Metrom Rail, LLC v. Siemens Mobility, Inc.

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METROM RAIL, LLC, Plaintiff, v. SIEMENS MOBILITY, INC. and HUMATICS CORP., Defendants.

No. 1:23-cv-3057 (MKV)

United States District Court, S.D. New York

January 29, 2024

OPINION AND ORDER GRANTING MOTION TO STAY

MARY KAY VYSKOCIL, UNITED STATES DISTRICT JUDGE

This is a patent infringement action brought by Plaintiff Metrom Rail, LLC (“Metrom”), against Siemens Mobility Inc. (“Siemens”) and Humatics Corp. (“Humatics”) (together “Defendants”). Currently pending before the Court is Siemens' motion to stay the case pending completion of inter partes review (“IPR”) proceedings instituted by the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”). For the following reasons, the motion to stay is GRANTED.

BACKGROUND AND PROCEDURAL HISTORY

The Court briefly summarizes the relevant procedural history which has been thoroughly outlined in the parties' previous submissions. [See ECF Nos. 62, 73, 74]. Metrom initiated this case in the District of Delaware asserting claims for infringement of five patents, in addition to state law claims for tortious interference with prospective economic advantage and civil conspiracy, against Defendants and two other companies. The claims arise out of Metrom's failed bid to secure a contract from the New York City Transit Authority (“MTA”). [ECF Nos. 1, 32]. As relevant here, in response to defense motions, the Delaware district court severed Metrom's claims here against Defendants from its claims against the two other defendants, dismissed the state law claim for tortious interference with prospective economic advantage as to all defendants except Siemens, and dismissed the state law claim for civil conspiracy entirely. [ECF No. 51].

The parties then stipulated to a transfer to this Court, and agreed to stay all then-pending patent infringement claims in light of IPR petitions challenging each of the asserted patents.^[1] [ECF Nos. 52, 53]. The parties disagreed, however, as to whether the surviving claim against Siemens for tortious interference should be stayed along with the patent infringement counts. [ECF Nos. 52, 53]. Thereafter, the action was transferred to this Court. [ECF No. 54]. Metrom then amended its complaint, dropping three of the patent counts and adding a new claim for infringement of a different patent (the “'738 patent”). [ECF No. 69-1 (“SAC”)]. Accordingly, this case now involves claims against Defendants for infringement of three patents (Counts I through III) and a claim against Siemens alone for tortious interference with prospective economic advantage (Count IV). SAC ¶¶ 70-108. Counts II and III, which relate to the previously asserted patents subject to IPR proceedings, are stayed by the prior joint stipulation of the parties. [ECF Nos. 52, 53]. Siemens^[2] now moves to stay Counts I and IV-in effect, the case in its entirety-pending completion of IPR as to all three asserted patents.^[3] [ECF No. 81]. Siemens filed a memorandum of law in support of its motion. [ECF No. 82 (“Def. Mem.”)]. Metrom opposed. [ECF No. 83 (“Pl. Opp.”)]. Siemens filed a reply. [ECF No. 86 (“Def. Reply”)].

LEGAL STANDARD

“District courts have the inherent power to manage their dockets, which includes issuing a stay pending the conclusion of review proceedings before the USPTO.” CDX Diagnostics, Inc. v. U.S. Endoscopy Grp., Inc., No. 13-CV-05669 NSR, 2014 WL 2854656, at *2 (S.D.N.Y. June 20, 2014). “Courts generally consider three factors in deciding a motion to stay pending review by the PTO: ‘(1) whether a stay will simplify the issues in question and trial of the case; (2) the stage of the proceedings; and (3) whether a stay will prejudice the nonmoving party.'” Id. (quoting TouchTunes Music Corp. v. Rowe Int'l Corp., 676 F.Supp.2d 169, 177 (S.D.N.Y. 2009)); see Murata Mach. USA v. Daifuku Co., 830 F.3d 1357, 1361 (Fed. Cir. 2016). These factors are not exclusive, and “an overarching consideration of the circumstances in their totality governs.” Straight Path IP Grp., Inc. v. Verizon Commc'ns Inc., No. 16-CV-4236 (AJN), 2016 WL 6094114, at *2 (S.D.N.Y. Oct. 18, 2016) (quoting Rensselaer Polytechnic Inst. v. Apple Inc., No. 1:13-CV-0633 DEP, 2014 WL 201965, at *3 (N.D.N.Y. Jan. 15, 2014)).

DISCUSSION

Metrom does not oppose a stay of Count I for infringement of the '738 patent.^[4] See Pl. Opp. 5, 8. Accordingly the Court considers only the propriety of a stay with respect to the state law claim for tortious interference with prospective economic advantage, Count IV. A stay of Count IV would result in a complete stay of the case. The Court concludes that under the three factors courts generally analyze, considered alongside the totality of the circumstances, a complete stay is warranted.

I. A Stay Will Simplify the Issues in Question and Trial of This Case

First, a stay of Count IV, and thus a complete stay, will simplify the issues in question and trial of this case. Siemens argues that a stay is appropriate because “the IPRs are likely to streamline or moot Metrom's tortious interference claim, which is inextricably intertwined with Metrom's patent infringement claims.” Def. Mem. 5. Metrom contends, in opposition, that “a stay of the patent issues has no impact on Metrom's tortious interference claim,” because the resolution of the tortious interference claim does not depend on the validity of Metrom's patents. Pl. Opp. 8-9.

Courts in the Second Circuit have stayed non-patent claims alongside patent claims where, as here, the “patent claims are the main thrust of th[e] litigation.” Kannuu, 2021 WL 195163, at *9 (finding that complete stay would simplify the issues where patent claims represented fifteen out of sixteen causes of action); see also PopSockets LLC v. Quest USA Corp., No. 17CV3653FBCLP, 2018 WL 4660374, at *2 (E.D.N.Y. Sept. 28, 2018) (staying case in its entirety where, “[t]hough the patent and non-patent claims are legally unrelated, the underlying factual disputes are intertwined”).^[5]

Three of the four claims in this action-and all claims against Humatics-are patent infringement claims. See SAC ¶¶ 70-101. Thus, patent infringement is “the main thrust of this litigation.” Kannuu, 2021 WL 195163, at *9. Moreover, although Metrom's tortious interference claim does not allege infringement of its patents per se, the factual context of the claim, as alleged, inextricably implicates the asserted patents. See PopSockets, 2018 WL 4660374, at *2. For example, Metrom alleges that “Siemens interfered with Metrom's reasonable expectations of success by deliberately infringing Metrom's patents, or submitting proposals to the MTA knowing that they would inevitably infringe Metrom's patent rights in the future.” SAC ¶ 105 (emphasis added). Further, Metrom alleges that “[b]ut for submitting proposals that infringed Metrom's intellectual property rights, Defendants would not have won” the MTA contract. SAC ¶ 106 (emphasis added). Metrom argues that Count IV includes allegations that are “independent of the patent infringement claims,” Pl. Opp. 10, such as that Siemens improperly influenced the MTA by obtaining Metrom's bid amount and lobbying the MTA through consultants who did not disclose their affiliation with Siemens, see SAC ¶ 107. However, even if any decision from PTAB would not dispose of the tortious interference claim in its entirety because of these allegations, PTAB's patent validity determination, at a minimum, could “narrow the issues before the Court and guide its analysis regarding the remaining issues” in Count IV. Kannuu, 2021 WL 195163, at *9.

In arguing that a stay of Count IV would not simplify the issues, Metrom cites to several cases in which courts declined to stay non-patent claims alongside patent claims. See Pl. Opp. 911. As an initial matter, “[t]he decision whether to grant a stay is committed to the district court's sound discretion, and the court is given considerable leeway in the exercise of its judgment.” Straight Path, 2016 WL 6094114, at *2 (internal quotation marks omitted). “Thus, even if a court denies a stay . . . that does not necessarily mean that another court abuses its discretion when issuing a stay in similar circumstances.” Kannuu, 2021 WL 195163, at *8 n.5. In addition, Metrom's cited cases are distinguishable. In Bytemark, Inc. v. Xerox Corp., the court declined to stay a tortious interference claim that challenged the defendants' “unfair commercial business practices” where “resolution . . . [did] not depend on the validity of Plaintiff's patents.” No. 17 Civ. 1803 (PGG), 2018 U.S. Dist. LEXIS 164674, at *16 (S.D.N.Y. Sept. 21, 2018).

By contrast, resolution of Metrom's tortious interference claim does depend, at least in part, on the validity of Defendants' patents. See SAC ¶¶ 105-106. In Metrom's out-of-circuit authority, too, the patent infringement claims were fully distinct from the state law claims. See, e.g., Meissner Filtration Prods., Inc. v. Sani-Tech W., Inc., No LACV2201194JAKEX, 2022 WL 17190245, at *5 (C.D. Cal. Oct. 3, 2022) (finding that “unfair competition claims do not relate to” the challenged patent); Nippon Steel & Sumito Metal Corp. v. POSCO, No. CIV.A. 12-2429 DMC, 2013 WL 1867042, at *8 (D.N.J. May 2, 2013) (“The non-patent claims do not depend on the continued validity of the patents and are based on different legal theories. Therefore, there is no basis to stay these claims.”); Shurtape Techs., LLC v. 3M Co., No. 5:11CV17-RLV, 2013 U.S. Dist. LEXIS 28815, at *13 (W.D. N.C. Mar. 1, 2013) (finding that “a stay imparts no advantage for the non-patent aspects of the case”); Card Tech. Corp. v. DataCard Corp., No. 05-2546 (MJD / SRN), 2007 U.S. Dist. LEXIS 103291, at *22 (D. Minn. Feb. 2, 2007) (denying stay of non-patent counterclaim that “turn[ed] in no...