The United States District Court for the Central District of California recently denied Defendant Adobe Systems Inc.’s motion to stay litigation pending resolution of parallel inter partes review (“IPR”) proceedings before the PTAB based on the defendant’s refusal to accept estoppel effects of third-party IPRs. Realtime Adaptive Streaming LLC v. Adobe Sys. Inc., No. 2:18-cv-09344, ECF No. 75 (C.D. Cal. May 14, 2019) (Wu).
Realtime sued Adobe for infringing seven U.S. patents owned by Realtime. Five of the seven Realtime patents asserted in the litigation were subject to IPR proceedings; however, Adobe only filed an IPR petition challenging one of the patents. All other IPR petitions were filed by third parties not involved in the lawsuit. Adobe filed a motion to stay litigation pending resolution of the IPRs. In its motion to stay, Adobe agreed to be bound by a limited estoppel for the third-party IPRs, barring Adobe from raising any invalidity grounds actually raised in the IPRs, but not by the full scope of statutory estoppel of 35 U.S.C. § 315(e)(2), which provides:
“(2) Civil actions and other proceedings.—
The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”
The Court explained that a denial of Adobe’s motion to stay is strongly warranted because Adobe only filed an IPR petition for one of the seven asserted patents and does not agree to be bound by the full scope of statutory estoppel applicable to final written decisions from PTAB proceedings for the third-party IPRs. The Court further indicated that Adobe had the opportunity to join the pending third-party IPRs as an “understudy,” which would have preserved Adobe’s right to continue the IPRs should the original petitioner(s) settle. However, because Adobe did not join the third-party IPRs and refused to be bound by the full scope of statutory estoppel for the third-party IPRs, the likelihood of delay of court proceedings without simplification of the issues is significantly increased. Even in cases where the Defendant has not joined or filed an IPR, but agrees to be bound by the full scope of statutory estoppel, delay of litigation without issue simplification is a concern. For example, if the Court grants Defendant’s motion to stay, but the Defendant has not joined the IPR proceeding and the IPR later settles, the end result is a delay of court proceedings without simplification or narrowing of the issues relating to the patent subject to the IPR.
This decision indicates that a Court may not grant a motion to stay litigation if the Defendant has not joined third-party IPR proceedings concerning the patents at issue and does not agree to be bound by the full scope of statutory estoppel for the third-party IPRs. Therefore, a Defendant should consider the consequence of not agreeing to be bound by the full scope of statutory estoppel for third-party IPRs – that is, denial of a stay and, therefore, proceeding with litigation without the potential benefit of a final written decision of an IPR in its favor.