Opinion
Case No.: CV 13-05499-CJC(RNBx)
01-24-2014
INTERTAINER, INC., Plaintiff, v. HULU, LLC, Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO STAY PROCEEDINGS
I. INTRODUCTION AND BACKGROUND
This is a patent infringement action filed by Plaintiff Intertainer, Inc. ("Intertainer") against Defendant Hulu, LLC ("Hulu") on July 30, 2013. Intertainer alleges that the video streaming service provided on Hulu's website directly infringes claim 1 of United States Patent No. 8,479,246 (the " '246 Patent") and claim 13 of United States Patent No. 8,468,099 (the " '099 Patent"). (See Dkt. No. 1 [" Compl."] ¶ 12.) On December 20, 2013, Hulu filed two petitions with the U.S. Patent and Trademark Office ("PTO") seeking Covered Business Method ("CBM") review of the asserted patents. (See Dkt. No. 25 ["Mot. to Stay"] at 3-4.) The petitions contend that the asserted claims of the '246 Patent and the '099 Patent are invalid on the grounds of, among other things, prior art references. (Id. at 4.) Before the Court is Hulu's motion to stay this action pending completion of the CBM reviews. For the following reasons, Hulu's motion is GRANTED.
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for January 27, 2014 at 1:30 p.m. is hereby vacated and off calendar. --------
II. ANALYSIS
Section 18 of the Leahy-Smith America Invents Act ("AIA") created a new transitional program by which a person or entity that has been sued for infringement of a CBM patent can petition the PTO for post-grant review of the validity of the patent. See AIA § 18(a)(1); P.L. 112-29, 125 Stat. 284, 330. The AIA provides that a party petitioning for CBM review may request that the district court can stay the pending civil infringement action. AIA § 18(b); P.L. 112-29, 125 Stat. 284, 331. Courts deciding whether to stay proceedings pending completion of the new CBM review process have applied the four factors supplied by the AIA. See Progressive Cas. Ins. Co. v. Safeco Ins. Co. of Ill., Nos. 1:10CV01370, 1:11CV00082, 1:12CV01068, 1:12CV01070, 2013 WL 1662952, at *2 (N.D. Ohio Apr. 17, 2013); Zillow, Inc. v. Trulia, Inc., No. C12-1549JLR, 2013 WL 5530573, at *3, Slip Copy (W.D. Wash. Oct. 7, 2013). The four factors are as follows:
(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
(B) whether discovery is complete and whether a trial date has been set;AIA § 18(b)(1); P.L. 112-29, 125 Stat. 284, 331.
(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.
As to the first factor, Hulu asserts that a stay will simplify the issues in dispute and streamline the trial of this matter because there is a likelihood that the PTO will cancel or change the claims, and, in any event, the CBM review will inform the claim construction process and may resolve invalidity issues and remove prior art references from the dispute. The Court agrees. All the asserted patents in this infringement action are challenged in Hulu's CBM petitions and Intertainer does not bring any non-patent claims that would be unaffected by the CBM review. Accordingly, it is likely that the result of the CBM review will simplify issues in this case or possibly resolve this matter entirely. See Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., No. SACV 12-21-JST (JPRx), 2012 WL 7170593, at *2 (C.D. Cal. Dec. 19, 2012) (granting stay for inter partes review in part because the request for reexamination included all patents at issue and the plaintiff asserted only patent infringement claims against the defendants).
Second, this case is at a very early stage, discovery is not complete, and no trial date has been set. In fact, the parties have not yet exchanged any discovery or engaged in any claim construction activities. No substantive motions have been filed, and the Court has not made any substantive rulings. This factor strongly favors staying the proceeding. //
The third factor is "whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party." AIA § 18(b)(1); P.L. 112-29, 125 Stat. 284, 331. However, "[i]t is well-established that the delay inherent in the reexamination process by itself does not constitute undue prejudice." Zillow, 2013 WL 5530573, at *6 (citing CCP Sys. AG v. Samsung Elecs. Corp., No. 09-CV-4354 DMC-JAD, 2010 WL 5080570, at *1 (D.N.J. Dec. 7, 2010) (collecting cases)). Of the various factors courts have examined to determine undue prejudice, all favor granting a stay in this matter. Hulu and Intertainer are not direct competitors. Cf. Interwoven, Inc. v. Vertical Computer Sys., Inc., No. C 10-04645 RS, 2012 WL 761692, at *3 (N.D. Cal. Mar. 8, 2012) ("The parties' status as direct competitors also weighs against a stay because it increases the likelihood of undue prejudice."). There is no indication of delay, as Hulu filed its petitions less than five months after being served with the Complaint and moved to stay the proceeding only six days after filing the petitions. See Progressive, 2013 WL 1662952, at *6 (delay can support finding of undue prejudice). In addition, there is nothing to indicate that Hulu timed its petitions to gain some tactical advantage in the litigation. See Zillow, 2013 WL 5530573, at *7. Accordingly, a stay will not unduly prejudice Intertainer.
Finally, the fourth factor concerns whether a stay will reduce the burden of litigation on the parties and the court. Progressive, 2013 WL 1662952, at *8; AIA § 18(b)(1); P.L. 112-29, 125 Stat. 284, 331. The fourth factor was enacted with the intent of increasing the likelihood that stays would be granted for CBM reviews and to have such stays granted at a greater rate than stays have been granted for inter partes reexaminations. See id; Market-Alerts Pty. Ltd. v. Bloomberg Fin. L.P., 922 F. Supp. 2d 486, 496 (D. Del. 2013). A stay would relieve Hulu and Intertainer from the burden of simultaneously litigating these patent claims in multiple fora. Moreover, a stay will conserve judicial resources that may otherwise be wasted on claim construction and invalidity issues before those claims are canceled or amended through CBM review. The fourth factor weighs heavily in favor of staying this matter.
III. CONCLUSION
Given that all four factors weigh in favor of staying the proceeding pending CBM review, Hulu's motion is GRANTED.
DATED: January 24, 2014
/s/_________
CORMAC J. CARNEY
UNITED STATES DISTRICT JUDGE