There are certain situations that come up over and over in patent cases. One of them is that a plaintiff will bring identical infringement suits against multiple defendants, and one of those defendants will then file an IPR or CBM proceeding before the patent office attacking the validity of the patents.
Under the America Invents Act, the filing party and any real party in interest are subject to estoppel. But unrelated defendants are not. The filing party will often move to stay the district court litigation. Generally speaking, parties with an instituted IPR or CBM review of all patents-in-suit often have pretty good chances of getting a stay.
So what happens when the defendants in related cases move to stay as well? They are not subject to any estoppel, and that effects the stay calculus, because they could potentially re-assert grounds that could have been raised (or even grounds that were raised) in the patent office proceeding.
As such, judges have sometimes asked the unrelated defendants to agree to some degree of estoppel in exchange for staying the action. But what if a defendant refuses to agree?
That's what happened earlier this month in SITO Mobile R&D IP, LLC v. TheStreet, Inc., C.A. No. 21-1571-CFC (D. Del.). There, the defendant moved to stay following IPR and CBM proceedings filed by another defendant in a related action. The plaintiffs stated that they "do not oppose" a stay, but asked the Court to impose an estoppel requirement on the defendant so that it is estopped to the same extent that the party who filed the CBR would be.
Within one day of plaintiff filing its response, the Court ordered the defendant to file a letter stating whether it would consent to full estoppel:
ORAL ORDER: TheStreet states on page 11 of its brief (D.I. 12) that "in the unlikely event that the PTAB issues a Final Written Decision finding all claims challenged by [the CMB filer] Hulu to be valid, [defendant] TheStreet agrees to not raise in this litigation any invalidity ground asserted by Hulu in the Post Grant Proceedings." This language communicates that TheStreet is willing to be bound by the outcomes of the Post Grant Proceedings to the same extent as Hulu only if all claims are found to be valid in those proceedings. That's not good enough. If TheStreet wants the stay it seeks, it shall state clearly in a letter to the Court no later than January 14, 2022 that it agrees to be bound by the outcomes of the Post Grant Proceedings to the same extent Hulu is bound, creating statutory estoppel under 35 U.S.C. § 315(e)(2).
The defendant filed a letter stating that they would not agree to the full scope of statutory estoppel. True to its word, the Court issued a short order on the same day fully denying the stay motion:
Based on Defendant's letter filed today (D.I. 15), Defendant's Motion to Stay Pending Inter Partes Review and Covered Business Method Review . . . is DENIED.
The motion was denied entirely, even though Plaintiff had stated that it did not oppose the motion (and merely asked for the estoppel requirement). This may not be exactly what plaintiff wanted, as they may end up moving forward on a case against a subset of the original defendants, with a potential IPR lurking in the background. Of course, they can always stipulate to a stay if they so desire.
So, lesson learned: If you are a defendant who is planning to move to stay pending another defendant's IPR or CBR, be prepared to answer whether you will agree to full estoppel (and be prepared to potentially lose the motion if the answer is "no").
Separately, I have to wonder whether the parties met-and-conferred before Defendant filed its motion. I don't see a LR 7.1.1 statement saying that they did. And if plaintiff did not oppose a stay, I have to think the defendant wouldn't have spent the time drafting a motion and a 17-page brief in support of a stay.
If you enjoyed this post, consider subscribing to receive free e-mail updates about new posts.
