SHERRY R. FALLON, Magistrate Judge.
Presently before the court in this patent infringement action is Defendant Apple Inc.'s ("Apple") motion to stay this litigation pending the resolution of its petitions for inter partes review ("IPR") and covered business method review ("CBM"). (D.I. 90) For the following reasons, Apple's motion to stay is denied without prejudice.
On May 21, 2017, Plaintiff Universal Secure Registry, LLC ("USR") filed a complaint against Visa Inc., Visa U.S.A., Inc. (together, "Visa"), and Apple (together with Visa, "Defendants") asserting infringement of United States Patent Nos. 8,577,813 ("the '813 patent"), 8,856,539 ("the '539 patent"), 9,100,826 ("the '826 patent"), and 9,530,137 ("the '137 patent") (collectively, the "patents-in-suit"). (D.I. 1) USR is the owner by assignment of the patents-in-suit. The patents-in-suit relate to systems, methods, and apparatus "for authenticating . . . the identity of individuals . . . seeking access to certain privileges . . . and for selectively granting privileges . . . in response to such identifications." ('813 patent, col. 1:37-42; '539 patent, col. 1:16-19; '826 patent, col. 1:36-42; '137 patent, col. 1:45-50)
On August 25, 2017, Defendants filed a motion to dismiss USR's complaint asserting that USR failed to state a claim upon which relief could be granted under Fed. R. Civ. P. 12(b)(6). (D.I. 16) On September 19, 2017, Defendants filed a motion to transfer the case arguing that USR's allegations do not have a "material connection to the District of Delaware." (D.I. 21; D.I. 22) The court denied both motions on September 19, 2018.
On April 10, 2018, the court issued a scheduling order requiring that all discovery be completed on or before July 2, 2019. (D.I. 57 at 1) The Joint Claim Construction Chart is due on December 14, 2018, and the claim construction hearing is set for March 6, 2019. (Id. at 9) A jury trial is scheduled to begin on July 20, 2020. (Id. at 12)
Apple filed eleven IPR and CBM petitions with the Patent Trial and Appeal Board ("PTAB") regarding the patents-in-suit in April and May of 2018. (D.I. 92, Exs. B-K; D.I. 93, Ex. L) Apple's IPR and CBM petitions challenge all of the independent claims of the patents-in-suit, every claim of the '137, '539, and '813 patents, and all of the pertinent claims of the '826 patent. (D.I. 92, Ex. A) The PTAB will determine whether to institute proceedings regarding Apple's IPR and CBM petitions
On May 2, 2018, the PTAB instituted an IPR proceeding on claim 1 of the '813 patent based on a petition filed on October 16, 2017 by Unified Patents, Inc., a nonparty to this suit. (D.I. 77, Ex. A) On August 24, 2018, USR filed a contingent motion to amend all challenged claims of the '813 patent pursuant to 37 C.F.R. § 41.121 in the IPR proceeding instituted on May 2, 2018. (9/17/18 Apple Presentation, Slides 3, 12-13) The PTAB is expected to deliver a decision on the merits of the IPR proceeding regarding the '813 patent in May of 2019.
On August 10, 2018, USR served its initial infringement contentions against Defendants, asserting infringement of sixty-two claims across the four patents-in-suit. (D.I. 122) In USR's preliminary response to Apple's CBM petition regarding the '539 patent, USR indicated that it had filed statutory disclaimers with respect to sixteen claims, thirteen of which were asserted in the present litigation. (D.I. 129, Ex.Bat 18) Of the forty-nine asserted claims remaining, the PTAB has instituted IPR proceedings on 19 claims of the '813 patent based on Unified Patents' petition. Apple's nine pending petitions cover forty-three asserted claims, and Visa's pending petitions cover an additional three asserted claims. Consequently, forty-six of the forty-nine remaining asserted claims are covered by pending IPR and CBM petitions.
In June 2018, USR indicated its intention to amend the complaint to add two new patents and one pending patent application from the same patent family to the instant litigation. (D.I. 119, Ex. G) United States Patent Application No. 14/814,740 is not expected to issue until mid-November 2018. The operative scheduling order in the present case sets a deadline of November 30, 2018 for amendment of pleadings. (D.I. 57 at ¶ 1) The parties are to exchange a list of disputed claim terms on November 9, 2018, and a Markman hearing is scheduled for March 6, 2019. (Id. at ¶ 9)
III. LEGAL STANDARD
A court has discretionary authority to grant a motion to stay. 454 Life Scis. Corp. v. Ion Torrent Sys., Inc., C.A. No. 15-595-LPS, 2016 WL 6594083, at *2 (D. Del. Nov. 7, 2016) (citing Cost Bros., Inc. v. Travelers Indem. Co., 760 F.2d 58, 60 (3d Cir. 1985)). Courts consider three factors in deciding how to exercise this discretion: (1) whether a stay will simplify the issues for trial; (2) the status of the litigation, particularly whether discovery is complete and a trial date has been set; and (3) whether a stay would cause the non-movant to suffer undue prejudice from any delay or allow the movant to gain a clear tactical advantage. Id. (citing Advanced Microscopy Inc. v. Carl Zeiss Microscopy, LLC, C.A. No. 15-516-LPS-CJB, 2016 WL 558615, at *1 (D. Del. Feb. 11, 2016)). The court considers an additional factor, "whether a stay . . . will reduce the burden of litigation on the parties and on the court," when considering a motion to stay pending a CBM review. Benefit Funding Sys. LLC v. Advance Am. Cash Advance Ctrs., Inc., 767 F.3d 1383, 1384 (Fed. Cir. 2014) (quoting America Invents Act, Pub. L. No. 112-29, § 18(b)(1)(D), 125 Stat. 284, 32-31 (2011) ("AIA")).
After considering the four stay-related factors, the court denies Apple's motion to stay without prejudice to renew the motion following the PTAB's determination regarding whether to institute IPR and CBM proceedings in response to Apple's petitions.
A. Simplification of Issues for Trial
The first factor regarding the simplification of issues for trial weighs against a stay in this litigation. Unless and until the PTAB institutes IPR and CBM proceedings based on the petitions, any expected simplification rests on speculation that such institution will occur. See Advanced Microscopy Inc., 2016 WL 558615, at *1 ("If no review is instituted, the asserted basis for a stay will fall away."). Before the PTAB decides whether to institute Apple's petitions, this factor does not favor granting a stay. Copy Prat. LLC v. Netflix, Inc., C.A. No. 14-365-LPS, 2015 WL 3799363, at *1 (D. Del. June 17, 2015) (quoting Freeny v. Apple Inc., 2014 WL 3611948, at *2 (E.D. Tex. July 22, 2014)). "[T]he ideal time" to file a motion to stay is "shortly after the PTAB issue[s] its decision to proceed with a validity trial on all of the Asserted Claims." 454 Life Scis. Corp., 2016 WL 6594083, at *4. If the PTAB institutes Apple's petitions, Apple "may renew its [m]otion . . . and the simplification factor may be evaluated differently at that time."
The Supreme Court's recent decision in SAS Institute, Inc. v. lancu supports the court's conclusion on this factor because it guarantees that the PTAB's decision to institute Apple's petitions will be a "binary choice." 138 S.Ct. 1348, 1355 (2018). The PTAB, in deciding whether to institute an IPR, "cannot curate the claims at issue but must decide them all." Id. at 1353. With respect to each of Apple's petitions, the PTAB will either issue a written decision addressing every challenged patent claim, or it will deny the petition. Id. at 1354 (quoting 35 U.S.C. § 318(a) ("If an inter partes review is instituted and not dismissed" the PTAB "shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.") (internal quotations and alterations omitted)). Therefore, issue simplification depends on whether the PTAB institutes or dismisses Apple's petitions, which will occur by November of 2018.
Without any certainty as to whether the PTAB will institute review, the extent to which the issues before the court might be simplified remains unknown. As a practical matter, putting the case on hold until the decision to institute is made is likely less efficient than continuing on track through discovery. Delay is not favored in litigation. There is nothing in this record to suggest that engaging in fact discovery and preparation for claim construction for an additional few months pending action by the PTAB, will unusually tax or waste the resources of the parties.
In its August 30, 2018 notice of subsequent authority, Apple directs the court to USR's preliminary response to Apple's CBM petition regarding the '539 patent in support of its contention that the PTAB proceedings will simplify the issues for trial.
Following the filing of a statutory disclaimer, the patent owner records a notice of disclaimer with the U.S. Patent and Trademark Office ("USPTO"). 35 U.S.C. § 253(a). In this regard, the filing of a statutory disclaimer, and the resultant narrowing of the case, occur outside the scope of proceedings before the PTAB. See Liqwd, Inc. v. L'Oreal USA, Inc., C.A. No. 17-14-JFB-SRF, D.I. 388 at ¶ 6 (D. Del. Aug. 30, 2018). Federal Circuit precedent dictates that the PTAB must treat statutorily disclaimed claims as though they never existed. In re Yamazaki, 702 F.3d 1327, 1332 (Fed. Cir. 2012). Consequently, the filing of a statutory disclaimer does not substantively affect the PTAB's institution analysis with respect to the remaining claims of the challenged patent. Under these circumstances, the court is not persuaded that the recordation of a statutory disclaimer with the US PTO supports a stay of litigation pending resolution of proceedings before the PTAB.
B. Stage of Proceedings
The second factor regarding the status of the case also weighs against a stay at this time because the PTAB's institution decisions, expected by November 2018, will likely precede intensive claim construction activity set to begin a month later. (D.I. 57 at 1, 9, 12; D.I. 91 at 4) Although the parties have engaged in some preliminary discovery, the docket does not show that a significant amount of discovery has been conducted. Advanced Microscopy Inc. v. Carl Zeiss Microscopy, LLC, C.A. No. 15-516-LPS-CJB, 2016 WL 558615, at* 1 (D. Del. Feb. 11, 2016) (denying motion to stay prior to PTAB's decision whether to institute proceedings); see also Toshiba Samsung Storage Tech. Korea Corp. v. LG Elecs., Inc., C.A. No. 15-691-LPS-CJB, 2015 WL 7824098, at *1 (D. Del. Dec. 3, 2015); NuVasive, Inc. v. Neurovision Med Prods., Inc., C.A. No. 15-286-LPS-CJB, 2015 WL 3918866, at *2 (D. Del. June 23, 2015). It remains likely that the PTAB's institution decisions will precede large-scale and expensive discovery efforts related to document production or claim construction. Id Therefore, it is more practical to allow preliminary claim construction activity to proceed while awaiting the PTAB's decision on whether to institute proceedings on Apple's petitions.
C. Undue Prejudice or Tactical Advantage
The third factor also supports the court's denial of Apple's motion because a stay in the instant litigation would prejudice USR. Specifically, Dr. Kenneth Weiss ("Dr. Weiss"), the sole inventor of the patents-in-suit and an important trial witness, is in poor health at age 76. (D.I. 106 at 18) Apple cites case authorities outside of this district in support of its contention that Dr. Weiss's heath concerns are not, without more, enough to reach a conclusion of undue prejudice to USR as a result of granting the stay. (D.I. 118 at 9)
In VirtualAgility Inc. v. Salesforce.com, Inc., the Federal Circuit rejected the argument that undue prejudice existed because of the "risk of witness loss" where "potentially relevant" witnesses were over the ages of60 and 70. 759 F.3d 1307, 1319 (Fed. Cir. 2014). The court specifically noted that there was "no evidence that any of these [witnesses were] in ill health." Id. Conversely, the facts presently before the court establish that Dr. Weiss suffers from congestive heart failure and atrial fibrillation. (D.I. 108 at ¶ 7) Dr. Weiss is the sole inventor of all of the patents-in-suit and is likely to be an important witness at trial. (D.I. 106 at 18) For these reasons, the health and age of Dr. Weiss weigh against a stay of the litigation at this stage of the proceedings.
D. Burden of Litigation
The final factor in the stay analysis, regarding the burden of litigation on the court and on the parties, also weighs against a stay. Apple argues that the stay would ease the burden on the court and the parties by preventing the potential need for dual claim construction proceedings in light of USR's plan to add three more patents to the case.
In Benefit Funding Systems LLC v. Advance America Cash Advance Centers Inc., 767 F.3d 1383, 1384-85 (Fed. Cir. 2014), the district court originally denied a motion to stay after petitions were filed with the PTAB, but before institution decisions were made. Later, the PTAB instituted a CBM review based on subject matter eligibility challenges. Id. at 1384. The district court then granted a renewed motion to stay the litigation because "the burden on the court would be reduced due to the likely and substantial simplification resulting from the CBM review." Id. at 1385. The Federal Circuit affirmed the district court's grant of the motion to stay. Id. at 1384. Applying the procedures followed in Benefit Funding to the circumstances of the present case, the court concludes that a stay is not warranted at this stage. If the PTAB institutes Apple's CBM petitions and Defendants file a renewed motion to stay, the court will reevaluate the merits of the renewed motion in light of those circumstances.
For the foregoing reasons, Apple's motion to stay proceedings is denied. (D.I. 90) This order is without prejudice to renew an application to stay the case if warranted by institution of any subsequent IPR or CBM proceeding. An Order consistent with this Memorandum Opinion shall issue.
This Memorandum Opinion is filed pursuant to 28 U.S.C. § 636(b)(1)(A), Fed. R. Civ. P. 72(a), and D. Del. LR 72.1(a)(2). The parties may serve and file specific written objections within fourteen (14) days after being served with a copy of this Memorandum Opinion. Fed. R. Civ. P. 72(a). The objections and responses to the objections are limited to ten (10) pages each. The parties are directed to the court's Standing Order For Objections Filed Under Fed. R. Civ. P. 72, dated October 9, 2013, a copy of which is available on the court's website, www.ded.uscourts.gov.