5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 WAG ACQUISITION, LLC, 8 No. 2:19-CV-1278-BJR 9 Plaintiff, v. ORDER ON DEFENDANTS’ MOTION 10 TO STAY FLYING CROCODILE, INC. et al., 11
12 Defendants.
13 This matter is before the Court on Defendants’ motion to stay claim construction 14 proceedings and a Markman hearing pending the resolution of requests for ex parte 15 16 reexamination of the patents at issue in this case. Dkt. No. 274. Having reviewed the materials 17 submitted by the parties, the Court GRANTS Defendants’ motion. The reasons for the Court’s 18 decision are set forth below. 19 I. Background 20 Plaintiff WAG Acquisition, LLC provides Internet broadcasting services for live and on- 21 demand audio and video program material. On April 25, 2014, Plaintiff filed this case in the 22 U.S. District Court for the District of New Jersey. Plaintiff alleges that Defendants1 have 23 24 infringed four of its patents, each of which relates to streaming media technology: (1) Patent No. 25 26 1 By stipulation of the parties, the remaining Defendants in this matter are: (1) Accretive Technology Group, Inc. (ATG); (2) ICF Technology, Inc. (ICF); and (3) Riser Apps LLC. ORDER - 1 1 8,122,141 (the ‘141 patent); (2) Patent No. 8,185,611 (the ‘611 patent); (3) Patent No. 8,327,011 2 (the ‘011 patent); and (4) Patent No. 8,364,839 (the ‘839 patent). 3 On October 6, 2014, U.S. District Judge Esther Salas consolidated this case for discovery 4 purposes with several other lawsuits that Plaintiff had filed in the District of New Jersey against 5 other defendants concerning one or more of the same patents. On July 28, 2017, the defendants 6 in the consolidated cases filed a joint motion to dismiss or, in the alternative, to transfer venue. 7 On August 13, 2019, Judge Salas denied the defendants’ motion to dismiss the 8 9 consolidated cases, but granted their motion to transfer venue in six of the seven consolidated 10 cases. Pursuant to Judge Salas’s order, this case was transferred to the Western District of 11 Washington. Other cases were transferred to the Northern District of California, the Central 12 District of California, the District of Nevada, the Western District of Texas, and the Southern 13 District of Florida, while one case remained in the District of New Jersey. 14 On March 19, 2020, this Court granted Defendants’ motion to stay the case during the 15 16 pendency of an inter partes review of one of the patents at issue (the ‘141 patent). The Patent 17 Trial and Appeal Board issued a decision on July 16, 2020, which held that several claims in the 18 ‘141 patent were unpatentable. 19 On August 6, 2020, the Court issued a scheduling order that set a case schedule through 20 the completion of claim construction briefing and reserved setting additional deadlines until the 21 Court issued a claim construction ruling. On July 2, 2021, the Court issued an order on several 22 pending motions in the case, including an order granting Plaintiff’s motion to end the bifurcation 23 24 of liability and damages discovery in this case. 25 26
ORDER - 2 1 Consistent with the Court’s scheduling order, the parties completed their briefing on 2 claim construction. However, before the Court scheduled a Markman hearing, Defendants filed 3 the pending motion to stay further proceedings on claim construction and the Markman hearing. 4 Defendants’ motion to stay is based on requests for ex parte reexamination of the patents- 5 in-suit that were filed with the United States Patent and Trademark Office (USPTO) by the 6 defendants in WAG Acquisition, LLC v. FriendFinder Networks, Inc., No. 19-cv-05036-JD (N.D. 7 Cal.) (hereinafter “FriendFinder”). The FriendFinder case was previously consolidated with 8 9 this case in the District of New Jersey, and concerns the same patents at issue in this case. 10 FriendFinder and its co-defendant Streamray Inc. submitted requests with the USPTO for 11 ex parte reexamination of the patents at issue in this case on August 25, 2021. Since the time 12 that Defendants filed the pending motion to stay, the USPTO has granted the requests by 13 FriendFinder and Streamray for ex parte reexamination of three of the four patents (the ‘011, 14 ‘141, and ‘839 patents). On November 12, 2021, the USPTO denied the request for ex parte 15 16 reexamination of the fourth patent at issue (the ‘611 patent). However, Defendants have filed a 17 notice of supplemental authority indicating that on December 10, 2021, FriendFinder and 18 Streamway filed a petition for review of the examiner’s decision denying ex parte reexamination 19 of the ‘611 patent.2 20 II. Discussion 21 “A district court has the discretion to stay judicial proceedings pending reexamination of 22 a patent by the USPTO.” Pacific Bioscience Labs., Inc. v. Pretika Corp., 760 F. Supp. 2d 1061, 23 24 25 2 The Court takes judicial notice that on December 23, 2021, U.S. District Judge James Donato issued an order 26 staying the FriendFinder case in light of the pending ex parte reexaminations. FriendFinder, Dkt. No. 233 (N.D. Cal. Dec. 23, 2021). Of the seven cases that were previously consolidated before Judge Salas in the District of New Jersey, it appears from court records that only this case and the FriendFinder case are still being litigated. ORDER - 3 1 1063 (W.D. Wash. 2011). In determining whether to grant a motion to stay proceedings pending 2 reexamination, the court considers: “(1) whether a stay will simplify the issues in question and 3 the trial of the case, (2) whether discovery is complete and whether a trial date has already been 4 set, and (3) whether a stay will unduly prejudice or present a clear tactical disadvantage to the 5 non-moving party.” Id. 6 A. Whether a Stay Will Simplify Issues 7 Defendants argue that a stay of claim construction proceedings and the Markman hearing 8 9 will simplify the issues in this case because the pending ex parte reexamination: (1) has the 10 potential to reduce the number of claims at issue; (2) will allow the Court to evaluate the fully 11 developed intrinsic record; and (3) will provide the Court with “the benefit of USPTO’s 12 expertise, analysis of the asserted claims, and evaluation of the prior art.” Dkt. No. 274 at 4. 13 Plaintiff argues that a stay is unlikely to simplify the issues in this case, arguing that the patents- 14 in-suit have already been subject to prior inter partes reviews (IPRs). Plaintiff also points to 15 16 USPTO statistics indicate that only 14 percent of reexamination requests filed by third-party 17 requestors result in all claims in a patent being cancelled.3 18 The Court finds Defendants’ arguments more persuasive. The pending reexamination of 19 at least three of the patents-in-suit has the potential to reduce the number of claims at issue and to 20 simplify this case. Although the patents at issue have been subject to prior IPR proceedings, 21 Defendants correctly note that the USPTO grants an ex parte reexamination request only when it 22 finds substantial new questions of patentability. And while Plaintiff notes that USPTO statistics 23 24 25 3 Plaintiff also suggests that a stay is unlikely to simplify issues because if the USPTO reaffirms the validity of the 26 patents-in-suit during reexamination, Defendants will still remain free to challenge the validity of the patents in this action. However, other courts have found this argument unpersuasive in determining whether to stay litigation pending reexamination. See Pacific Bioscience, 760 F. Supp. 2d at 1065-66. ORDER - 4 1 indicate that ex parte reexaminations do not often result in all claims in a patent being cancelled, 2 Defendants note that USPTO statistics indicate that 64.4 percent of such reexaminations result in 3 claims being changed and 14.2 percent result in all claims being canceled.
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5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 WAG ACQUISITION, LLC, 8 No. 2:19-CV-1278-BJR 9 Plaintiff, v. ORDER ON DEFENDANTS’ MOTION 10 TO STAY FLYING CROCODILE, INC. et al., 11
12 Defendants.
13 This matter is before the Court on Defendants’ motion to stay claim construction 14 proceedings and a Markman hearing pending the resolution of requests for ex parte 15 16 reexamination of the patents at issue in this case. Dkt. No. 274. Having reviewed the materials 17 submitted by the parties, the Court GRANTS Defendants’ motion. The reasons for the Court’s 18 decision are set forth below. 19 I. Background 20 Plaintiff WAG Acquisition, LLC provides Internet broadcasting services for live and on- 21 demand audio and video program material. On April 25, 2014, Plaintiff filed this case in the 22 U.S. District Court for the District of New Jersey. Plaintiff alleges that Defendants1 have 23 24 infringed four of its patents, each of which relates to streaming media technology: (1) Patent No. 25 26 1 By stipulation of the parties, the remaining Defendants in this matter are: (1) Accretive Technology Group, Inc. (ATG); (2) ICF Technology, Inc. (ICF); and (3) Riser Apps LLC. ORDER - 1 1 8,122,141 (the ‘141 patent); (2) Patent No. 8,185,611 (the ‘611 patent); (3) Patent No. 8,327,011 2 (the ‘011 patent); and (4) Patent No. 8,364,839 (the ‘839 patent). 3 On October 6, 2014, U.S. District Judge Esther Salas consolidated this case for discovery 4 purposes with several other lawsuits that Plaintiff had filed in the District of New Jersey against 5 other defendants concerning one or more of the same patents. On July 28, 2017, the defendants 6 in the consolidated cases filed a joint motion to dismiss or, in the alternative, to transfer venue. 7 On August 13, 2019, Judge Salas denied the defendants’ motion to dismiss the 8 9 consolidated cases, but granted their motion to transfer venue in six of the seven consolidated 10 cases. Pursuant to Judge Salas’s order, this case was transferred to the Western District of 11 Washington. Other cases were transferred to the Northern District of California, the Central 12 District of California, the District of Nevada, the Western District of Texas, and the Southern 13 District of Florida, while one case remained in the District of New Jersey. 14 On March 19, 2020, this Court granted Defendants’ motion to stay the case during the 15 16 pendency of an inter partes review of one of the patents at issue (the ‘141 patent). The Patent 17 Trial and Appeal Board issued a decision on July 16, 2020, which held that several claims in the 18 ‘141 patent were unpatentable. 19 On August 6, 2020, the Court issued a scheduling order that set a case schedule through 20 the completion of claim construction briefing and reserved setting additional deadlines until the 21 Court issued a claim construction ruling. On July 2, 2021, the Court issued an order on several 22 pending motions in the case, including an order granting Plaintiff’s motion to end the bifurcation 23 24 of liability and damages discovery in this case. 25 26
ORDER - 2 1 Consistent with the Court’s scheduling order, the parties completed their briefing on 2 claim construction. However, before the Court scheduled a Markman hearing, Defendants filed 3 the pending motion to stay further proceedings on claim construction and the Markman hearing. 4 Defendants’ motion to stay is based on requests for ex parte reexamination of the patents- 5 in-suit that were filed with the United States Patent and Trademark Office (USPTO) by the 6 defendants in WAG Acquisition, LLC v. FriendFinder Networks, Inc., No. 19-cv-05036-JD (N.D. 7 Cal.) (hereinafter “FriendFinder”). The FriendFinder case was previously consolidated with 8 9 this case in the District of New Jersey, and concerns the same patents at issue in this case. 10 FriendFinder and its co-defendant Streamray Inc. submitted requests with the USPTO for 11 ex parte reexamination of the patents at issue in this case on August 25, 2021. Since the time 12 that Defendants filed the pending motion to stay, the USPTO has granted the requests by 13 FriendFinder and Streamray for ex parte reexamination of three of the four patents (the ‘011, 14 ‘141, and ‘839 patents). On November 12, 2021, the USPTO denied the request for ex parte 15 16 reexamination of the fourth patent at issue (the ‘611 patent). However, Defendants have filed a 17 notice of supplemental authority indicating that on December 10, 2021, FriendFinder and 18 Streamway filed a petition for review of the examiner’s decision denying ex parte reexamination 19 of the ‘611 patent.2 20 II. Discussion 21 “A district court has the discretion to stay judicial proceedings pending reexamination of 22 a patent by the USPTO.” Pacific Bioscience Labs., Inc. v. Pretika Corp., 760 F. Supp. 2d 1061, 23 24 25 2 The Court takes judicial notice that on December 23, 2021, U.S. District Judge James Donato issued an order 26 staying the FriendFinder case in light of the pending ex parte reexaminations. FriendFinder, Dkt. No. 233 (N.D. Cal. Dec. 23, 2021). Of the seven cases that were previously consolidated before Judge Salas in the District of New Jersey, it appears from court records that only this case and the FriendFinder case are still being litigated. ORDER - 3 1 1063 (W.D. Wash. 2011). In determining whether to grant a motion to stay proceedings pending 2 reexamination, the court considers: “(1) whether a stay will simplify the issues in question and 3 the trial of the case, (2) whether discovery is complete and whether a trial date has already been 4 set, and (3) whether a stay will unduly prejudice or present a clear tactical disadvantage to the 5 non-moving party.” Id. 6 A. Whether a Stay Will Simplify Issues 7 Defendants argue that a stay of claim construction proceedings and the Markman hearing 8 9 will simplify the issues in this case because the pending ex parte reexamination: (1) has the 10 potential to reduce the number of claims at issue; (2) will allow the Court to evaluate the fully 11 developed intrinsic record; and (3) will provide the Court with “the benefit of USPTO’s 12 expertise, analysis of the asserted claims, and evaluation of the prior art.” Dkt. No. 274 at 4. 13 Plaintiff argues that a stay is unlikely to simplify the issues in this case, arguing that the patents- 14 in-suit have already been subject to prior inter partes reviews (IPRs). Plaintiff also points to 15 16 USPTO statistics indicate that only 14 percent of reexamination requests filed by third-party 17 requestors result in all claims in a patent being cancelled.3 18 The Court finds Defendants’ arguments more persuasive. The pending reexamination of 19 at least three of the patents-in-suit has the potential to reduce the number of claims at issue and to 20 simplify this case. Although the patents at issue have been subject to prior IPR proceedings, 21 Defendants correctly note that the USPTO grants an ex parte reexamination request only when it 22 finds substantial new questions of patentability. And while Plaintiff notes that USPTO statistics 23 24 25 3 Plaintiff also suggests that a stay is unlikely to simplify issues because if the USPTO reaffirms the validity of the 26 patents-in-suit during reexamination, Defendants will still remain free to challenge the validity of the patents in this action. However, other courts have found this argument unpersuasive in determining whether to stay litigation pending reexamination. See Pacific Bioscience, 760 F. Supp. 2d at 1065-66. ORDER - 4 1 indicate that ex parte reexaminations do not often result in all claims in a patent being cancelled, 2 Defendants note that USPTO statistics indicate that 64.4 percent of such reexaminations result in 3 claims being changed and 14.2 percent result in all claims being canceled. In any case, as 4 Defendants observe, “[t]he standard is simplification of the district court case, not complete 5 elimination of it . . . .” LELO, Inc. v. Standard Innovation (US) Corp., No. 13-cv-01393-JD, 6 2014 WL 2879851, at *3 (N.D. Cal. June 24, 2014). Therefore, the Court finds that this factor 7 weighs in favor of Defendants’ request for a stay. 8 9 B. Stage of the Litigation 10 The Court must next consider “whether discovery is complete and whether a trial date has 11 already been set.” Pacific Bioscience, 760 F. Supp. 2d at 1063. The Court finds that this factor 12 weighs in favor of a stay. Although fact discovery related to liability has been completed, fact 13 discovery related to damages is not yet complete, nor have the parties yet conducted expert 14 discovery. In addition, the Court has not yet set a trial date, but instead previously indicated that 15 16 it would schedule the remaining deadlines in this case after ruling on claim construction. Dkt. 17 No. 216. 18 C. Undue Prejudice to Plaintiff 19 Finally, the Court must consider “whether a stay will unduly prejudice or present a clear 20 tactical disadvantage to the non-moving party.” Pacific Bioscience, 760 F. Supp. 2d at 1063. 21 Plaintiff suggests that a stay premised on reexamination will suffer from “interminable delays, 22 since the reexamination process will include not only up to two rounds of Office Actions and 23 24 Replies with the Examiner, but potentially appeal to the PTAB, and further appeal to the Federal 25 Circuit.” Dkt. No. 275 at 7. Plaintiff also points to a statistic from the USPTO indicating that 26
ORDER - 5 1 the average pendency of an ex parte reexamination request is 25.7 months from the filing date to 2 the certificate issue date. Dkt. No. 274-5 at 3. 3 However, as Defendants note, courts have held that “mere delay does not demonstrate 4 undue prejudice.” SRC Labs. v. Microsoft Corp., No. C18-0321JLR, 2018 WL 6065635, at *4 5 (W.D. Wash. Nov. 20, 2018). Defendants also note that the potential prejudice resulting from a 6 stay is of less concern in cases where, as here, the parties are not competitors. Id. Furthermore, 7 Defendants point out that only Plaintiff will have the ability to appeal decisions on the pending 8 9 requests for ex parte reexamination. See U.S. Patent & Trademark Office, Manual of Patent 10 Examining Procedure § 2273 (“A patent owner who is dissatisfied with the primary examiner’s 11 decision to reject claims in an ex parte reexamination proceeding may appeal to the Board for 12 review of the examiner’s rejection by filing a notice of appeal within the required time. A third 13 party requester may not appeal, and may not participate in the patent owner’s appeal.”). 14 Therefore, the Court finds that Plaintiff would not suffer undue prejudice or a clear 15 16 tactical disadvantage if the Court grants Defendant’s motion to stay claim construction and a 17 Markman hearing pending the outcome of the pending requests for reexamination of the patents 18 at issue. 19 III. Conclusion 20 For the foregoing reasons, the Court GRANTS Defendant’s motion to stay. Dkt. No. 21 274. The Court ORDERS that the claim construction and Markman phase of this litigation are 22 STAYED pending the outcome of the current requests for reexamination of the patents-in-suit. 23 24 The Court directs the parties to submit a joint status report to the Court every six months 25 from the date of this Order to inform the Court of the status of the current requests for 26 reexamination of the patents-in-suit. The parties are further directed to notify the Court within
ORDER - 6 1 fourteen days after all of the current requests for reexamination of the patents-in-suit are 2 resolved. 3 DATED: December 28, 2021 4 A 5 6 Barbara Jacobs Rothstein U.S. District Court Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
ORDER - 7