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Rr Donnelley & Sons Co. v. Xerox Corporation

United States District Court, Seventh Circuit

December 16, 2013

RR DONNELLEY & SONS COMPANY, Plaintiff and Counterclaim-Defendant,
v.
XEROX CORPORATION, Defendant and Counterclaim-Plaintiff.

MEMORANDUM OPINION AND ORDER

SHARON JOHNSON COLEMAN, District Judge.

Counterclaim-plaintiff Xerox Corporation ("Xerox") moves for leave to amend its answer and counterclaims and moves to stay this proceeding pending the inter partes review of counterclaim-defendant RR Donnelley & Sons Company's ("RR Donnelley") asserted patents. For the following reasons, Xerox's motion for leave to amend is granted and its motion to stay this proceeding is denied.

Background

On August 7, 2012, RR Donnelley filed a complaint alleging patent infringement by Xerox of four patents relating to variable data printing: U.S. Patent Nos. 6, 327, 599, 6, 844, 940, 6, 205, 452, and 7, 278, 094 (collectively, "the VDP patents"). Xerox counterclaimed, alleging several defenses as well as infringement by RR Donnelley of one of Xerox's patent, U.S. Patent No. 6, 486, 895. On May 7, 2013, RR Donnelley filed an amended complaint asserting infringement by Xerox of two additional patents, relating to raster image processing: U.S. Patent Nos. 5, 796, 411 and 5, 949, 438 (collectively, "the RIP patents"). On May 21, 2013, Xerox filed a motion for leave to amend its answer and counterclaims, alleging three additional infringement claims: U.S. Patent Nos. 5, 513, 126 ("the 126 patent"), 5, 689, 642 ("the 642 patent") and 5, 987, 535 ("the 535 patent"). The parties stipulated to adding the 126 and 642 patents. RR Donnelley only opposes the addition of the 535 patent.

Xerox filed for inter partes review of the RIP patents with the U.S. Patent and Trademark Office ("PTO") in August 2013. Xerox subsequently moved this court to stay the entire litigation pending conclusion of the inter partes review.

Discussion

1. Xerox's motion for leave to amend its answer and counterclaims

RR Donnelley opposes Xerox's motion to amend only as to the 535 patent. Federal Rule of Civil Procedure 15(a)(2) allows a party to amend its complaint with the district court's leave. Fed.R.Civ.P. 15(a)(2). The court should freely give leave when justice so requires but may deny leave to file an amended complaint in the event of "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, [and] futility of amendment." Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010).

In considering Xerox's motion to amend, the Court finds that Xerox's request should be granted. In February, Xerox indicated its intent to add the 126 and 642 patents and also requested additional information regarding the ProteusJet Digital Print System ("ProteusJet") as it believed it infringed on one or more of Xerox's patents. At RR Donnelley's request, Xerox identified patents which it believed to be infringed by the ProteusJet, including U.S. Patent No. 7, 837, 290 ("the 290 patent"). In April, the parties agreed to extend the deadline to amend their pleadings in contemplation of adding additional infringement claims and counterclaims. In April and May, RR Donnelley provided requested information about the ProteusJet.

On May 7, the parties filed an agreed motion for leave to amend the pleading wherein the parties stipulated to certain amended pleadings, including Xerox's proposed amended counterclaim adding the 126, 642 and 290 patents. Based on information provided by RR Donnelley on May 17, Xerox determined that the ProteusJet was not infringing the 290 patent but was allegedly infringing the 535 patent. On May 21, 2013 the day its amended pleading was due - Xerox notified RR Donnelley that it intended to substitute the 535 patent for the 290 patent in its amended answer and counterclaim.

RR Donnelley opposes the substitution and now argues Xerox should have and could have included the alleged infringement in its original counterclaim filed September 2012. This argument is specious because RR Donnelley was on notice that Xerox believed the ProteusJet was allegedly infringing one or more of Xerox's patents as early as February and, indeed, was not opposed to Xerox adding the 290 patent on May 7. The Court finds Xerox's actions do not indicate undue delay, bad faith or dilatory motive, or any other basis which warrants denial of their motion. Therefore, Xerox's motion to amend its answer and counterclaim to include the 126, 642 and 535 patents is granted. The parties represent that they have engaged in discovery with respect to the 126 and 642 patents and the Court acknowledges that certain deadlines will need to be adjusted to allow discovery as to the 535 patent.

2. Xerox's motion to stay this proceeding pending the inter partes review of RR Donnelley's asserted patents

On August 28, 2013, Xerox filed petitions for inter partes review of the validity of each of the RIP patents. RR Donnelley's response to the petitions was due and presumably filed with the PTO on December 4, 2013. (Dkt 104, p. 4). Thus, the PTO will issue a decision on whether to grant Xerox's petitions by March 4, 2013. See 35 U.S.C. § 314(b)(1) (The PTO "shall determine whether to institute an inter partes review...within 3 months after receiving a preliminary response to the petition"). The PTO will grant review of one or both petitions if Xerox has a "reasonable likelihood" of prevailing on at least one of the claims challenged in the petition. 35 U.S.C. § 314(a). If the PTO grants review of one or both petitions, it must issue its final determination by March 4, 2015, but may extend for another six months for good cause. See 35 U.S.C.§ 316(a)(11).

District courts have inherent authority to manage their dockets and stay proceedings. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). Indeed, the decision to stay litigation pending patent review is within a district court's broad discretionary powers. Gould v. Control Laser Corp., 705 F.2d 1340, 1341 (Fed.Cir. 1983). When considering a request to stay litigation pending an inter partes review, courts consider: (1) whether a stay will unduly prejudice or tactically disadvantage the non-moving party; (2) whether a stay will simplify the issues in question and streamline the trial; and (3) the stage of litigation, including whether discovery is complete and a trial date has been set. Universal Electronics, Inc. v. Universal Remote Control, Inc., 943 F.Supp.2d 1028, 1030-31 (C.D. Cal. 2013); see also Black & Decker Inc. v. Positec USA, Inc., 13 C 3075, ...


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