Continental Automotive Systems, Inc. v. Nokia Corporation

• Court: Court of Chancery of Delaware
• Decided: December 20, 2021
• Docket: C.A. No. 2021-0066-JRS
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE

417 S. State Street JOSEPH R. SLIGHTS III Dover, Delaware 19901 VICE CHANCELLOR Telephone: (302) 739-4397 Facsimile: (302) 739-6179

December 20, 2021

Philip A. Rovner, Esquire Kelly E. Farnan, Esquire Jonathan A. Choa, Esquire Blake Rohrbacher, Esquire Potter Anderson & Corroon LLP Richards, Layton & Finger, P.A. 1313 North Market Street 920 North King Street Wilmington, DE 19801 Wilmington, DE 19801

Re: Continental Automotive Systems, Inc. v. Nokia Corporation C.A. No. 2021-0066-JRS

Dear Counsel:

I have reviewed your submissions regarding Defendants’ Motion to Stay

Discovery and For Protective Order (the “Motion”). For the reasons explained

below, the Motion is granted.

Plaintiff, Continental Automotive Systems, Inc. (“Continental”), filed its

Verified Complaint (“Complaint”) in this Court on January 25, 2021. Continental

seeks equitable relief to enforce its rights to license on fair, reasonable and non-

discriminatory terms standard-essential patents held by Defendants, Nokia Continental Automotive Systems, Inc. v. Nokia Corporation C.A. No. 2021-0066-JRS December 20, 2021 Page 2

Corporation, Nokia of America Corporation, Nokia Solutions and Networks OY,

and Nokia Technologies OY (collectively “Nokia”).

The litigation has not moved at a pace typical for litigation in this Court. Once

served with the Complaint, Nokia sought and received an extension to respond and

then removed the action to the United States District Court for the District of

Delaware (the “District Court”). After contested litigation in the District Court, the

action was remanded to this Court by Opinion and Order dated November 15, 2021.

Nokia filed a motion to dismiss on November 29, 2021,1 and then filed the Motion

sub judice on December 3, 2021. The Motion seeks a stay of discovery and

protection from pending discovery until the motion to dismiss is decided.

“Ordinarily, where a motion to dismiss is made a Court will direct that

discovery be held in abeyance in the absence of a showing of a need that the

discovery continue because it is always desirable to avoid the cost and inconvenience

of unnecessary discovery.”2 The burden placed on the party seeking a stay of

1 The motion to dismiss was originally filed and fully briefed in the District Court. 2 Weinberger v. Amstar Corp., 1984 WL 19474, at *1 (Del. Ch. Jan. 16, 1984); see also AM Gen. Hldgs. LLC v. Renco Gp., Inc., 2013 WL 1668627, at *4 (Del. Ch. Apr. 18, 2013) (“When, as here, there is a pending motion to dismiss but no special circumstances warranting discovery at that time, a stay is frequently granted.”). Continental Automotive Systems, Inc. v. Nokia Corporation C.A. No. 2021-0066-JRS December 20, 2021 Page 3

discovery is to “show that there are practical reasons for staying discovery, but those

reasons need not rise to a level of unusual or difficult circumstances.”3 That minimal

burden “is often easily met” and “avoiding unnecessary discovery is usually

sufficient justification for a stay of discovery pending resolution of a potentially

dispositive motion.”4 Indeed, “absent special circumstances, discovery will be

stayed pending determination of a motion to dismiss the complaint where the ground

for the motion offers a reasonable expectation that if the motion is granted litigation

in this or another forum will be avoided.”5

Continental opposes the Motion principally on the grounds that the case has

been delayed long enough thanks to Nokia’s tactics and the motion to dismiss is not

likely to succeed. Continental’s frustration is understandable. Nokia’s ill-fated

removal bid has taken roughly eight months off the litigation clock. Nevertheless,

there is pending a fully briefed motion to dismiss that, if granted, will end the

3 Skubik v. New Castle Cty., 1998 WL 118199, at *2 (Del. Ch. Mar. 5, 1998). 4 In re KKR Fin. Hldgs. LLC S’holder Litig., 2014 WL 2090527, at *1 (Del. Ch. May 19, 2014) (quotations omitted): see also TravelCenters of Am. LLC v. Brog, 2008 WL 5101619, at *1 (Del. Ch. Nov. 21, 2008) (same). 5 In re McCrory Parent Corp., 1991 WL 137145, at *1 (Del. Ch. July 3, 1991). Continental Automotive Systems, Inc. v. Nokia Corporation C.A. No. 2021-0066-JRS December 20, 2021 Page 4

litigation.6 The litigation is not expedited––another factor weighing in favor of a

temporary stay of discovery.7 With these facts in mind, on balance, I am satisfied

that “the costs and hardship to defendants if discovery were to proceed [outweighs]

plaintiffs’ need for discovery and the risks to plaintiffs if a stay were granted.”8

Based on the foregoing, the Motion is GRANTED. Discovery in this action

shall be stayed pending resolution of Defendants’ Motion to Dismiss.

IT IS SO ORDERED.

Very truly yours,

/s/ Joseph R. Slights III

6 In this regard, I disagree with Continental that the motion to dismiss is not likely to end the litigation if successful. The motion addresses threshold jurisdictional and standing issues and it presents arguments that the claims asserted in the Complaint are not well pled. Any or all of these defenses, if successful, would be case dispositive. Now is not the time to weigh in on the merits. The question presented here is simply whether a temporary stay discovery should be ordered as a matter of discretionary case management. In my view, based on our settled precedent, the answer is yes. 7 See Ohrstrom v. Harris Tr. Co. of N.Y., 1997 WL 666977, at *2 (Del. Ch. Oct. 20, 1997) (finding that a brief stay of discovery pending resolution of dispositive motion would cause no prejudice to plaintiff given that there was not a “pending application for emergency relief”), vacated on other grounds by 1998 WL 13859 (Del. Ch. Jan. 9, 1998). 8 Id.