UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
NST Global, LLC, d/b/a SB Tactical Case No. 19-cv-792-PB v. Opinion No. 2020 DNH 044
SIG Sauer Inc.
MEMORANDUM AND ORDER
NST Global, LLC d/b/a SB Tactical (“Plaintiff” or “SB
Tactical”) filed this patent infringement action, alleging that
SIG Sauer Inc. (“Defendant” or “SIG Sauer”) infringes two of its
patents. SIG Sauer filed petitions for inter partes review
(“IPR”) with the U.S. Patent and Trial Appeal Board (“PTAB”) of
the Patent and Trademark Office (“PTO”), challenging the
validity of all twelve claims in the two asserted patents in
this case. SIG Sauer now moves to stay proceedings in this court
pending the resolution of the IPRs. For the reasons that follow,
Defendant’s motion to stay is granted.
I. BACKGROUND
SB Tactical brought this action alleging direct, induced,
and contributory infringement of two patents it owns: U.S.
Patent No. 8,869,444 (“the ’444 Patent”) and U.S. Patent No.
9,354,021 (“the ’021 Patent”). Compl., Doc. No. 1 at 2-3. In its complaint, SB Tactical alleges, inter alia, that SIG Sauer
manufactures and sells several products that share a similar
design to handgun stabilizing braces claimed in SB Tactical’s
patents. Doc. No. 1 at 2–3. SB Tactical filed its complaint on
January 22, 2019 in the U.S. District Court for the District of
Delaware. Doc. No. 1 at 1. SIG Sauer moved to transfer the case
to the District of New Hampshire on March 27. Defs.’ Mot. to
Transfer, Doc. No. 15 at 1. The District of Delaware granted the
motion to transfer on July 9. Transfer Order, Doc. No. 44 at 1.
On September 25, the parties submitted a joint discovery
plan, which proposed the following deadlines:
• Commencement of claim construction discovery: October 10, 2019 • Amendment of pleadings: January 7, 2020 • Exchange of preliminary claim constructions, extrinsic evidence, and identification of references: January 20, 2020 • Filing of joint claim construction and prehearing statement: February 17, 2020 • Completion of claim construction discovery and commencement of non-claim construction discovery: March 9, 2020 • Opening claim construction briefs: March 30, 2020 • Responsive claim construction briefs: April 13, 2020
Proposed Disc. Plan, Doc. No. 65 at 8–9. The parties also
proposed that a claim construction hearing be held “not later
than [sixty] days after service of Responsive Claim Construction
Briefs”; that all fact and expert discovery be complete “[forty-
five] days after service of rebuttal expert disclosures”; that
2 motions for summary judgment be filed “no later than 120 days
before trial”; and that trial occur during the “[t]wo-week
period beginning [January 5, 2021].” Doc. No. 65 at 9–11. I
approved the parties’ plan on September 30, 2019.
On January 23, 2020, SIG Sauer submitted IPR petitions for
the ’444 and ’021 patents. Carroll Decl., Doc. No. 68-2 at 1–2.
Its IPR challenges all twelve claims in the two patents. Doc.
No. 68-2 at 1–2. On January 30, it filed a motion requesting
that I stay proceedings in this court, pending the resolution of
the IPR petition. Def.’s Mot. to Stay pending inter partes
review, Doc. No. 68 at 1.
B. Inter Partes Review
The IPR process was created in 2012 as part of the Leahy–
Smith America Invents Act (“AIA”). See 35 U.S.C. §§ 311–319. IPR
is an expedited procedure for challenging the validity of a
patent before the PTO and PTAB. Id. It replaced the earlier
inter partes reexamination process, which frequently took many
years to complete. See, e.g., PersonalWeb Techs., LLC v.
Facebook, Inc., Nos. 5:13-CV-01356-EJD; 5:13-CV-01358-EJD; 5:13-
CV-01359-EJD, 2014 WL 116340, at *2 (N.D. Cal. Jan. 13, 2014)
(“IPR, if instituted, will typically conclude within 18 months
of the filing date. In contrast, the average time from filing to
conclusion of the previous inter partes reexamination procedure
3 ranged from 28.9 to 41.7 months.”) (citing 77 Fed. Reg. 48680-01
at 48721).
Once a petitioner requests IPR, the patent owner has three
months to file a preliminary response, 35 U.S.C. § 313; 37 C.F.R
§ 42.107(b), after which the PTO has three months to determine
whether to institute IPR, 35 U.S.C. § 314(b)(1). The PTO may
institute an IPR only if it determines that “there is a
reasonable likelihood that the petitioner would prevail with
respect to at least [one] of the claims challenged in the
petition.” 35 U.S.C. § 314(a). If the PTO grants an IPR
petition, the final determination in the IPR must be issued
within one year from the date that the petition is granted. 35
U.S.C. § 316(a)(11) 1.
Because SIG Sauer filed its petition on January 23, SB
Tactical will have until late April to respond. Depending upon
when SB Tactical responds, the PTO will have until as late as
July to decide whether to institute IPR.
II. ANALYSIS
I have the inherent power to manage my docket by staying
proceedings. Landis v. N. Am. Co., 299 U.S. 248, 254–55, 57 S.
1 The one-year deadline may be extended up to six months for good cause shown. 35 U.S.C. § 316(a)(11).
4 Ct. 163, 81 L. Ed. 153 (1936). This includes stays of
proceedings pending the resolution of a related matter before
the PTO. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426–27 (Fed.
Cir. 1988). It is within my discretion to grant a stay, based
upon an analysis of the same three factors previously used to
grant or deny a stay pending the earlier inter partes
reexamination. See In re Corel Software LLC, 778 Fed. Appx. 951,
952–54 (Fed. Cir. 2019) (reviewing magistrate judge’s
application of “traditional” inter partes reexamination stay
factors to an IPR stay request); accord SurfCast, Inc. v.
Microsoft Corp., No. 2:12–CV–333, 2014 WL 6388489, at *1 (D. Me.
Nov. 14, 2014). These three factors are:
(1) the stage of the litigation, including whether discovery is complete and a trial date has been set; (2) whether a stay will simplify the issues in question and the trial of the case; and (3) whether a stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving party.
SurfCast, 2014 WL 6388489, at *1. “The analysis considers the
totality of the circumstances, and ‘while prior decisions may
prove instructive, the inquiry is largely case[-]specific.’”
ACQIS, LLC v. EMC Corp., 109 F. Supp. 3d 352, 356 (D. Mass.
2015) (quoting SurfCast, 2014 WL 6388489, at *1).
As I explain below, I find that the balance of the three
factors tips in favor of granting a stay.
5 A. Stage of the Litigation
Evaluating this prong requires me to “consider the progress
already made in the case.” PersonalWeb Techs., LLC v. Google
Inc., 2014 WL 4100743, at *4 (N.D. Cal. Aug. 20, 2014). I must
determine “whether litigation has progressed significantly
enough for a stay to be disfavored.” PersonalWeb Techs., LLC v.
Apple Inc., 69 F. Supp. 3d 1022, 1025 (N.D. Cal. 2014). “The
earlier the stage of proceedings, the greater the reason to
grant a stay.” SurfCast, 2014 WL 6388489, at *2.
This factor weighs heavily in favor of granting a stay in
this case. The Markman hearing has not yet been briefed, let
alone held. Cf., e.g. SurfCast, 2014 WL 6388489, at *2 (granting
stay even though Markman order had issued). Non-claim
construction discovery has barely begun. See Qualcomm Inc. v.
Apple Inc., No. 3:17-CV-2403-CAB-MDD, 2018 WL 4104966, at *3
(S.D. Cal. Aug. 29, 2018) (granting stay where “the majority of
fact and expert discovery is still to be completed”). Although
this case was filed over a year ago, much of this time was spent
litigating the motion to transfer, rather than the substantive
issues of the case. Indeed, “the most burdensome stages of the
case[] — completing discovery, preparing expert reports, filing
and responding to pretrial motions, preparing for trial, going
through the trial process, and engaging in post-trial motions
practice — all lie in the future.” IOENGINE, LLC v. PayPal
6 Holdings, Inc., Nos. CV 18-452-WCB, CV 18-826-WCB, 2019 WL
3943058, at *5 (D. Del. Aug. 21, 2019). 2
B. Simplification of the Issues
Courts consider the question of whether a stay is likely to
simplify the issues at trial to be the “most important factor.”
IOENGINE, 2019 WL 3943058, at *8. There are myriad ways in which
an IPR could simplify this case. Specifically,
(1) all prior art presented to the Court will have been first considered by the USPTO with its particular expertise; (2) many discovery problems relating to the prior art can be alleviated by the USPTO examination; (3) in those cases resulting in effective invalidity of the patent, the suit will likely be dismissed; (4) the outcome of the reexamination may encourage a settlement without the further use of the Court; (5) the record of reexamination would likely be entered at trial, thereby reducing the complexity and length of the litigation; (6) issues, defenses and evidence will be effectively limited in pre-trial conferences after a reexamination; and (7) the cost of litigation will likely be reduced.
In re Body Science LLC Patent Litig., No. 12-10536-FDS, 2012 WL
5449667, at *3 (D. Mass. Nov. 2, 2012) (listing ways in which
the inter partes reexamination process may simplify a case)
(quoting Nidec Corp. v. LG Innotek Co., Ltd., No. 6:07cv108,
2009 WL 3673433, at *2 (E.D. Tex. Apr. 3, 2009); accord
Destination Maternity Corp. v. Target Corp., 12 F. Supp. 3d 762,
2 I also consider “whether . . . a trial date has been set.” SurfCast, 2014 WL 6388489, at *1. Although trial in this case has been set, it is scheduled for the two-week period beginning January 5, 2021. Even assuming no changes to the trial schedule, this is not so imminent as to warrant denying a stay.
7 769 (E.D. Penn. 2014) (quoting Gioello Enters. Ltd. v. Mattel,
Inc., No. 99-375, 2001 WL 125340, at *1 (D. Del. Jan. 29, 2001)
(listing same potential simplification benefits in analysis of
stay pending IPR).
Once IPR has been granted, the issues are likely to be
simplified regardless of which party prevails. Any invalidated
claims will no longer be before the court, and SIG Sauer will be
estopped from presenting to the court “any ground that [it]
raised or reasonably could have raised during [the IPRs]”. 3 35
U.S.C. § 315(e)(2); see Canatelo, LLC v. Avigilon Corp., No. 12-
1431-JAG, 2014 WL 2533407, at *2 (D.P.R. June 5, 2014) (“If the
patent-in-suit is invalidated, Plaintiff’s patent claims here
evaporates [sic]. Alternatively, in case the patent board rules
in favor of Plaintiff, any invalidity arguments based on prior
art would be moot here. Simplicity is achieved either way.”)
This is especially true where, as here, a party seeks IPR of all
relevant claims. See Uniloc USA Inc. v. LG Electronics U.S.A.
Inc., Nos. 18-cv-06737-JST, 18-cv-06739-JST, 18-cv-06740-JST,
3 To the extent SB Tactical argues that this estoppel will not significantly simplify the issues before the court because SIG Sauer “may find and assert previously unknown prior art upon resumption of the litigation, so long as a skilled searcher conducting a diligent search reasonably would not have been expected to discover the new reference,” Pl.’s Mem. in Opp. of Def.’s Mot. to Stay, Doc. No. 69 at 19, this argument is entirely speculative and I decline to address it.
8 2019 WL 1905161, at *4 (Apr. 29, 2019) (“[T]he requested stay
presents the maximum potential for simplification of issues, as
all the asserted claims are challenged in the IPR petitions.
This high upside mitigates to some extent the risk that the PTO
will deny review.”).
SB Tactical advances two arguments for why this factor does
not favor SIG Sauer, neither of which is persuasive. First, it
argues that, because the PTO has yet to institute IPR, whether
the issues will be simplified is speculative at best. Second, it
argues that simplification will be limited because SIG Sauer’s
invalidity contentions are broader than the scope of IPR. I
address each argument in turn.
1. Pre-institution Stays
Some courts are reluctant to stay proceedings before the
PTO has instituted IPR. The U.S. District Court in Delaware, for
example, “almost invariably den[ies] requests for stays pending
IPR proceedings when the stay requests are filed before the IPR
is instituted.” IOENGINE, 2019 WL 3943058, at *6 (identifying
three Delaware cases where request for pre-institution stay was
denied without prejudice as to petitioner’s right to seek stay
again if IPR were granted). This per se rule, however, is hardly
universal, and courts in numerous other districts across the
country have granted stays before IPR was instituted. See, e.g.,
Uniloc, 2019 WL 1905161, at *7; Neuro Cardiac Techs., LLC v.
9 LivaNova, Inc., No. CV H-18-1517, 2018 WL 4901035, at *5 (S.D.
Tex. Oct. 9, 2018); TAS Energy, Inc., v. San Diego Gas & Elec.
Co., No. 12cv2777–GPC(BGS), 2014 WL 794215, at *6 (S.D. Cal.
Feb. 26, 2014).
Two considerations persuade me that this factor weighs in
SIG Sauer’s favor, even though IPR has not yet been instituted.
First, if IPR is not instituted, “the stay will be short, only
four months.” TAS Energy, 2014 WL 794215, at *4. If the IPR
petition is rejected, this stay will be lifted, and the case can
move forward after a relatively brief pause.
Second, if I defer ruling on the stay until July, the
parties and the court will need to move through several labor-
intensive stages of litigation that may ultimately be rendered
meaningless or duplicative. If we continue on the current
schedule, the parties will need to submit their opening and
responsive claim construction briefs. Then, I will hold a
Markman hearing and likely issue a Markman order before the PTO
decides whether to institute IPR. All the while, discovery would
be ongoing. These efforts would be wasted if the PTO then
granted review and invalidated some of or all the claims at
issue. The potential impact of the PTO’s decision is “enough to
await at least the [PTO’s] initial institution decisions before
moving forward.” Provisur Techs., Inc. v. Weber, Inc., No. 5:19-
10 CV-06021-SRB, 2019 WL 4131088, at *2 (W.D. Mo. Aug. 29, 2019)
(analyzing stay under inter partes reexamination system). 4
2. Issues Not Subject to IPR
SB Tactical also correctly notes that SIG Sauer has raised
invalidity contentions that cannot be resolved in IPR. As both
parties concede, IPRs cannot address indefiniteness, written
description, enablement, or new matter issues. Thus, assuming SB
Tactical’s patents survive IPR, those issues would remain for
trial. 5 The IOENGINE court addressed this precise concern, but
ultimately concluded that IPR was nevertheless likely to
simplify the case, noting that
[w]hen a court is deciding whether to grant a stay, there is no requirement that issues in the IPR be identical to those in the litigation. . . . [I]ssues of patent eligibility, inequitable conduct, and validity under section 112 of the Patent Act will never be subject to review in an IPR. But that does not mean that the IPR
4 This determination is bolstered by the Federal Circuit’s decision in VirtualAgility Inc. v. Salesforce.com, Inc., 759 F. 3d 1307 (Fed. Cir. 2014). While VirtualAgility dealt with a stay pending a Covered Business Method (“CMB”) patent review, rather than an IPR, the court based its ruling on a consideration of the same factors. In discussing whether it was preferable to wait for the PTAB to institute review before granting a stay, the court “express[ed] no opinion on which is the better practice.” Id. at 1316.
5 Both parties ask me to rule on the merits of SIG Sauer’s invalidity contention. A motion to stay, however, is not the appropriate time to address the merits of the claim, and I decline to do so. Cf. VirtualAgility, 759 F. 3d at 1313 (holding that second-guessing the PTAB’s “more likely than not” determination that a CMB claim would be held invalid “amounts to an improper collateral attack” and that “allowing it would create serious practical problems”).
11 will not significantly simplify the litigation both with respect to the invalidity issues that are addressed in the IPR and with respect to collateral matters such as claim construction and characterization of the state of the art on which the PTAB’s expertise may be helpful in the district court proceeding.
IOENGINE, 2019 WL 3943058, at *10. The fact that IPR cannot —
and was never designed to — resolve these issues does nothing to
diminish the fact that, if instituted, IPR will significantly
simplify the issues before this court.
Because an IPR on some or all relevant claims would
significantly simplify the issues before the court, and SB
Tactical’s arguments to the contrary do not persuade me
otherwise, I conclude that this factor weighs heavily in favor
of granting a stay.
C. Prejudice to SB Tactical
The last factor is “whether a stay would unduly prejudice
or present a clear tactical disadvantage 6 to the non-moving
party.” Uniloc, 2019 WL 1905161, at *5 (quoting TPK Touch Sols.,
Inc. v. Wintek Electro-Optics Corp., No. 13-cv-02218-JST, 2013
WL 6021324, at *4 (N.D. Cal. Nov. 13, 2013)). “Courts are
generally reluctant to grant a stay in a matter where the
6 Apart from noting that “SIG Sauer waited until the last possible day on which it could file the an [sic] [IPR] against each of the patents in suit”, Doc. No. 69 at 6, SB Tactical does not advance any argument that SIG Sauer engaged in dilatory tactics.
12 parties are direct competitors on the rationale that a stay
would likely cause the non-movant to lose substantial profits
and goodwill on the market.” Canfield Sci., Inc. v. Drugge, No.
CV 16-4636 (JMV), 2018 WL 2973404, at *3 (D.N.J. June 13, 2018).
In this case, it is abundantly clear that SB Tactical and
SIG Sauer are direct competitors. While SIG Sauer correctly
points out that “[t]he mere fact that companies might sell
similar products does not prove they are ‘direct competitors’”;
Reply, Doc. No. 72 at 4 n.3 (citing Transocean Offshore
Deepwater Drilling, Inc. v. Seadrill Ams., Inc., CIV. A. No. H-
15-144, 2015 WL 6394436, at *3 (S.D. Tex. Oct. 22, 2015)); but
this is more than a case of similar products. 7 SB Tactical
alleges, and SIG Sauer does not deny, that SIG Sauer used to
sell SB Tactical’s forearm brace with SIG Sauer’s MPX and MCX
pistols, and that SIG Sauer now sells its own brace with these
pistols. The products are aimed at the same customers with
almost pinpoint accuracy.
Although the parties are direct competitors, I do not find
that this factor weighs against a stay to such a degree that it
outweighs the other two factors. This is for two reasons. First,
7 I consider the products to be similar inasmuch as both parties describe them as forearm-gripping stabilizer attachments for handguns. I note this similarity without making any determinations on the merits of the infringement claims.
13 I note that SB Tactical did not request a preliminary injunction
in this case. While failure to seek a preliminary injunction is
not, in and of itself, reason to completely disregard concerns
about prejudice, it is evidence of how serious SB Tactical takes
those concerns. See E.I. Du Pont De Nemours & Co. v. MacDermid
Printing Sols. LLC, CIV. A. No. 10-3409 MLC, 2012 WL 2995182, at
*4 (D.N.J. July 23, 2012) (“While the Court appreciates
[plaintiff]’s concern that [defendant] will continue to sell its
allegedly infringing product during the course of the stay,
thereby further eroding [plaintiff]'s market share and resulting
in substantial loss of profits and goodwill, the Court notes
that [plaintiff] did not seek a preliminary injunction in this
matter.”).
Second, many of the cases cited by SB Tactical that give
great weight to competition concerns are from the inter partes
reexamination era, when stays might have lasted years. See,
e.g., Kaneka Corp. v. JBS Hair, Inc., No. 3-10-CV-1430-P-BD,
2012 WL 10464130, at *1 (N.D. Tex. Apr. 27, 2012) (“[T]he PTO
estimates the average pendency of an inter partes reexamination
at just over three years. . . . Other evidence suggests that the
reexamination process can take more than six years.”); EMG
Tech., LLC v. Apple, Inc., No. 6:09 CV 367, 2010 WL 10029483, at
*2 (E.D. Tex. Nov. 15, 2010) (“[Plaintiff] would be unduly
prejudiced if the Court were to grant the stay because a stay
14 would effectively prevent [plaintiff] from enforcing its patent
rights for as long as [six to seven] years.”). Here, the stay
may be as brief as five months, and in no event is it likely to
last beyond July 2021. SB Tactical’s concerns about competition,
while real, are not so great as to outweigh the other factors I
must consider. See Karma, Inc. v. Allied Mach. & Eng'g Corp.,
No. 4:10-CV-00568-SMR-RAW, 2013 WL 12082496, at *3 (S.D. Iowa
Jan. 29, 2013) (“[T]he present suit involves competing products
[and w]hile the potential for prejudice may exist, it is not
clear that [plaintiff] would be unduly prejudiced, as the factor
requires.”) (emphasis in original).
SB Tactical also raises more generalized prejudice
concerns, such as the likelihood that “witnesses may become
unavailable, their memories may fade, and evidence may be lost.”
Doc. No. 69 at 13. However, “[s]peculation that evidence will be
lost, without more, is insufficient to demonstrate undue
prejudice.” Evolutionary Intelligence, LLC v. Millenial Media,
Inc., No. 5:13-cv-04206-EJD, 2014 WL 2738501, at *6 (N.D. Cal.
June 11, 2014); see also PersonalWeb v. Apple, 69 F. Supp. 3d at
1029 (“Courts have repeatedly found no undue prejudice unless
the patentee makes a specific showing of prejudice beyond the
delay necessarily inherent in any stay.”); Canatelo, 2014 WL
2533407, at *2 (rejecting generic prejudicial “horrors” cited by
plaintiff because “[i]t is not enough for Plaintiff to show
15 prejudice; rather, any prejudice must be undue.”) (emphasis in
original). Ultimately, I conclude that this factor weighs
against granting a stay.
IV. CONCLUSION
Two of the three factors (including the “most important
factor,” IOENGINE, 2019 WL 3943058, at *8) weigh in favor of
granting a stay. SIG Sauer’s motion to stay proceedings (Doc.
No. 68) is, therefore, granted. All pending deadlines
established in the discovery plan approved on September 30, 2019
are stayed. Within seven days of the PTO’s institution decision,
the parties are ordered to file a joint case management
statement apprising the court of the PTO’s decision and
requesting such further relief as may be appropriate.
SO ORDERED.
/s/ Paul J. Barbadoro Paul J. Barbadoro United States District Judge
March 24, 2020
cc: Brittany J. Maxey-Fisher, Esq. Samuel E. Cooley, Esq. William R. Brees, Esq. Jason M. Ellison, Esq. Leslie C. Nixon, Esq. Raeann Warner, Esq. Eric G. J. Kaviar, Esq. Helena C. Rychlicki, Esq. Laura L. Carroll, Esq.