2 3 . 4 5 6 . UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 9 .
10 CYWEE GROUP LTD., CASE NO, C17-0932JLR 11 Plaintiff, ORDER ON THIRD-PARTY v. DEFENDANT’S MOTION FOR 12 SUMMARY JUDGMENT AND HTC CORPORATION, et al., ON CROSS-MOTIONS FOR 13 STAY 4 Defendants/Third-Party Plaintiffs, PROM ORES [eb Reba, 15 “
16 CYWEE MOTION GROUP LTD.,
7 Third-Party Defendant.
18 I. INTRODUCTION 19 Before the court are three motions. First, Third-Party Defendant CyWee Motion 20 |) Group Ltd. (“CyWee Motion”) moves for summary judgment against Defendants and 21 || Third-Party Plaintiffs HTC Corporation (“HTC Corp.”) and HTC America, Inc. (“HTC 22 || America”) (collectively, “HTC”). (MSJ (Dkt. # 107).) HTC opposes CyWee Motion’s
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1 summary judgment motion. (Resp. (Dkt. ## 112 (redacted), 113 (sealed).) Second, 2 || Plaintiff CyWee Group Ltd. (“CyWee Group”) and CyWee Motion (collectively, 3 ||““CyWee”) move for a partial stay of this matter pending inter partes review (“IPR”) 4 || proceedings. (CyWee MTS (Dkt. # 123).) Third, HTC cross-moves for a complete stay 5 || pending IPR proceedings. (HTC MTS (Dkt. #126).) The court has considered the 6 || motions, the parties’ submissions concerning the motions, the relevant portions of the ||record, and the applicable law. Being fully advised,' the court DENIES CyWee Motion’s 8 || motion for summary judgment without prejudice to refiling according to the timeline set
_ 9 || forth herein.. The court further GRANTS in part and DENIES in part CyWee’s motion 10 || for a partial stay and GRANTS in part and DENIES in part HTC’s motion for a complete 11 || stay. 12 . Il. BACKGROUND 13 This case features patent infringement and other disputes between technology 14 || companies. The court identifies the parties before summarizing the factual and 15 || procedural background. 16 ||A. ~The Parties 17 CyWee Group provides products and services in the areas of “motion processing, 18 || wireless high definition video delivery, and facial tracking technology.” (SAC (Dkt. 19 20 ' CyWee Motion and HTC request oral argument on CyWee Motion’s summary 1 judgment motion (see MSJ at Title Page; Resp. at Title Page), and HTC requests oral argument on its cross-motion for a complete stay (see HTC MTS at Title Page), but the court finds that oral “ea is unnecessary to its disposition of the motions, see Local Rules W.D. Wash, LCR
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1 #61) 92.) CyWee Group owns two patents protecting technology that detects, measures, 2 and calculates the movements of machines: United States Patent No. 8,441,438 and 3 || United States Patent No. 8,552,978 (collectively, “the Patents-in-Suit”). (Ud. J¥ 15, 4 |} 20-22, 122-24.) CyWee Motion, which is “affiliated” with CyWee Group, specializes in 5 || “wireless streaming, facial tracking, and motion processing technology solutions for 6 || home entertainment and mobile devices.” (CyWee Motion Am. Countercl. (Dkt. # 104) 747.) . HTC Corp. manufactures consumer electronics, including mobile phones and — □ 9 tablets. (SAC 4/3; Answer to SAC (Dkt. # 62) { 3.) HTC America, a wholly-owned
10 || subsidiary of HTC Corp., imports and sells HTC Corp.’s mobile phones and tablets in the 11 || United States. (SAC 7 4; Answer to SAC 94.)
12 || B. Factual Background . 13 a 14 | | renee — {5 | Rmmmrermmmmmmaaas {6 || ee 17 | |e S| | ners 19 | | Xr 20 41 * HTC also filed a sealed copy of the License Agreement, (See Yoon Decl. (Dkt. # 112-1) □ 14, Ex. 3 (sealed).) When citing the License Agreement, the court cites specific paragraph numbers, where applicable. Where no paragraph number corresponds to the cited material, the court cites the Bates number at the bottom-right corner of the document.
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9 || Motion, Inc. is a wholly-owned subsidiary of CyWee Motion. (Liou Decl. (Dkt. # 107-2) 10 42.) iL TI | | nner (3 || EE Spccifically, HTC 14 || integrated into its mobile phones STM sensor hub modules with CyWee Software. (id. 15 1194.) Whenever HTC required new sensor fusion functionalities, “HTC would request the 16 support from CyWee Motion to develop the new functionalities in the CyWee Software.” 17 || (2d. | ©.) | | Xn | i (TC asserts that “CyWee Motion provided each 20 * Both CyWee Motion and HTC imply that that the nn. (See CyWee Motion Am. Countercl. § 9; HTC MTS at 2.) 7 As discussed below, however, on the record before the court, the relationship between the Patents-in-Suit and the CyWee Software remains unclear, See infra § II.B.2.
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1 || version of the CyWee Software directly to HTC in binary form” and “did not place any 2 restrictions on HTC's use of the CyWee Software in HTC devices.” (Ud. J§ 7-8.) HTC 3 || further contends that it understood that CyWee Motion was compensated for the CyWee 4 || Sottwarc i ee 200 that CyWee 5 || Motion “has never requested payment from HTC for the integration and use of CyWee
6 || Software in HTC devices.” (Ud. ¥ 8.) 7 I es =
| | Nr ners 12, | | Xr 3 | i 14 The same day, CyWee Motion notified HTC SE 15 || (CyWee Motion Am. Countercl. 18, Ex. B at 1.°) CyWee Motion 16 ||demanded that HTC “immediately cease and desist any use of [the CyWee S]oftware” 17 || and “immediately return any and all copies of the software to CyWee Motion.” (/d.) □ 18 // 19 20 * Although CyWee Motion’s amended counterclaims authenticate Exhibit A, the exhibit is appended to CyWee Motion’s counterclaims. (See CyWee Motion Countercl. (Dkt. # 102) 51 117, Bx. AD 7 > Although CyWee Motion’s amended counterclaims authenticate Exhibit B, the exhibit is appended to CyWee Motion’s counterclaims. (See CyWee Motion Countercl. § 18, Ex. B.)
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1 || CyWee Motion contends that HTC refused to return its copies of the CyWee Software 2 || and, to this day, continues to use the CyWee Software in HTC devices, (MSJ at 2.) 3 ||C. Procedural History 4 On June 16, 2017, CyWee Group filed an action for patent infringement against 5 || HTC, alleging that certain HTC devices impermissibly practice the Patents-in-Suit. (See 6 || Compl. (Dit, #1); see also SAC.) This suit is one of seven pending cases in which 7 || CyWee Group alleges that a technology company has infringed the Patents-in-Suit, (See 8 || CyWee Motion MTS at 2 n.7 (listing cases).) Among other affirmative defenses, HTC
. 9 || asserts that CyWee Group’s patent infringement claims are.barred by the patent 10 |] exhaustion doctrine and that HTC holds “an express or implied license” to practice the 11 || Patents-in-Suit. (Answer to SAC at 19.) In addition, HTC brings counterclaims against 12 || CyWee Group for declaratory judgments of patent invalidity and noninfringement. (ad. 13 || 9] 26-41.) 14 On January 11, 2018, HTC filed a third-party complaint against CyWee Motion 15 ||and STM. (TPC (Dkt. # 43).) HTC alleged that the STM components HTC purchased 16 |j for incorporation into the accused HTC products were covered by the License 17 || Agreement, such that STM was obligated to indemnify and defend HTC against CyWee 18 || Group’s patent infringement claims. (Ud. ff] 23, 39-50.) HTC also brought a claim for 19 || unfair business practices under Washington law against CyWee Motion and sought 20 || contribution from both CyWee Motion and STM. (ad. 4 51-61.) 21 On May 31, 2018, HTC filed a stipulated motion to dismiss with prejudice all its 22 || claims against STM. (Stip. MTD (Dkt. # 93); see also 6/1/18 Order (Dkt. # 94) at 2
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1 || (granting the stipulated motion to dismiss).) HTC now represents that it agreed to 2 dismiss its claims against STM because STM threatened to stop supplying HTC with 3 STM sensor hub modules if the litigation continued.® (Siddiqui Decl. (Dkt. # 113-2) A || 5-6 (sealed).) 5 On September 26, 2018, approximately two months after terminating the License 6 || Agreement, CyWee Motion filed counterclaims against HTC for conversion, unjust 7 || enrichment, and declaratory judgment of unauthorized possession. (See CyWee Motion 8 || Countercl. (Dkt. # 102) ff 20-33; see also CyWee Motion Am. Countercl. ff] 20-38.)
_ Additionally, on November 19, 2018, CyWee Motion asserted a replevin claim against □ 10 || HTC. (See CyWee Motion Am. Countercl. 4] 24-27.) In brief, CyWee Motion alleges 11 ||that HTC impermissibly retained possession of the CyWee Software after CyWee Motion 12 terminated the License Agreement. (id. | 17-19.) On November 28, 2018, CyWee 13 || Motion filed the present motion for summary judgment on its conversion and replevin 14 claims. (See MSJ.) 15 ~ On March 4, 2019, CyWee filed a motion to partially stay this case pending IPR 16 || proceedings involving the Patents-in-Suit. (See CyWee MTS at 2.) Months earlier, in 17 || connection with an unrelated suit, non-party Google, Inc. filed IPR petitions with the 18 |] Patent and Trademark Office’s Patent Trial and Appeal Board “PTAB”), seeking to 19 □
20 ° HTC also asserted claims against STMicroelectronics, Inc., an affiliate of STM. (See generally 3d-Party Compl. (Dkt. # 43).) HTC’s claims against STMicroelectronics, Inc. were 1 dismissed with prejudice. (4/23/18 Order (Dkt. #79) at 1.) Additionally, HTC withdrew its motion for leave to file an amended third-party complaint, which would have asserted claims 7 against STMicroelectronics Asia Pacific Ltd., another STM affiliate. (See Mot. for Leave to File Am, 3d-Party Compl. (Dkt. # 87) at 2; 6/1/18 Order at 2.)
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1 || invalidate claims in each of the Patents-in-Suit, Ud. (citing CyWee Grp. v. Google, Inc. 2 No. 1-18-cv-00571 (D. Del.).) The PTAB granted Google, Inc.’s IPR petitions on 3 December 11, 2018. Ud.) CyWee now seeks to stay CyWee Group’s patent infringement 4 || claims against HTC, HTC’s patent invalidity and noninfringement counterclaims against 5 || CyWee Group, and HTC’s third-party claims against CyWee Motion for contribution and 6 || unfair business practices. (Id. at 4.) In other words, CyWee seeks to stay all claims 7 except CyWee Motion’s counterclaims against HTC. (See id.) HTC cross-moves for a
.§ complete stay pending the outcome of the IPR proceedings. (See generally HTC MTS at 9 1.) mo, □□□□ □ 10 The court now considers the motions. ul I. ANALYSIS
12 Summary Judgment Motion . 13 CyWee Motion argues that it is entitled to summary judgment on its conversion 14 || and replevin claims because there is no genuine dispute that HTC continued to use the 15 || CyWee Software “without authorization” after CyWee Motion terminated the License 16 Agreement. (MSJ at 7-8; see also Reply at 3.) HTC contends that the court should deny 17 || the motion pursuant to Federal Rule of Civil Procedure 56(d) because CyWee Motion 18 filed the motion before HTC could conduct sufficient discovery on CyWee Motion’s 19 || cross-counterclaims and HTC’s affirmative defenses to those claims, (Resp. at 1-2, 20 13-14, 23; Yoon Decl. ¥ 10); see also Fed. R. Civ. P. 56(d). HTC also asserts that 21 || genuine disputes of material fact preclude summary judgment. (Resp. at 17-22.) The 22
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1 || court finds that HTC is entitled to relief under Rule 5 6(d) and thus does not reach the 2 merits of CyWee Motion’s summary judgment motion. 3 1, Conversion and Replevin 4 Before addressing HTC’s arguments under Rule 56(d), the court summarizes the 5 || standards that govern CyWee Motion’s conversion and replevin claims. Under 6 || Washington law, conversion “occurs when’a person intentionally interferes with chattel 7 || belonging to another, either by taking or unlawfully retaining it, thereby-depriving the rightful owner of possession.” Alhadeff'v. Meridian on Bainbridge Island, LLC, 220 P.3d
9 1214, 1223 (Wash. 2009). “Wrongful intent is not an element of conversion, and good 10 || faith is not a defense.” Brown ex rel. Richards v. Brown, 239 P.3d 602, 610 (Wash. Ct. 11 |) App. 2010). “Chattel’ includes both tangible and intangible goods, such as corporate 12 || property.” Lang v. Hougan, 150 P.3d 622, 637 (Wash. Ct. App. 2007). 13 In a replevin action, a plaintiff “must prove its title and right to possession” of the 14 || property at issue. Crystal Recreation, Inc. v. Seattle Ass’n of Credit Men, 209 P.2d 358, 15 |{361 (Wash. 1949), Under Washington law, replevin is a statutory cause of action. See 16 || Graham y. Notti, 196 P.3d 1070, 1072 (Wash, Ct. App. 2008) (citing RCW 7.64.020(2)). 17 ||A plaintiff bringing a replevin action must show: (1) that “the plaintiff is the owner of 18 the property or is lawfully entitled to the possession of the property by virtue ofa special 19 || property interest”; (2) that “the property is wrongfully detained” by the defendant; (3) 20 || that “the property has not been taken for a tax, assessment, or fine pursuant to a statute”; 21 || and (4) that “[t]he approximate value of the property.” Graham, 196 P.3d at 1072. In 22
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replevin, the plaintiff “seeks a return of his goods, and damages for the interruption to his 2 || possession.” Hoff □□ Lester, 168 P.2d 409, 413 (Wash. 1946). 3 CyWee Motion’s theories of conversion and replevin are straightforward. In 4 || short, CyWee Motion argues that HTC wrongfully retained possession of the CyWee 5 || Software after the termination of the License Agreement. According to CyWee Motion, 6 ‘when the [License Agreement] was terminated, HTC’s right to possess and use the 7 || CyWee Software pursuant to the [License Agreement] terminated as well.” (Reply at 3.) 8 || CyWee Motion insists that, “[rJegardless of whether the Patents-in-Suit are infringed or 9 not, CyWee Motion [Group] is still entitled to its property,” and HTC must return—i.e., □□ 10 || destroy its copies ofthe CyWee Software. (MSJ at 8.) HTC, for its part, argues that 11 || CyWee Motion’s summary judgment motion is “premature” and that HTC is entitled to || conduct discovery into various areas related to HTC’s alleged right to continue 13 |) integrating the CyWee Software into its products. (See Resp. at 1.) 2. Rule 56(d) Analysis Under Rule 56(d), if the nonmoving patty “shows by affidavit or declaration that, 16 || for specified reasons, it cannot present facts essential to justify its opposition, the court 17 ||may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or 18 || declarations or to take discovery; or (3) issue any other appropriate order.” Fed. R. Civ. 19 || P. 56(d). A Rule 56(d) “continuance of a motion for summary judgment for-purposes of 20 |} discovery should be granted almost as a matter of course unless the non-moving party has 21 not diligently pursued discovery of the evidence.” Burlington N. Santa Fe R.R. Co. v. 22 || Assiniboine & Sioux Tribes of the Fort Peck Reservation, 323 F.3d 767, 773-74 (9th Cir.
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1 2003) (internal quotation marks and citations omitted); see also Metabolife Int'l, Inc. v. 2 || Wornick, 264 F.3d 832, 846 (9th Cir. 2001) (“Although Rule 56(f)’ facially gives judges 3. || the discretion to disallow discovery when the non-moving party cannot yet submit 4 || evidence supporting its opposition, the Supreme Court has restated the rule as requiring, 5 |/rather than merely permitting, discovery ‘where the nonmoving party has not had the 6 opportunity to discover information that is essential to its opposition.”” (citing Anderson 7 || v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5 (1986)) (footnote added). To prevail under 8 || Rule 56(d), “parties opposing a motion for summary judgment must make ‘(a)atimely: □□ □
_ 9 |} application which (b) specifically identifies (c) relevant information, (d) where there is. 10 || some basis for believing that the information sought actually exists.’” Emp’rs T eamsters 11 || Local Nos, 175 & 505 Pension Trust Fund v., Clorox, 353 F.3d 1125, 1129 (9th Cir. 12 || 2004) (quoting VISA Int’l Serv. Ass’n vy. Bankcard Holders of ‘Am., 784 F.2d 1472, 1475 13 || (9th Cir. 1986)). 14 HTC makes its Rule 56(d) request in its opposition to CyWee’s summary 15 ||judgment motion and the accompanying declaration of HTC’s counsel, James C. Yoon. 16 || (See generally Resp.; Yoon Decl. § 10.) The court finds that HTC satisfies all four 17 || requirements for relief under Rule 56(d). . 18 |] - First, HTC’s request is timely: it was filed within the time HTC had to oppose 19 CyWee Motion’s summary judgment motion. (See MSJ at 1 (showing that CyWee 20 21 7 Effective December 1, 2010, Federal Rule of Civil Procedure 56(f) was renumbered 56(d). The Advisory Committee’s notes to Rule 56 with respect to the 2010 amendments state that “[s]ubdivision (d) 09 carries forward without substantial change the provisions of former subdivision (f).” See Fed. R. Civ. P. 56 Advisory Comin. Notes.
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~ 1 ||Motion’s motion was initially noted for December 28, 2018); Resp. at 24 (showing that 2 || HTC filed its response on December 24, 2018)); see also IVC Highlands TT, LLC vy. 3 || DirectBuy, Inc., No, C16-0327RAJ, 2016 WL 3690127, at *2 (W.D. Wash. July 12, 4 || 2016) (stating that a “request [is] timely if made prior to the summary judgment hearing” S |} (citations and quotations omitted)). CyWee Motion does not dispute that HTC timely 6 |) invoked Rule 56(d). (See generally Reply.) 7 Second, Mr. Yoon’s declaration “specifically identifies” information that HTC 8 || contends is essential to support its opposition to CyWee Motion’s summary judgment 9 ||motion. See Emp’rs Teamsters, 353.F.3d at 1129; (Yoon Decl. § 10.) HTC represents 10 that its discovery requests will clarify, among other issues: (1) the relationship between 11 || CyWee Motion and its affiliates, and whether CyWe Motion, CyWee Motion, Inc., and 12 CyWee Tech are “collectively licensors or owners of the CyWee Software,” as CyWee 13 || Motion claims; (2) “[t]he nature and extent of any royalty payments” Ey 14 || i oder the License Agreement; (3) whether HTC may 15 || neers 16 | | IS : or (4) “factual 17 issues underlying HTC’s affirmative defense of equitable estoppel.” (d.; see also Resp. 18 || at 13-17.) 19 CyWee Motion does not dispute that the fourth factor in the Rule 56(d) analysis— 20 || that “there is some basis for believing that the information [HTC seeks] actually 21 || exists’”—is satisfied, See Emp’rs Teamsters, 353 F.3d at 1129; (see generally Reply.) 22 || Rather, CyWee Motion appears to argue that the areas of discovery that HTC identifies
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1 || are not relevant because, whatever discovery HTC might obtain, HTC cannot show that it 2 || has a right to possess the CyWee Software in light of the termination of the License 3 || Agreement. (See Reply at 2.) The court disagrees. 4 To begin, HTC’s intended discovery into the relationship between CyWee Motion, 5 || CyWee Motion Inc., CyWee Tech, and other CyWee affiliates is warranted. CyWee 6 || Motion refers to CyWee Motion, CyWee Tech, and CyWee Motion, Inc. “collectively as 7 || licensors or owners of the CyWee Software.” (MSJ at 2 n.1.) To support the proposition 8 || that CyWee Motion has an ownership interest in the CyWee Software, however, CyWee
_... Motion cites only the License Agreement and the Assignment.. (See id. at 4,.9;.see 10 || emerald) | Mmmm rears 1 || Aan 12 || But, on the record before the court, the relationships between CyWee Motion and other 13 || CyWee entities remain unclear. HTC is entitled to discovery into the nature of those 14 || relationships, their bearing on the ownership of the CyWee Software, and whether . 15 || CyWee Motion has a property interest in the CyWee Software sufficient to confer 16 || standing for its conversion and replevin claims. See Davenport v. Wash. Educ. Ass’n, 17 || 197 P.3d 686, 696 (Wash. Ct. App. 2008) (explaining that, to assert a conversion claim, 18 || the plaintiff must “have a possessory or other ‘property interest’ in the chattel”); RCW 9.64.020(2). Moreover, HTC is entitled to obtain discovery on its theory that yy 2.1 || A 22 |r
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———————————— 43 en HTC is entitled to further examine which CyWee affiliates received royalties from STM, when the royalties ceased, if ever, and whether the royalties encompassed HTC’s ° ost-termination use of the CyWee Software. These issues bear on whether HTC might Jfnete rom hc 17 CyWee Motion argues that HTC collaterally estopped itself from invoking the protection of the License Agreement when HTC dismissed its claims against STM. (MSJ at 8.) Specifically, CyWee Motion insists that “[a]ny rights HTC may have claimed under the [License Agreement] are extinguished because HTC voluntarily and with prejudice dismissed its claims that it was a third-party beneficiary of the [License 22
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1 Agreement] and entitled to indemnity or contribution from the STM entities.” (Ud. 2 (emphasis omitted).) CyWee Motion is mistaken. “Issue preclusion, also known as 3 || collateral estoppel, ‘attaches only when an issue of fact or law is actually litigated and 4 || determined by a valid and final judgment, and the determination is essential to the 5 ||judgment.’” Amadeo y, Principal Mut. Life Ins. Co., 290 F.3d 1152, 1159 (9th Cir. 2002) □
6 || (quoting Arizona y. California, 530 U.S. 392, 414 (2000)). “A voluntary dismissal of a 7 claim prior to any adjudication and without any stipulated findings of fact does not 8 || actually litigate any issue.” Jd. HTC voluntarily dismissed its claims against STM prior
any adjudication of those claims and without any stipulated findings of fact. (See Stip. |. 10 || MTD at 2-3.) Thus, in defending against CyWee Motion’s counterclaims, HTC is not 1 1 || precluded from arguing that HTC is a third-party beneficiary of the License Agreement. 12 Finally, as of the filing of CyWee Motion’s summary judgment motion, there was 13 || no indication that HTC had failed to diligently pursue its intended discovery, See 14 || Burlington, 323 F.3d at 773-74. CyWee Motion filed its summary judgment motion 15 || approximately two months after filing its counterclaims and just nine days after amending 16 ||those claims. (See MSJ ; CyWee Motion Countercl.; CyWee Motion Am. Countercl.) In □□ 17 || his declaration, Mr. Yoon chronicles the discovery efforts HTC made before CyWee 18 || Motion filed its motion for summary judgment, as well as the discovery requests by HTC 19 || that were pending at the time it filed its opposition. (Yoon Decl. 6-10.) That HTC 20 || lacked facts “essential to justify its opposition,” see Fed. R. Civ. P. 56(d), reflected the 21 || relatively early date at which CyWee Motion filed its summary judgment motion rather 22 || than a failure to diligently pursue discovery.
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1 For the foregoing reasons, the court concludes that HTC is entitled to relief under 2 Rule 56(d). The court thus DENIES CyWee Motion’s motion for summary judgment 3 || without prejudice to refiling, if appropriate, according to the timeline set forth in the 4 || prevailing scheduling order and as explained more fully in the penultimate section of this 5 |jorder. (See 8/7/18 Order (Dkt. # 101) at 2); see infra § TII.B.2. 6 Cross-Motions to Stay 7 In light of the pending IPR proceedings, CyWee moves to stay CyWee Group’s 8 || patent infringement claims against HTC and HTC’s counterclaims for declaratory 9 ||judgments of noninfringement and patent invalidity against CyWee Group (collectively, □□ 10. || “the patent claims”). (CyWee MTS at 4-6; see also CyWee MTS Reply (Dkt. # 129) at 11 |/6-12.) Additionally, CyWee urges the court to stay HTC’s third-party claims against 12 || CyWee Motion while allowing CyWee Motion’s counterclaims against CyWee Motion to 13 || proceed. (CyWee MTS at 5-6.) HTC, in contrast, insists.that a complete stay is 14 || warranted. (HTC MTS at 6-10; HTC MTS Reply (Dkt. # 130) at 1-6.) The court begins 15 considering whether to stay the patent claims. 16 _ 1. Patent Claims 17 “Courts have inherent power to manage their dockets and stay proceedings,” 18 || including the authority to stay a case pending IPR proceedings. Ethicon, Inc. v. Quigg, 19 F.2d 1422, 1426-27 (Fed. Cir. 1988); Wre-Hol v. Pharos Sci. & Applications, No. 20 ||C09-1642MIP, 2010 WL 2985685, at *2 (W.D. Wash. July 23, 2010). To determine 21 || whether to grant such a stay, the court considers “(1) whether a stay will simplify the 22 || issues in question and the trial of the case, (2) whether discovery is complete and
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1 || whether a trial date has already been set, and (3) whether a stay will unduly prejudice or 2 || present a clear tactical disadvantage to the non-moving party.” Pac. Bioscience Labs., 3. || Inc. v. Pretika Corp., 760 F. Supp. 2d 1061, 1063 (W.D. Wash. 2011). “The moving A || party bears the burden of demonstrating that a stay is appropriate.” DSS Tech. Mgmt., 5 ||Ine. v. Apple, Inc., No. 14-cv-05330-HSG, 2015 WL 1967878, at *2 (N.D. Cal. May 1, 6 2015),
7 The court finds each of the relevant factors weighs in favor of staying the patent . § claims. First, the IPR proceedings are likely to simplify the issues for trial. The PTAB
9 already granted the IPR petitions. (CyWee MTS at 2.) Staying the.case pending the □□ 10 |] outcome of IPR could clarify the scope of the patent claims, render some or all of the 11 infringement claims moot, and provide the court with the PTAB’s expert opinion. See 12 || Finjan, Inc. v. Symantec Corp., 139 F. Supp. 3d 1032, 1036 (N.D. Cal. 2015). Moreover, 13 || the stage of the litigation favors a stay. Although a trial date is set and the discovery 14 |) cut-off near, the court has yet to hold a claims construction hearing, and the parties have 15 || not engaged in dispositive motions practice with respect to the patent claims.*® See, e.g., 16 || PersonalWeb Techs., LLC v. Facebook, Inc., No. 13-cv-01356-EJD, 2014 WL 116340, at 17 || *3 (NLD. Cal. Jan. 13, 2014) (finding that the second factor favored a stay where “a claim 18 || construction order ha[d] been issued and the close of fact discovery [wa]s fast 19 |] approaching” but “a substantial portion of the work—expert discovery, summary 20 ||judgment, pre-trial preparation, and trial itself—I[ay] ahead”). Finally, HTC does not 21 7 . After the parties filed their cross-motions to stay this matter, the court vacated the remaining claim construction deadlines. (See 3/6/19 Order (Dkt. # 125) at 2.)
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1 |] argue that it will suffer prejudice if the court stays the patent claims, (See generally HTC 2 ||MTS; HTC MTS Reply.) Accordingly, the court STAYS, pending the outcome of the 3 || IPR proceedings, CyWee Group’s patent infringement claims against HTC and HTC’s 4 || counterclaims for declaratory judgments of noninfringement and patent invalidity against 5 |; CyWee Group. 6 2. Non-Patent Claims 7 . The court now confronts the more difficult question whether to extend the stay to 8 || the parties’ non-patent claims—that is, HTC’s third-party claims against CyWee Motion 9 || for contribution.and unfair.competition, and CyWee Motion’s counterclaims against HTC □□□□ 10 || for conversion, replevin, unjust enrichment, and declaratory judgment of unauthorized 11 || possession. The parties appear to agree that HTC’s third-party claims against CyWee 12 || Motion are sufficiently related to the patent claims to warrant a stay of those claims.’ 13 || (See CyWee Motion MTS at 4; HTC MTS at 9.) Accordingly, the parties’ dispute 14 || centers on whether the court should stay CyWee Motion’s counterclaims against HTC, in 15 || addition to the parties’ other claims, and thereby stay the entire action. 16 Even outside the IPR context, “[a] district court has inherent power to control the 17 || disposition of the causes on its docket in a manner which will promote economy of time 18 || and effort for itself, for counsel, and for litigants.” CMAX, Inc. v. Hall, 300 F.2d 265, 19 |} 268 (9th Cir. 1962). Considerations of judicial economy alone, however, are generally 20 1 ° However, HTC appears to argue that, should the court choose not to stay CyWee Motion’s counterclaims against HTC, it should likewise decline to stay HTC’s third-party claims 7 against CyWee Motion. (See HTC MTS Reply at 1.) The court need not reach that argument, given the parameters of the stay the court imposes, as described below.
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1 || insufficient to warrant a stay. See Dependable Highway Exp., Ine. v. Navigators Ins. Co., 2 |/498 F.3d 1059, 1066 (9th Cir. 2007). The court must also consider “the possible damage 3 || which may result from the granting of a stay, the hardship or inequity which a party may 4 || suffer in being required to go forward, and the orderly course of justice measured in 5 || terms of the simplifying or complicating of issues, proof, and questions of law which 6 |) could be expected to result from a stay.” CMAX, 300 F.2d at 268 (citing Landis v. N. Am. Co., 299 U.S, 248, 254-55 (1936)). 8 At the outset, the court acknowledges CyWee’s argument that, even if the PTAB || were to invalidate the Patents-in-Suit, CyWee Motion’s counterclaims against HTC 10 “would survive unaffected.” (CyWee MTS Reply at 1.) The court cannot evaluate the 11 || merits of that argument because the parties have failed to provide any evidence that sheds 12 || light on the relationship between the Patents-in-Suit and the CyWee Software. Both 13 || parties imply that the Patents-in-Suit are not coextensive with the CyWee Software, and □ 14 || that the License Agreement encompassed more than simply a license to practice the 15 || Patents-in-Suit. (See HTC MTS at 2; CyWee MTS Reply at 2-3.) But the role of the 16 Patents-in-Suit within the CyWee Software remains unclear; and, on the limited record 17 || before the court, the court cannot with confidence rule out the possibility that outcome of 18 || the IPR proceedings may have some bearing on CyWee Motion’s counterclaims against 19 HTC. 20 Moreover, the court finds that considerations of judicial efficiency and “the 21 || orderly course of justice” favor a complete stay. See CMAX, 300 F.2d at 268. Should the 22 || court allow CyWee Motion’s counterclaims to proceed, it would create the potential for
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1 || two trials on factually intertwined causes of action: one on CyWee Motion’s allegations 2 || that HTC has wrongfully retained the CyWee Software, and one on CyWee Group’s 3 |) patent infringement claims against HTC and HTC’s unfair competition and contribution 4 ||claims against CyWee Motion. These claims are best tried together, however. CyWee 5 || Group’s patent infringement claims, HTC’s unfair business practices claim, and CyWee 6 || Motion’s counterclaims all arise from the same transaction: CyWee Motion’s provision 7 || of the CyWee Software to HTC.!° Relatedly, with respect to both the patent infringement
8 || claims and CyWee Motion’s counterclaims, HTC’s affirmative defenses pivot on the mmm . 2s well as the alleged, years-long □ 10 || development relationship between CyWee Motion and HTC, In light of these factual 11 || commonalities, separate trials would risk confusing the complex relationships among the 12 || parties and substantially duplicating the court’s and the parties’ time and effort. See, e.g.,. 13 || PopSockets LLC v. Quest USA Corp., No. 17-CV-3653 (FB) (CLP), 2018 WL 4660374, 14 |\ at *2 (E.D.N.Y. Sept. 28, 2018) (declining to stay the plaintiffs non-patent claims 15 pending IPR proceedings because “the underlying factual disputes are intertwined”); 16 || Armor All/STP Co. v. Aerospace Comme’ns Holdings Co., No, 6:15-CV-781, 2016 WL 17 18 '0 CyWee Motion’s counterclaims against HTC thus appear to be “compulsory” within 19 || the meaning of Federal Rule of Civil Procedure 13(a). See Fed. R. Civ. P. 13(a) (stating that a compulsory counterclaim is one that “arises out of the transaction or occurrence that is the 20 || Subject matter of the opposing party’s claim”). To allow CyWee Motion’s counterclaims to proceed while staying the remaining claims would risk defeating Rule 13’s purpose to prevent “a 1 substantial duplication of effort and time by the parties and the courts.” See Interlabservice, OOO v. Illumina, Inc., No. 15cv2171-KSC, 2017 WL 4217133, at *5 (S.D. Cal. Sept. 20, 2017) (quoting Transamerica Occidental Life Ins. Co. v, Aviation Office of Am., Inc,, 292 F.3d 384, 22 389-390 (3d Cir. 2002)).
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1 || 6397269, at *4 (E.D. Tex. Oct. 28, 2016) (staying factually related patent and non-patent 2 || claims). 3 The court also finds that a complete stay will not unduly prejudice CyWee. 4 CyWee contends that, “if this case were stayed in its entirety, CyWee Motion would be 5 |) unfairly deprived of the opportunity to request, in a timely manner, an order requiring that HTC return the CyWee Software and stop using it.” (CyWee MTS at 6; see also 7 CyWee MTS Reply at 10-11.) That CyWee Motion elected not to pursue preliminary
_ ||injunctive relief against HTC on its conversion and replevin claims undercuts its assertion |.
.. 9 |i that it must “obtain resolution of those claims as quickly and efficiently as possible.” cared 10 ||(CyWee MTS at 6); see Tradesman Int’l v. Black, 724 F.3d 1004, 1012-13 (7th Cir. 11 |}2013) (noting that the plaintiffs decision to not seek preliminary injunctive relief 12 “suggests that [the plaintiff] has not suffered irreparable harm”). Furthermore, a stay 13 || pending IPR is not indefinite; the PTAB must issue a final determination within a year— 14 18 months “for good cause shown”—of the date when the PTAB notices the institution 15 || of IPR proceedings. See 35 US.C. § 316(a)(11). The court acknowledges, however, that □
16 || CyWee Motion has a legitimate interest in obtaining a decision on the merits of its 17 || summary judgment motion, which was pending for longer than the time within which the 18 || court endeavors to address such motions. (See MSJ.) The court also observes that 19 || CyWee Motion filed its summary judgment motion before the PTAB granted the IPR 20 || petitions and before the parties filed their cross-motions for a stay. (See id.; CyWee MTS 21 2.) 22 //
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1 Accordingly, the court imposes a stay with the following parameters: The court 2 || will permit CyWee Motion to refile its motion for summary judgment before the 3 || dispositive motions deadline, currently set for July 2, 2019. (See 8/7/18 Order at 2.) If 4 || CyWee Motion does not refile its summary judgment motion or the court does not grant 5 the motion in full, then the court will stay CyWee Motion’s counterclaims pending the 6 || outcome of the IPR proceedings. In light of the court’s ruling on HTC’s.request for relief 7 || under Rule 56(d), see supra § I.A.2, HTC is entitled to respond to CyWee Motion’s 8 summary judgment motion with any discovery it obtains before the June 18, 2019,
_. 9 || discovery cut-off (see id). In other words, the court does not stay discovery related to 10 || CyWee Motion’s summary judgment motion. However, all other discovery is stayed. 11 || The court further STAYS CyWee Group’s patent infringement claims against HTC, 12 || HTC’s counterclaims against CyWee Group, and HTC’s third-party claims against 13 || CyWee Motion pending the IPR proceedings. 14 ||C. — Provisionally Filed Under Seal 15 Because this order relies on materials filed under seal, the court DIRECTS the 16 Clerk to provisionally file the order the seal. The court ORDERS counsel to meet and 17 || confer regarding which, if any, portions of this order they seek redact. Counsel must then 18 || submit one joint statement or, if they cannot agree on a joint statement, competing 19 || statements indicating the portions of the order they seek to have redacted and on what 20 || basis. See Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1179-80 (9th Cir. 21 2006). The statement or statements must attach a proposed redacted order that 22 || incorporates the redactions requested in the corresponding statement. The parties must
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1 || file any such statement within 14 days of the date of this order. The court will consider 2 || the parties’ redaction requests, if any, and then file the order on the docket with any 3 || necessary redactions. 4 IV. CONCLUSION 5 For the foregoing reasons, the court DENIES CyWee Motion’s motion for 6 ||summary judgment (Dkt. # 107) without prejudice to refiling before the dispositive 7 || motions deadline. The court further GRANTS in part and DENIES in part CyWee’s 8 || motion for a partial stay (Dkt. # 123) and GRANTS in part and DENIES in part on
... 9.\)HTC’s motion for.a complete stay (Dkt. # 126). The court VACATES the trial dateand □□□ 10 || related pretrial dates in this matter, except for the discovery cut-off and the dispositive 11 || motions deadline. In addition, the court DIRECTS the Clerk to provisionally file this 12 || order under seal and ORDERS the parties to meet and confer regarding the need for 13 || redaction and, within 14 days of the date of this order, to indicate any such need as 14 || described above. 15 Dated this 13" day of June, 2019. 16 ( 2 VON 18 The Honorable James L. Robart . U.S. District Court Judge 19 20 ,
21 22
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