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Intellectual Ventures Ii LLC v. Suntrust Banks, Inc.

United States District Court, N.D. Georgia, Atlanta Division

October 7, 2014

INTELLECTUAL VENTURES II LLC, Plaintiff,
v.
SUNTRUST BANKS, INC., and SUNTRUST BANK, Defendants.

OPINION AND ORDER

WILLIAM S. DUFFEY, Jr., District Judge.

This matter is before the Court on the Defendants' Motion to Stay Pending Inter Partes Review [151] ("Motion to Stay").

I. BACKGROUND

On July 24, 2013, Plaintiff Intellectual Ventures II LLC ("Plaintiff") filed a Complaint against Defendants SunTrust Banks, Inc. and SunTrust Bank (collectively, "Defendants"), in which it alleged that the Defendants infringed U.S. Patents Nos. 6, 715, 084 (the "084 Patent"), 6, 314, 409 (the "409 Patent"), 5, 745, 574 (the "574 Patent"), 6, 826, 694 (the "694 Patent"), and 7, 634, 666 (the "666 Patent") (collectively, the "Patents"). Non-parties International Business Machines Corporation ("IBM"), BBVA Compass Bancshares, Inc. and Compass Bank, Commerce Bancshares, Inc. and Commerce Bank, and First National Bank of Omaha and First National of Nebraska, Inc. have filed thirteen (13) petitions requesting inter partes ("IPR") review of the Patents that are the subject of this infringement action.

On April 16, 2014, the Patent Trial and Appeal Board ("PTAB") instituted IPR proceedings on all claims of the 666 Patent, and found that non-party IBM had established a reasonable likelihood of showing that Claims 1-11 are invalid over the prior art. On September 22, 2014, the PTAB denied IBM's request for IPR regarding various claims of the 409 Patent, including claims asserted by Plaintiff against Defendants. On September 24, 2014, the PTAB instituted IPR of claim 1 of the 694 Patent, and found that the non-parties had established a reasonable likelihood of showing that the claim was invalid under 35 U.S.C. §§ 102 and/or 103. Plaintiff has asserted this claim against the Defendants. The remaining non-party petitions that seek IPR challenge the validity of every claim asserted by the Plaintiff against the Defendants in this matter.

The PTAB is expected to decide whether IPR proceedings should be instituted on the remaining petitions by the end of October, 2014. The PTAB is expected to issue final written decisions on the pending petitions by October, 2015. See 25 U.S.C. §§ 314(b); 316(a)(11).

On June 6, 2014, the Defendants filed their Motion to Stay this action pending the outcome of the PTAB's review. On June 23, 2014, Plaintiff filed a response in opposition to the Motion to Stay. On August 18, 2014, the Court held a telephone conference with the parties, and determined that it was required to stay discovery in this case until the Court ruled on Defendants' Motion to Stay.

II. DISCUSSION

A. Legal Standard

The IPR petitions regarding the Patents in this action were filed by various non-parties pursuant to the Leahy-Smith America Invents Act, which authorizes the PTAB to conduct an IPR of the validity of a patent, on the basis of prior art. See generally 35 U.S.C. §§ 311-319 (2006 & Supp. V 2011). If the PTAB grants review and finds the patent invalid, the patent is cancelled, and any infringement litigation becomes moot. 35 U.S.C. § 311. If the PTAB finds the patent valid, the challenger in the IPR proceeding is estopped from asserting invalidity, on the same grounds, in subsequent litigation. 35 U.S.C. § 315(e)(2).

If any party seeks IPR of an allegedly infringed patent, the district court has the discretion to stay the action pending the PTAB's review. See Procter & Gamble Co. v. Kraft Foods Global, Inc. , 549 F.3d 842, 850-49 (Fed. Cir. 2008). Several courts have noted the benefits of staying infringement litigation in the face of IPR:

All prior art presented to the Court will have been first considered by the PTO, with its particular expertise[;] Many discovery problems relating to prior art can be alleviated by the PTO examination[;] In those cases resulting in effective invalidity of the patent, the suit will likely be dismissed[;] The outcome of the reexamination may encourage a settlement without the further use of the Court[;] The record of reexamination would likely be entered at trial, thereby reducing the complexity and length of the litigation[;] Issues, defenses, and evidence will be more easily limited in pretrial conferences after a reexamination[; and] The cost will likely be reduced both for the parties and the Court.

Tomco2 Equip. Co. v. Se. Agri-Sys., Inc. , 542 F.Supp.2d 1303, 1307 (N.D.Ga. 2008) (alterations in original) (quoting Datatreasury Corp. v. Wells Fargo & Co. , 490 F.Supp.2d 749, 754 (E.D. Tex. 2006)).

Despite these benefits, there are "potential difficulties" with staying a case, including "the possible length of the [review]" and the fact that the review process "only considers the validity of the patent with regard to prior art, " leaving for the court "other infringement issues or other grounds for invalidity." Id . In balancing the benefits and difficulties, courts consider three factors: (1) "whether discovery is complete and a trial date has been set"; (2) "whether a stay will simplify the issues in the case"; and (3) "whether a stay would unduly prejudice or present a tactical disadvantage to the nonmovant." Id . (citing Xerox Corp. v. 3Com Corp. , ...


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