UPL NA, Inc. v. Tide International (USA), Inc.

• Court: District Court, C.D. California
• Decided: February 19, 2021
• Docket: 8:19-cv-01201
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 CV 19-1201-RSWL-KSx 12 UPL NA, INC., ORDER re: Motion to Stay 13 Plaintiff, Pending Inter Partes 14 v. Review Proceedings [103] 15 TIDE INTERNATIONAL (USA), 16 INC.; ZHEJIANG TIDE CROPSCIENCE CO., LTD.; and 17 NINGBO TIDE IMP. & EXP. CO., LTD., 18 19 Defendants. 20 21 Currently before the Court is Defendant Tide 22 International (USA), Inc.; Defendant Zhejiang Tide 23 CropScience Co., Ltd.; and Defendant Ningbo Tide Imp. & 24 Exp. Co., Ltd.’s (collectively, “Defendants”) Motion to 25 Stay Pending Inter Partes Review Proceedings (the 26 “Motion”) [103]. For the reasons set forth below, the 27 Court GRANTS Defendants’ Motion. 28 1 1 I. BACKGROUND 2 A. Factual Background

3 Plaintiff UPL NA, Inc. (“Plaintiff”) is a supplier 4 of crop protection products and plant technologies 5 designed for agricultural, professional, and aquatics 6 markets in the United States. Compl. ¶ 8, ECF No. 1. 7 Defendants comprise part of a group informally known as 8 the “Tide Group,” which “has a strong sales network” and 9 “has established several companies or offices” outside 10 of China. Id. ¶ 9. 11 On January 6, 2009, the United States Patent and 12 Trademark Office issued the Patent Number 7,473,685, 13 titled “Processes for Preparation of Chemically Stable, 14 Dry-Flow, Low Compact, Dust Free, Soluble Granules of 15 Phosphoroamidothioates” (the “‘685 patent”). Id. ¶¶ 2, 16 24. Plaintiff alleges that Defendants have infringed 17 and will continue to infringe one or more claims of the 18 ’685 patent, including at least claim 1 of the ’685 19 patent, by making, using, selling, and/or offering to 20 sell in the United States and/or importing into the 21 United States their Tide Acephate products in violation 22 of 35 U.S.C. §§ 271(a), (b), and/or (c). Id. ¶ 48. 23 B. Procedural Background 24 Plaintiff filed its Complaint [1] on June 17, 2019, 25 alleging patent infringement. After the parties 26 stipulated to extend the time to answer the Complaint 27 [23], Defendants filed their Answer [24] on August 12, 28 2019. On December 3, 2019, Defendants filed a m otion 1 for leave to file an amended answer [58], which this

2 Court granted [64] on February 5, 2020. Defendants

3 filed their First Amended Answer [65] on February 7, 4 2020. 5 The Markman hearing [78] was held on March 10, 6 2020, and the Court issued a claim construction order 7 [83] on April 10. Under the existing scheduling order 8 [104, 110], fact discovery closes March 2, 2021, opening 9 expert reports are due March 26, rebuttal expert reports 10 are due April 16, expert discovery closes April 30, 11 dispositive motions must be filed by May 18, and a jury 12 trial is set for August 3. 13 On June 17, 2020, Tide International (USA), Inc. 14 filed a petition for inter partes review (“IPR”) before 15 the Patent Trial and Appeal Board (“PTAB”), challenging 16 the validity of claims 1-4 and 7-12 of the ‘685 patent. 17 Defs.’ Notice of Related Case 2:9-15, ECF No. 90. The 18 PTAB instituted the IPR proceeding on January 22, 2021. 19 Defs.’ Notice Regarding Related Inter Partes Proceedings 20 1:11-13, ECF No. 102. On January 24, 2021, Defendants 21 filed this Motion to Stay Pending Inter Partes Review 22 Proceedings [103]. Plaintiff filed its Opposition [105] 23 on January 29, and Defendants replied [107] on February 24 1. 25 II. DISCUSSION 26 A. Legal Standard 27 “Courts have inherent power to manage their dockets 28 and stay proceedings, including the authority to order a 1 stay pending conclusion of a PTO reexamination.”

2 Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed.

3 Cir. 1988) (citing Landis v. N. Am. Co., 299 U.S. 248, 4 254 (1936)). 5 In evaluating whether to stay an action pending 6 IPR, courts consider three factors: “(1) whether 7 discovery is complete and whether a trial date has been 8 set; (2) whether a stay will simplify the issues in 9 question and trial of the case; and (3) whether a stay 10 would unduly prejudice or present a clear tactical 11 disadvantage to the nonmoving party.” DMF, Inc. v. AMP 12 Plus, Inc., No. 2:18-cv-07090-CAS(GJSx), 2019 WL 13 9077477, at *6 (C.D. Cal. Dec. 13, 2019) (quoting 14 Universal Elecs., Inc. v. Universal Remote Control, 943 15 F. Supp. 2d 1028, 1030-31 (C.D. Cal. 2013)). Courts 16 also consider the “totality of the circumstances.” 17 Caravan Canopy Int’l, Inc. v. Home Depot U.S.A., Inc., 18 No. SACV 19-1072 PSG (ADSx), 2020 WL 5834297, at *1 19 (C.D. Cal. Aug. 19, 2020) (citing Wonderland Nursery 20 Goods Co. v. Baby Trend, Inc., No. EDCV 14-01153-VAP, 21 2015 WL 1809309, at *2 (C.D. Cal. Apr. 20, 2015)). 22 There exists a “liberal policy in favor of granting 23 motions to stay pending IPR.” DMF, Inc., 2019 WL 24 9077477, at *6 (quoting Zomm, LLC v. Apple Inc., 391 F. 25 Supp. 3d 946, 956 (N.D. Cal. 2019)). 26 B. Discussion 27 The Court evaluates each factor in turn. 28 1 1. Stage of the Litigation 2 In assessing the stage of litigation, courts look

3 to the status of discovery, claim construction, setting 4 of a trial date, and the Court’s expenditure of 5 resources. Spin Master Ltd. v. Mattel, Inc., No. CV 18- 6 3435-RSWL-GJS, 2018 WL 11241718, at *2 (C.D. Cal. Nov. 7 21, 2018) (citing Universal, 943 F. Supp. 2d at 1030- 8 31). Courts “‘have adopted the date of the filing of 9 the motion to stay’ as the ‘proper time to measure the 10 stage of litigation.’” Caravan Canopy, 2020 WL 5834297, 11 at *2 (quoting VirtualAgility Inc. v. Salesforce.com, 12 Inc., 759 F.3d 1307, 1316 (Fed. Cir. 2014)). 13 Defendants argue that this Action is in its early 14 stages, pointing to the fact that “[d]iscovery has not 15 yet concluded, no party depositions have been taken, and 16 no expert discovery has occurred.” Defs.’ Mot. to Stay 17 (“Mot.”) 1:11-12, ECF No. 103. Defendants further argue 18 that “no summary judgment motions have been filed, and 19 the proceedings to date do not place the parties on the 20 cusp of trial.” Id. at 6:11-14 (quotation marks and 21 citation omitted). They insist that “there is still 22 more work ahead of the parties than behind.” Id. at 23 7:20-21. 24 Plaintiff counters that “the Court has already 25 expended considerable resources by conducting Markman 26 proceedings, issuing its order construing the disputed 27 claim terms, and rejecting Defendants’ arguments that 28 two claim terms rendered the asserted claims inv alid as 1 indefinite.” Pl. UPL NA’s Opp’n to Defs.’ Mot.

2 (“Opp’n”) 2:7-10, ECF No. 105. Plaintiff further

3 contends that the parties have already invested 4 considerable time and resources in this litigation. Id. 5 at 2:21-3:19. 6 As Defendants note, there remains significant work 7 ahead of the parties in this litigation, including party 8 depositions, expert discovery, summary judgment, 9 pretrial preparation, and trial. Although a claim 10 construction order has been issued, the amount of work 11 yet to be undertaken by the parties weighs slightly in 12 favor of a stay. See, e.g., Neodron, Ltd. v. Lenovo 13 Grp., Ltd., No. 19-cv-05644-SI, 2020 WL 5074308, at *2 14 (N.D. Cal. Aug. 27, 2020) (granting a motion to stay 15 despite the issuance of a Markman order); Caravan 16 Canopy, 2020 WL 5834297, at *2 (concluding that the 17 litigation was in its early stages where, although the 18 court had already issued a claim construction order, the 19 parties had not yet taken depositions, exchanged expert 20 reports, or filed dispositive motions); Universal Elecs. 21 Inc. v. Roku, Inc., No. SACV 18-1580 JVS (ADSx), 2019 WL 22 6974173, at *2 (C.D. Cal. Nov. 4, 2019) (determining 23 that the first factor weighed in favor of a stay where 24 fact discovery was not complete and expert discovery had 25 not begun). 26 2. Simplification of the Issues 27 Defendants argue that this factor heavily favors a 28 stay because there is a minimal likelihood that both 1 claims asserted in this Action survive review before the

2 PTAB. Mot. 8:8-11. Defendants further argue that, even

3 if no claims are canceled, “the intrinsic record 4 developed during the PTAB proceedings may inform issues 5 in the case.” Id. at 8:12-14. Moreover, a stay would 6 conserve the Court’s and the parties’ resources in light 7 of the PTAB’s decision to institute IPR proceedings. 8 Id. at 7:24-8:7. 9 On the other hand, Plaintiff counters that a stay 10 is unlikely to simplify the issues in this Action 11 because the PTAB’s decision to institute IPR proceedings 12 does not suggest that all asserted claims are likely to 13 be invalidated. Opp’n 7:4-7. It also contends that 14 there will not be unnecessary or duplicative efforts in 15 this Court absent a stay because “[t]he issues of 16 infringement, damages, and any invalidity defenses 17 Defendants pursue at trial will not overlap with the 18 issues in the IPR.” Id. at 7:14-16. 19 The Court agrees with Defendants. The PTAB has 20 instituted IPR proceedings concerning the asserted 21 claims of the ’685 patent. Should a claim be canceled, 22 “the patentee loses any cause of action based on that 23 claim, and any pending litigation in which the claims 24 are asserted becomes moot.” Fresenius USA, Inc. v. 25 Baxter Int’l, Inc., 721 F.3d 1330, 1340 (Fed. Cir. 26 2013). At a minimum, the IPR proceedings will reduce or 27 refine the issues presented in this Action. See 28 Realtime Data LLC v. Terada Operations, Inc., No . SACV 1 16-02743 AG (FFMx), 2017 WL 3453295, at *2 (C.D. Cal. 2 Feb. 27, 2017) (citing Semiconductor Energy Lab’y Co. v.

3 Chimei Innolux Corp., No. SACV 12-00021 JST (JPRx), 2012 4 WL 7170593, at *2 (C.D. Cal. Dec. 19, 2012)) (stating 5 that the PTAB “might cancel the asserted claims, narrow 6 some of the grounds for invalidity, or simply develop a 7 record of its expert administrative proceedings”). 8 Although the parties and the Court have already 9 expended considerable resources through Markman 10 proceedings and claim construction, a stay would 11 nevertheless prevent, or at least limit, the expenditure 12 of resources that may prove unnecessary based on the 13 PTAB proceedings. This factor therefore weighs in favor 14 of a stay. 15 3. Undue Prejudice 16 The third factor assesses whether a stay would 17 result in undue prejudice or present a clear tactical 18 disadvantage to the nonmovant. Caravan Canopy, 2020 WL 19 5834297, at *3 (citing Wonderland Nursery Goods Co., 20 2015 WL 1809309, at *2). 21 Plaintiff argues that, because Defendants filed 22 their IPR petition one year after this Action was 23 initiated and filed their present Motion more than seven 24 months after petitioning for IPR, it is unduly 25 prejudiced by the delay. Opp’n 8:15-21. Plaintiff also 26 argues that it is unduly prejudiced because the parties 27 are direct competitors and a stay would permit

28 Defendants to continually infringe through the 1 expiration of the ‘685 patent. Id. at 9:3-7. The

2 Defendants’ delay in filing a petition for IPR and in

3 filing this Motion indeed weigh against a stay. See 4 Jiaxing Super Lighting Elec. Appliance Co., Ltd. v. 5 MaxLite, Inc., No. CV 19-4047 PSG (MAAx), 2020 WL 6 5079051, at *4 (C.D. Cal. June 17, 2020) (determining 7 that this factor weighed against a stay where the 8 defendant waited several months after being served with 9 the complaint to file the IPR petition and several more 10 months thereafter to file a motion to stay); see also 11 Int’l Test Sols., Inc. v. Mipox Int’l Corp., No. 16-CV- 12 00791-RS, 2017 WL 1316549, at *3 (N.D. Cal. Apr. 10, 13 2017) (citation and quotation marks omitted) (noting 14 that “[c]ourts expect accused infringers to evaluate 15 whether to file, and then to file, IPR petitions as soon 16 as possible after learning that a patent may be asserted 17 against them”). This is especially true where the 18 parties are market competitors. See Juno Therapeutics, 19 Inc. v. Kite Pharma, No. CV 17-07639, 2018 WL 1470594, 20 at *8 (C.D. Cal. Mar. 8, 2018) (noting that a stay could 21 considerably prejudice the patentee where the parties 22 were soon expected to be direct competitors); Tire 23 Hanger Corp. v. Shinn Fu Co. of Am., No. ED CV16-02668 24 JAK (JPRx), 2017 WL 3457122, at *4 (C.D. Cal. June 7, 25 2017) (finding that a stay would prejudice the plaintiff 26 where the parties, although they disputed their degree 27 of competition in the marketplace, competed against each

28 other). 1 However, even accepting Plaintiff’s

2 characterization of Defendants’ delays as dilatory

3 tactics, Plaintiff’s failure to seek a preliminary 4 injunction belies its claims of undue prejudice in the 5 marketplace. The Federal Circuit has noted that, while 6 not determinative, a patentee’s failure to move for a 7 preliminary injunction contradicts the assertion that 8 the patentee requires immediate relief. See 9 VirtualAgility Inc., 759 F.3d at 1319 (“[Plaintiff’s] 10 arguments are rational reasons for not pursuing a 11 preliminary injunction, but the fact that it was not 12 worth the expense to ask for this remedy contradicts 13 [plaintiff’s] assertion that it needs injunctive relief 14 as soon as possible.”); see also Medtronic, Inc. v. 15 Axonics Modulation Techns., Inc., No. SA CV 19-02115- 16 DOC-JDE, 2020 WL 5087820, at *2 (C.D. Cal. May 8, 2020) 17 (granting a stay where the plaintiffs “[did] not explain 18 why they did not move for a preliminary injunction”). 19 In sum, this factor does not sway in either 20 direction. While Defendants have delayed significantly 21 in petitioning for IPR and filing this Motion, Plaintiff 22 has not established that it will be unduly prejudiced if 23 the Court stays the litigation. 24 4. Totality of the Circumstances 25 The Court recognizes that Defendants could have 26 petitioned for IPR or sought a stay sooner in the 27 litigation. Although those delays make this a close 28 call, the Court ultimately concludes that a stay is 1 appropriate because of the liberal policy in favor of

2 stays pending IPR, the interest of judicial economy, and

3 the potentially conclusive nature of IPR. 4 III. CONCLUSION 5 Based on the foregoing, the Court GRANTS 6 Defendants’ Motion to Stay Pending Inter Partes Review 7 Proceedings. This Action is hereby STAYED pending the 8 PTAB’s final determination in the related IPR 9 proceeding. IT IS HEREBY ORDERED that the parties shall 10 file a joint status report within fourteen (14) days of 11 the PTAB’s final written decision. All dates currently 12 on calendar are VACATED. 13 IT IS SO ORDERED. 14 15 16 DATED: February 19, 2021 _______/_s/_ R_o_na_ld_ S_._W_. L_e_w___________ HONORABLE RONALD S.W. LEW 17 Senior U.S. District Judge 18 19 20 21 22 23 24 25 26 27 28