Rensselaer Polytechnic Inst. v. Apple Inc.

RENSSELAER POLYTECHNIC INSTITUTE, et al., Plaintiffs, v. APPLE INC., Defendant.

Civil Action No. 1:13-CV-0633 (DEP)

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK

Dated: January 15, 2014

APPEARANCES:

FOR PLAINTIFFS:

SKIERMONT PUCKETT LLP

HESLIN ROTHENBERG FARLEY

& MESITI P.C.

HARRIS BEACH PLLC

OF COUNSEL:

PAUL J. SKIERMONT, ESQ.

AMY E. LaVALLE, ESQ.

DONALD E. TILLER, ESQ.

LENNY HUANG, ESQ.

ALEXANDER E. GASSER, ESQ.

NICHOLAS MESITI, ESQ.

JAMES R. MULDOON, ESQ.

STEVEN P. NONKES, ESQ.

FOR DEFENDANT:

FENWICK & WEST LLP

MENTER, RUDIN

& TRIVELPIECE, P.C.

TERESA M. CORBIN, ESQ.

HECTOR J. RIBERA, ESQ.

RYAN J. MARTON, ESQ.

DAVID M. LACY KUSTERS, ESQ.

WILLIAM A. MOSELEY, JR., ESQ.

MITCHELL J. KATZ, ESQ.

DAVID E. PEEBLES

U.S. MAGISTRATE JUDGE

DECISION AND ORDER

Plaintiffs Rensselaer Polytechnic Institute ("RPI") and Dynamic Advances, LLC ("Dynamic"), have brought this action against defendant Apple Inc. ("Apple") alleging patent infringement.¹ Plaintiffs claim that, through its Siri personal assistant, available on certain Apple iPhones, iPads, and iPods, defendant has infringed United States Patent No. 7,177,798 ("'798 Patent"), entitled "Natural Language Interface Using Constrained Intermediate Dictionary of Results," which was issued to Cheng Hsu and Veera Boonjing, and assigned to RPI. Apple hasanswered plaintiffs' complaint, denying infringement, asserting various affirmative defenses, and counterclaiming seeking declarations of non-infringement and patent invalidity. A scheduling order has been issued in the case, discovery is underway, and the parties are working toward a claim construction hearing, which the court contemplates holding in the coming months.

In October 2013, Apple petitioned the United States Patent and Trademark Office ("PTO"), requesting inter partes review ("IPR") of all claims contained within the '798 Patent. Currently pending before the court is Apple's request to stay this action during the pendency of IPR. For the reasons set forth below, after examining the relevant factors, I conclude that the motion should be denied, without prejudice to renewal once the PTO has decided whether to accept the matter for review.

I. BACKGROUND

The roots of this action can be traced to a complaint filed in a separate suit initiated by Dynamic against Apple on October 19, 2012. Dynamic Advances, LLC v. Apple, Inc. ("Dynamic I"), No. 12-CV-1579 (N.D.N.Y. filed Oct. 19, 2012). After questions arose concerning Dynamic's standing to sue for infringement of the '798 Patent, this action was commenced by Dynamic and RPI on June 3, 2013. Dkt. No. 1.Dynamic I was subsequently dismissed on stipulation of the parties, without prejudice to the right of plaintiffs to pursue, in this action, the infringement claims that were originally asserted in that case by Dynamic alone. See Dynamic I, No. 12-CV- 1579, Dkt. No. 68 at 1-2 ("[RPI], [Dynamic], and Apple Inc. jointly request the Court to coordinate Civil Action No. 1:12-cv-1579-DNH-DEP with Civil Action No. 1:13-cv-633-DNH-DEP under Rule 42 of the Federal Rules of Civil Procedure as follows: . . . Civil Action No. 1:12-cv-1579-DNH-DEP is dismissed without prejudice and the parties will proceed to litigate their claims and defenses in Civil Action No. 1:13-cv-633-DNH-DEP.").

In accordance with a case management scheduling order issued in Dynamic I and made applicable to this action with certain modifications, the case has proceeded in accordance with this court's local patent rules, and the parties have commenced fact discovery principally addressed to claim construction. See, e.g., Text Minute Entry Dated Oct. 22, 2013; Dkt. No. 35. Under the current schedule, opening claim construction briefs must be filed on January 17, 2014, and opposing claim construction briefs are due by February 17, 2014. Dkt. No. 27. While no claim construction hearing has yet been scheduled, the court contemplates conducting one in late March or early April of this year. Text Minute Entry Dated Oct. 22,2013.

On October 21, 2013, Apple filed an IPR petition with the PTO requesting review of all twenty-one claims of the '798 Patent.² Dkt. No. 39-6 at 2. That petition seeks review of all of the '798 Patent claims under the expedited procedure prescribed by the Leahy-Smith America Invents Act ("AIA"), Pub. L. No. 112-29, 125 S. Stat. 284 (2011), codified at 35 U.S.C. §§ 311-319. No action has yet been taken by the PTO with regard to Apple's IPR petition, to which an answer from plaintiffs is currently due later this month.

The IPR process set out in the AIA represents a "new, more streamlined adjudicative proceeding" intended to replace the more cumbersome and time-consuming inter partes reexamination that could take upwards of three years to conclude. Ultratec, Inc. v. Sorenson Commc'ns, Inc., No. 13-CV-346, 2013 WL 6044407, at *1 (W.D. Wisc. Nov. 14, 2013); see also Abbott Labs. v. Cordis Corp., 710 F.3d 1318, 1326 (Fed. Cir. 2013) ("The purpose of this reform was to convert inter partes reexamination from an examinational to an adjudicativeproceeding[.]"). Under the procedures governing IPR, which became effective on September 16, 2012, a request for review must be filed by the petitioner within one year of being served with a complaint alleging infringement of the patent in issue. 35 U.S.C. § 315(b); see Evolutionary Intelligence LLC v. Yelp Inc., No. 13-CV-3587, 2013 WL 6672451, at *2 (N.D. Cal. Dec. 18, 2013). Significantly, a petitioner may challenge the validity of a patent claim in an IPR petition only on grounds that could be raised under 35 U.S.C. §§ 102 (anticipation) or 103 (obviousness), and then only "on the basis of prior art consisting of patents or printed publication." 35 U.S.C. § 311(b); see Automatic Mfg. Sys., Inc. v. Primera Tech., Inc. ("Automatic Mfg. Sys., Inc. II"), No. 12-CV-1727, 2013 WL 6133763, at *2 (M.D. Fla. Nov. 21, 2013);³ Evolutionary Intelligence LLC, 2013 WL 6672451, at *2. Once an IPR petition is filed, the patent owner may submit a preliminary response within three months, or may instead expedite the process by waiving the right to submit a preliminaryresponse.⁴ 35 U.S.C. § 313; 37 C.F.R. § 42.107(b); see Evolutionary Intelligence LLC, 2013 WL 6672451, at *2.

An IPR trial may be initiated by the PTO if the petitioner demonstrates a reasonable likelihood of prevailing with respect to at least one challenged claim. 35 U.S.C. § 314(a); Evolutionary Intelligence LLC, 2013 WL 6672451, at *3. The PTO must decide whether to institute an IPR within three months of the filing of a response by the patentee, or, if none is submitted, within three months of the date upon which one was due. 35 U.S.C. § 314(b); Evolutionary Intelligence LLC, 2013 WL 6672451, at *2; Ultratec, Inc., 2013 WL 6044407, at *1.

Unlike the prior inter partes reexamination proceeding, which was accomplished largely through submissions before a PTO examiner, IPR under the AIA is conducted before a panel of three of the technically-trained administrative judges comprising the Patent Trial and Appeal Board ("PTAB"). 35 U.S.C. § 6(a), (c). In the event IPR is initiated, the PTAB must issue a final determination within one year after commencement, although that period may be extended, for good cause, toeighteen months. 35 U.S.C. § 316(a)(11); 37 C.F.R. § 42.100(c); see Evolutionary Intelligence LLC, 2013 WL 6672451, at *2. A party dissatisfied with the PTAB's final decision may appeal the determination to the Federal Circuit. 35 U.S.C. § 141; see Evolutionary Intelligence LLC, 2013 WL 6672451, at *3. Given this timeframe, IPR can take two years before the PTO, and an appeal to the Federal Circuit can extend that timeline further.

Because the new IPR procedures implemented under the AIA are in their relative infancy, empirical data concerning the PTO's response to such petitions is relatively sparse. As of November 7, 2013, for the fiscal year 2013, out of 203 decisions issued by the PTO regarding institution, trial was instituted in approximately eighty-seven percent of the cases.⁵ Patent Trial and Appeal Board, AIA Progress, http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_11_07_2013.pdf (last visited Jan. 15, 2014). For the fiscal year 2014, the percentage of petitions that were instituted dropped slightly to eighty-three percent. Id. Since the IPR provisions of the AIA took effect in September 2012, thePTAB has issued only three final written decisions - two in fiscal year 2013, and one in fiscal year 2014. Id.

On December 23, 2013, after the depositions were taken of co-inventor Dr. Hsu and Apple employee Didier Guzzoni, and the parties exchanged a significant volume of written documents, Apple moved to stay this action pending a determination by the PTO in connection with its IPR petitions. Dkt. No. 39. Plaintiffs oppose the request, arguing that the relevant factors to be considered when deciding whether to grant such relief, particularly in advance of an initial determination by the PTO regarding whether to accept the matter for review, weigh against the issuance of a stay. Dkt. No. 41.

II. DISCUSSION

A. Governing Legal Standard

"[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. N. Am., Co., 299 U.S. 248, 254 (1936); accord, Procter & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 848-49 (Fed. Cir. 2008). "How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance." Landis, 299 U.S. at254-55. As the party seeking a stay, Apple bears the burden to demonstrate that such relief is warranted. Automatic Mfg. Sys., Inc. II, 2013 WL 6133763, at *1 (citing Landis, 299 U.S. at 255).

When a party moves to stay patent infringement litigation during the pendency of PTO proceedings concerning the validity of patents in suit, courts consider three factors,...