United States District Court, N.D. Illinois
April 8, 2004.
IP INNOVATION L.L.C. AND TECHNOLOGY LICENSING CORPORATION, Plaintiff,
DELL COMPUTER CORPORATION, Defendant
The opinion of the court was delivered by: CHARLES KOCORAS, District Judge
This matter comes before the court on the motion of Plaintiffs IP
Innovation LLC and Technology Licensing Corporation (collectively
referred to herein as "IP Innovation") to amend their complaint against
Defendant Dell Computer Corporation ("Dell"). For the reasons set forth
below, the motion is granted.
IP Innovation holds two patents relevant to this case: U.S. Patent No.
5,424,780 ("the `780 patent") and U.S. Patent No. 6,529, 637 ("the `637
patent"). The patents involve computer imaging technology that can be
used in printing and faxing, among other applications. In October 2002,
IP Innovation filed a complaint alleging infringement of the' 780 patent by Minolta Corporation ("the manufacturer
suit"). This complaint initiated the companion suit to the instant case
("the Dell suit"), which was originally filed in December 2002 in the
Eastern District of Texas. As time went on, several other defendants were
added to the companion suit, and the complaint was amended in March 2003
to add a claim for infringement of the `637 patent.
In April 2003, Judge Ward of the Eastern District of Texas transferred
this suit to our court at Dell's request. Originally, it was assigned to
Judge Guzman but was reassigned to our calendar because of its relation
to the manufacturer suit. At a hearing in August, the parties to the
manufacturer suit reported on their progress in achieving settlement
agreements. The subject of consolidation of the Dell suit and the
manufacturer suit arose, prompting counsel for Dell to resurrect the
motion to stay that had been before Judge Guzman before reassignment. At
that time, we granted Dell's oral motion until the cast of characters in
the manufacturer suit could be finalized. See August 5, 2003 Tr. at 10.
Since then, all but one of the defendants in the manufacturer suit have
reached settlements with IP Innovation. The remaining defendant,
Lexmark, filed a motion to transfer the manufacturer suit to Kentucky as
well as a motion for summary judgment of the infringement claims against
it. Both motions were denied. Because no further impediments remained to
commencement of discovery, we set June 9 as a cut-off date for fact
discovery. Shortly after the minute order setting the discovery cut-off date
issued, IP Innovation propounded interrogatories to Dell and filed a
motion for leave to amend their complaint to add claims pertaining to the
`637 patent. Dell opposes the proposed amendment, claiming that the stay
remains in effect and thus precludes any action with regard to the Dell
suit, including amendment of the complaint.
The power and ability of a district court to stay a proceeding stem
from the court's inherent power to control disposition of cases before it
in an efficient and orderly manner. See Landis v. North American Corp.,
299 U.S. 248, 254-55, 57 S.Ct. 163, 166 (1936). Deciding how best to
accomplish this goal requires an exercise of judgment that must take into
account and balance competing interests. Id.; see also Ingersoll Mill.
Mach. Co. v. Granger, 833 F.2d 680, 686 (7th Cir. 1987).
Pursuant to Fed.R.Civ.Proc. 15(a), a plaintiff may amend a complaint
once as a matter of course at any time before a responsive pleading is
served. Rule 15(a) provides that leave to amend a complaint "shall be
freely given when justice so requires." Foman v. Davis, 371 U.S. 178,
182, 83 S.Ct. 227, 230 (1962). The decision whether to grant or deny a
motion for leave to amend is committed to the sound discretion of the
district court. Perrian v. O'Grady, 958 F.2d 192 (7th Cir. 1992). With
these principles in mind, we turn to the matters at hand. DISCUSSION
Although the motion before us is one for leave to amend, Dell focuses
nearly all of its attention on the issue of the stay of proceedings. They
assert that the stay should continue primarily because of the tendency in
patent cases to stay infringement actions against customers pending the
outcome of suits against manufacturers of the products sold to those
customers. They cite many cases from this jurisdiction and others where
this procedure has been used and urge us to follow suit. However, nearly
every case upon which they rely involved suits that were pending in
different fora. Katz v. Lear-Siegler. Inc., 909 F.2d 1459 (Fed. Cir.
1990) (Massachusetts and New York); Codex Corp, v. Milgo Elec. Corp.,
553 F.2d 735 (1st Cir. 1977) (Massachusetts and Kansas); William Gluckin
& Co. v. Int'l Playtex Corp., 407 F.2d 177 (2nd Cir. 1969) (Georgia and
New York); Whelen Tech., Inc. v. Mill Specialties, Inc., 741 F. Supp. 715
(N.D. Ill. 1990) (Illinois and Arizona); Andco. Environmental Processes.
Inc. v. Niagara Environmental Assocs., Inc., 211 U.S.P.Q. 544 (W.D.N.Y.
1981) (New York and Florida); Allway Tools, Inc. v. Am. Safety Razor
Co., 206 U.S.P.Q. 475 (S.D. Tex. 1979) (Texas and Virginia); Wehr Corp.
v. Commercial Construction Corp., 464 F. Supp. 676 (S.D. Fla. 1979)
(Florida and Washington); Kistler Instrumente v. PCB Piezotronics, Inc.,
419 F. Supp. 120 (W.D.N.Y. 1976) (New York and U.S. Court of Claims);
Siemens Aktiengesellschaft v. Sonotone Corp., 370 F. Supp. 970 (N.D.
Ill. 1973) (Illinois and New York); Coyne & Delany Co. v. G. W. Onthank Co.,
90 F. Supp. 505 (S.D. Iowa 1955) (New York and Iowa); Wireless Spectrum
Technologies, Inc. v. Motorola Corp., 2001 WL 32852 (N.D. Ill. Jan. 12,
2001) (Illinois and Patent and Trademark Office); Indianapolis Motor
Speedway Corp. v. Polaris Indus., Inc., 2000 WL 777874 (S.D. Ind. June
15, 2000) (Minnesota and Indiana); T.J. Smith v. Ferris Corp., 1987 WL
7496 (N.D. Ill. March 2, 1987) (New York and Illinois). Although the fact
that two judges are considering suits that are markedly similar is not
dispositive in deciding whether a stay is warranted, clearly it provides
a significant basis for circumspection.
By contrast, the manufacturer suit and the Dell suit are both before
us, through the efforts of Dell to transfer from the Eastern District of
Texas. Thus, there is no danger of inconsistent results or duplicative
expenditure of scarce judicial resources arising from simultaneous
consideration by different judges. See Watson Industries. Inc. v. Canon.
Inc., 2003 WL 23218401, at *1 (W.D. Wis. Nov. 24, 2003) (denying motion
to stay in patent infringement case against customer because, inter
alia, manufacturer case was before identical judge). Neither does it
promote judicial economy to await for ultimate resolution of the
manufacturer case when there is no agreement from IP Innovation or Dell
to be bound by the outcome of the issues in the manufacturer suit,
enabling later disputes over subjects such as collateral estoppel, patent validity, and the party responsible for the manufacture of the
products at issue. See id. To put off determination of these questions
with respect to Dell runs the risk of the very duplication that Dell says
a stay will avoid. At this time, the most sensible course of action is to
put the parties on a common track.
In addition, as the August 5, 2003, transcript makes clear, the stay
was granted for a limited time and with a limited purpose. It was not
intended to extend until the manufacturer suit was completely resolved.
The purpose of the stay, to allow time to determine whether and against
whom the manufacturer case would proceed, has been accomplished. Thus,
there is no reason for it to continue, and we formally acknowledge what
was implied in the February 9 minute order: the stay entered on August 5,
2003 is lifted.
We thus turn to the issue of the amendment of the complaint. As stated
above, leave to amend is freely given when justice requires. Aside from
the stay, Dell has not offered any objection of substance to the proposed
amendment. Our review of its contents reveals that the addition of the
claims pertaining to the `637 patent will makes the complaint in the Dell
suit track the one in the manufacturer suit. Thus, allowing the amendment
streamlines the contemporaneous consideration of the two suits and will
improve our ability to resolve them in tandem. Neither can we detect any
of the usual reasons to disallow an amendment, such as "undue delay, bad
faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the opposing party
by virtue of allowance of the amendment, [or] futility of amendment."
Foman, 371 U.S. at 182, 83 S.Ct. at 230. Accordingly, the motion for
leave to file the amended complaint is granted.
Based on the foregoing analysis, the stay initiated on August 5, 2003,
in this case is lifted. This case and its companion, IP Innovation v.
Lexmark, Case No. 02 C 7611, are consolidated for discovery purposes
only. IP Innovation's motion for leave to amend the complaint against
Dell is granted.
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