Miller Mendel Inc. v. Alaska State Troopers

MILLER MENDEL INC., a Washington Corporation, and TYLER MILLER, an Oregon resident, Plaintiffs, v. ALASKA STATE TROOPERS, an agency of the State of Alaska, and JAMES E. COCKRELL, Commissioner of the State of Alaska Department of Public Safety, Defendants.

No. 3:21-cv-0129-HRH

United States District Court, D. Alaska

August 19, 2021

ORDER

H Russel Holland, United States District Judge

Motion to Stay

Defendants move to stay this action pending resolution of a related action in the United States District Court for the Western District of Oklahoma.^[1] This motion is opposed.^[2]Oral argument was not requested and is not deemed necessary.

Background

“Plaintiff Tyler Miller is a resident of the State of Oregon, and is the owner of all right, title, and interest in and to United States Patent No. 10, 043, 188 B2. . . .”^[3] Plaintiffs allege that “[t]he ‘188 Patent, which is entitled ‘Background Investigation Management Service,' was issued on August 7, 2018.”^[4] “Plaintiff Miller Mendel is a Washington corporation, wholly owned by Tyler Miller[.] Miller Mendel has an exclusive license granted by Mr. Miller of all right and interest to the ‘188 Patent with the right to sublicense to third parties[.]”^[5]

Plaintiffs allege that “[d]efendant Alaska State Troopers under the direction and/or authority of Defendant Commissioner [James] Cockrell, uses a product, the Guardian Alliance Technologies investigation software platform (‘the Guardian Platform'), which infringes one or more claims of the ‘188 Patent[.]”^[6] In their amended complaint plaintiffs assert two counts.^[7] In Count 1, which is asserted against the Alaska State Troopers only, plaintiffs seek a declaration “that Alaska's use of the Guardian Platform infringes at least Claim 1 of the ‘188 Patent and thereby constitutes direct and/or indirect patent infringe-ment[.]”^[8] Plaintiffs seek injunctive relief “enjoining the State of Alaska to cease its ongoing infringing activities, to wit: using the infringing Guardian Platform, and to refrain from using the Guardian Platform in the future in any manner which infringes any claim of the ‘188 Patent” and “enjoining the State of Alaska to disclose all payments to Guardian Alliance Technology Inc. and any other third party made by Alaska for Alaska's use of the infringing Guardian Platform.”^[9] In Count 2, which is asserted against Cockrell only, plaintiffs seek a declaration “that the Department of Public Safety's use of the Guardian Platform infringes at least Claim 1 of the ‘188 Patent and thereby constitutes direct and/or indirect patent infringement under the Patent Act[.]”^[10] Plaintiffs seek injunctive relief

enjoining Commissioner Cockrell, by and through his authority over the State of Alaska Department of Public Safety and the Divisions and employees thereof, to cause the Department of Public Safety, including the Division of the Alaska State Troopers, to refrain from using the Guardian Platform in the future in any manner which infringes any claim of the ‘188 Patent, including at least not renewing any contract or license with GAT to use the infringing Guardian Platform in any manner which would infringe any claim of the ‘188 Patent.^[11]

Plaintiffs commenced this action on May 28, 2021. This is the third infringement action that plaintiffs have commenced in recent years related to the ‘188 Patent.

On October 9, 2018, plaintiffs filed a patent infringement action in the United States District Court of Western Oklahoma. In this action, plaintiffs have asserted patent infringement claims against the City of Oklahoma City, which like defendants in this case, is alleged to be a customer of Guardian Alliance Technologies (“GAT”) and is alleged to be infringing one or more claims of the ‘188 Patent.^[12] In their second amended complaint in the Oklahoma action, plaintiffs have also asserted non-patent infringement claims against GAT, namely a claim for defamation and a declaratory judgment claim of no inequitable conduct.^[13]Plaintiffs and the City of Oklahoma City have submitted their claim construction briefing but the court has not entered a claim construction order and no Markman hearing has been scheduled. Although GAT is not actively participating in the claim construction phase of the case since infringement claims have not been brought against it, defendants contend that GAT is contractually obligated to indemnify Miller Mendel's claims of patent infringement against the City of Oklahoma City.

On February 1, 2021, plaintiffs filed a patent infringement action in the United States District Court of Oregon. In the Oregon action, plaintiffs have asserted a patent infringement claim against Washington County, Oregon and the Washington County Sheriff's Office, which, like defendants in this case, are alleged to be customers of GAT and to be infringing the ‘188 Patent.^[14] On April 2, 2021, the Oregon action was stayed “because the dispute . . . involves the same patent, product, and ultimate indemnitor as the earlier-filed, related action currently pending in the U.S. District Court for the Western District of Oklahoma[.]”^[15]

Pursuant to the “first-to-file” rule, defendants now move to stay this action pending resolution of the Oklahoma action.

Discussion

“The first-to-file rule allows a district court to stay proceedings if a similar case with substantially similar issues and parties was previously filed in another district court.” Kohn Law Group, Inc. v. Auto Parts Mfg Mississippi, Inc., 787 F.3d 1237, 1239 (9th Cir. 2015). “The first-to-file rule is intended to ‘serve[] the purpose of promoting efficiency well and should not be disregarded lightly.'” Id. (quoting Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 625 (9th Cir. 1991)). “When applying the first-to-file rule, courts should be driven to maximize ‘economy, consistency, and comity.'” Id. at 1240 (quoting Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 604 (5th Cir.1999)). “The first-to-file rule may be applied ‘when a complaint involving the same parties and issues has already been filed in another district.'” Id. (quoting Alltrade, 946 F.2d at 625). “Thus, a court analyzes three factors: chronology of the lawsuits, similarity of the parties, and similarity of the issues.” Id.

But before considering these three factors, plaintiffs contend that the court must consider whether defendants have established a “clear case of hardship or inequity[.]” Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (citation omitted). Plaintiffs' contention, however, is incorrect. Dependable Highway Express involved a Landis stay, not a stay pursuant to the first-to-file rule. A Landis stay is based on the principle that “a district court has discretionary power to stay proceedings in its own court. . . .” Lockyer v. Mirant Corp., 398 F.3d 1098, 1109 (9th Cir. 2005). The factors the court considers when deciding whether a Landis stay is appropriate are:

(1) “the possible damage which may result from the granting of a stay;” (2) “the hardship or inequity which a party may suffer in being required to go forward;” and (3) “the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.”

Erceg v. LendingClub Corp., 475 F.Supp.3d 1071, 1074 (N.D. Cal. 2020 (quoting CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962)). Here, defendants have not moved for a Landis stay; they have moved for a stay pursuant to the first-to-file rule.

Turning then to that issue, the first factor requires that the court consider the chronology of the lawsuits. There can be no dispute that the Oklahoma action was filed prior to the instant action. Thus, the first factor weighs in favor of staying this action pursuant to the first-to-file rule.

The second factor requires the court to consider the similarity of the parties. “[C]ourts have held that the first-to-file rule does not require exact identity of the parties.” Kohn Law Group, 787 F.3d at 1240. “Rather, the first-to-file rule requires only substantial similarity of parties.” Id.

Plaintiffs argue that the parties in this action and the Oklahoma action are not substantially similar because there is no overlap in defendants. Plaintiffs argue that the defendants in both cases could not be more different, given that they are different entities in different jurisdictions which commenced and conducted their infringing activities independently of each other. Plaintiffs argue that this case is not like Kohn Law Group, the case on which defendants rely.

“In Kohn, a law firm brought an action against a property owner on behalf of a client whom the owner was suing in a first-filed interpleader action, but left out the other party sued in the interpleader action.” Brice v. Plain Green, LLC, 372 F.Supp.3d 955, 975 (N.D. Cal. 2019). “Kohn Law argue[d] that the parties [were] not substantially similar . . . because a defendant in the Mississippi interpleader action-King Construction-[was] not named in the present action.” Kohn Law Group, 787 F.3d at 1240. The Ninth Circuit rejected that argument because “[a] contrary holding could allow a party such as Kohn Law to skirt the first-to-file rule merely by omitting one party from a second lawsuit. We conclude that the omission of King Construction from the present action does not defeat application of the first-to-file rule.” Id.

But, here, according to plaintiffs, they have not added or omitted a defendant from the second-filed action. Rather, they have sued entirely different defendants. As such, plaintiffs argue that the parties in this case and the Oklahoma case are not substantially similar.

Although there is not an overlap of defendants be...