. Landis v. N. Am. Co., 299 U.S. 248, 25455
(1936); Gonzalez v. Infostream Grp., Inc., Case No. 2:14-cv-906, Dkt. No. 45 (E.D. Tex. Mar. 2,
2015). In particular, the question whether to stay proceedings pending inter partes review of a
patent is a matter committed to the district courts discretion. See Ethicon, Inc. v. Quigg, 849
F.2d 1422, 142627 (Fed. Cir. 1988) (request for stay pending inter partes reexamination). A
stay is particularly justified when the outcome of a PTO proceeding is likely to assist the court
in determining patent validity or eliminate the need to try infringement issues. Evolutionary
Intelligence, LLC v. Millennial Media, Inc., No. 5:13-cv-4206, 2014 WL 2738501 (N.D. Cal.
June 11, 2014); see also 3rd Eye Surveillance, LLC v. Stealth Monitoring, Inc., No. 6:14-cv-162,
2015 WL 179000, at *1 (E.D. Tex. Jan. 14, 2015).
District courts typically consider three factors when determining whether to grant a stay
pending inter partes review of a patent in suit: (1) whether the stay will unduly prejudice the
nonmoving party, (2) whether the proceedings before the court have reached an advanced stage,
including whether discovery is complete and a trial date has been set, and (3) whether the stay
will likely result in simplifying the case before the court. NFC Techs. LLC v. HTC Am., Inc.,
Case No. 2:13-cv-1058-WCB, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015) (Bryson, J.).
Based on th[ese] factors, courts determine whether the benefits of a stay outweigh the inherent
costs of postponing resolution of the litigation. Id.

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III.
1.

ANALYSIS

Undue Prejudice
Defendants argue that Plaintiff will not suffer undue prejudice from a stay for three

reasons. First, Defendants contend that Plaintiff is primarily a licensing entity that does not
compete with Defendants, and a stay would, at most, only serve to defer a potential damages
award. (Motion at 5.) Second, Defendants assert that Plaintiff delayed in bringing suit, stating
that plaintiff cannot deny that it waited over five years from the 177 patents issuance to file
suit . . . 6 (Id.; Reply at 4.) Finally, Defendants argue that Plaintiff will benefit from the costeffective resolution of validity issues that the IPRs will provide. . . . IPR proceedings have
statutory one-year deadlines, ensuring speedy review. (Id.)
Plaintiff does not disagree that it is a licensing entity or contend that a monetary remedy
would be inadequate. Instead, Plaintiff alleges that it will likely take years for the inter partes
review proceedings to become final through appeal and argues that a three-year stay will
unduly prejudice its rights as a patent owner. (Response at 89.) However, Defendants have not
requested a three-year stay. Instead, Defendants ask the Court to stay the present litigation only
until the PTAB has completed its review and issued final written decisions. While a delay in
enforcement of patent rights is certainly an interest entitled to weight, that factor is present in
every case in which a patentee resists a stay, and it is therefore not sufficient, standing alone, to
defeat a stay motion. NFC Techs., 2015 WL 1069111, at *2; see also VirtualAgility Inc. v.
Salesforce.com, Inc., 759 F.3d 1307, 1318 (Fed. Cir. 2014). Further, the Court is not persuaded
that a stay, within this particular scenario, would afford Defendants a major tactical advantage.
Accordingly, the Court concludes that this factor is neutral.

Defendants represent that [a]n IV entity owned the 177 Patent since it issued in 2009, but IV did not assert it
against anyone until the filing of the complaint in this case. (Motion at 5.)

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2.

Stage of Proceedings
Defendants argue that a stay is appropriate because, at the time their motion was filed,

expert discovery had not started, and the parties must engage in significant pre-trial filings,
motions, and other events identified in the Courts Docket Control Order. (Motion at 6.) In
response, Plaintiff asserts that the late stage of this case weighs against a stay. (Response at 7.)
While this case has indeed progressed to an advanced stage of proceedings, a large amount of
pretrial work remains. The Court finds that it appears likely that the bulk of the expenses that
the parties would incur in pretrial work and trial preparation are still in the future. NFC Techs.,
2015 WL 1069111, at *3.
The Court also considers whether the defendant acted with reasonable dispatch in filing
its petitions for inter partes review and then, after the petitions were granted, in filing its motion
for a stay. Id. Here, Defendants contend that their diligence in filing the IPR petitions also
favors a stay. (Id.) Defendants filed their petitions for inter parties review of the 177 Patent less
than seven months after the case was filed, 7 and they filed their petition for inter partes review of
the 555 Patent less than six months after Plaintiff amended its complaint. Defendants then filed
the present motion to stay a week after the PTAB instituted review of the 555 Patent.
Plaintiff argues that Defendants two-month delay [in filing their stay motion] disfavors
a stay. (Sur-Reply, Dkt. No. 142 at 4.) Although almost two months may have passed
between the PTABs institution of review of the 177 Patent and the filing of the present motion,
Defendants requested that the Court stay this action only a week after the PTAB granted
Defendants petition for inter partes review of the 555 Patent. The Court does not fault
Defendants for waiting to move for a stay until after the PTAB instituted review proceedings on

Defendants also state that they filed their petitions for review of the 177 Patent only three weeks after invalidity
contentions were exchanged and only three months after the service of infringement contentions. (Motion at 2, 6.)

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both patents asserted against them, even though the parties have since stipulated to the dismissal
of the 555 Patent. The Court finds that Defendants acted with reasonable dispatch in filing their
petitions for inter partes review and their subsequent motion to stay. However, because this
action has reached an advanced stage of proceedings, the Court concludes that this factor weighs
slightly against a stay.
3.

Simplification of Issues
[T]he most important factor bearing on whether to grant a stay in this case is the

prospect that the inter partes review proceeding will result in simplification of issues before the
Court. NFC Techs., 2015 WL 1069111, at *4. Here, nine of the ten asserted claims of the 177
Patent are currently under review. If the PTAB proceedings were to find some or all of the
claims under review to be valid, then Defendants would be estopped from asserting invalidity
defenses on any ground that [they] raised or reasonably could have raised during inter partes
review. 35 U.S.C. 315(e)(2).
Plaintiff argues that, if the asserted claims are not found to be invalid, then the PTAB
proceedings will not necessarily streamline the validity case because Defendants will likely
argue that prior art systems previously cited are not subject to the IPRs estoppel provision.
(Response at 5.) Plaintiff additionally notes that Defendants have raised other invalidity
arguments that are outside the purview of inter parties review. (Id.) However, the Court finds that
the likelihood of simplification of issues is high since the PTAB has instituted review of almost
all of the claims at issue in this case. See NFC Techs., 2015 WL 1069111, at *7 (finding that
after the PTAB has instituted review proceedings, the parallel district court litigation ordinarily
should be stayed). Thus, the Court concludes that this factor weighs in favor of a stay.

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IV.

CONCLUSION

After considering the relevant factors, and for the reasons above, the Court finds that
Defendants Motion for Stay Pending Resolution of Inter Partes Review of the Patents-In-Suit
should be and is hereby GRANTED-IN-PART. The Court ORDERS that this case be stayed
until the PTAB issues its rulings with regard to both of Defendants petitions for inter partes
review concerning the 177 Patent pursuant to which inter partes review is currently instituted on
.
certain claims of that patent.
The Parties are ORDERED to file a joint status report within ten (10) days after the
PTAB issues its rulings. Counsel shall also deliver a courtesy copy of such report to the Courts
chambers at the Sam B. Hall, Jr. Federal Building and United States Courthouse, 100 E. Houston
St., Marshall, TX 75670.

SIGNED this 19th day of December, 2011.

So ORDERED and SIGNED this 12th day of May, 2016.

____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE