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Riddell, Inc. v. Kranos Corp.

United States District Court, N.D. Illinois, Eastern Division

March 12, 2017

RIDDELL, INC., Plaintiff,
v.
KRANOS CORP., Defendant. RIDDELL, INC., Plaintiff,
v.
XENITH, LLC, Defendant.

          ORDER ON DEFENDANTS' MOTION TO STAY

          MATTHEW F. KENNELLY United States District Judge.

         Riddell, Inc., a manufacturer of sports equipment, including football helmets. It has sued Kranos Corp., which does business as Schutt Sports, for infringement of U.S. Patent Nos. 8, 938, 818 (the '818 patent), 8, 528, 118 (the '118 patent), and 8, 813, 269 (the '269 patent). Riddell has separately sued Xenith, LLC for infringement of the '818 and '118 patents. Riddell, Inc. v. Xenith, LLC, Case No. 16 C 4498 (N.D. Ill.). The two cases have been consolidated for pretrial purposes-including discovery, claim construction, and summary judgment.

         Both cases are proceeding under this district's local patent rules. The Court set a schedule in June 2017 that required the parties to exchange initial infringement and invalidity contentions and related documents on dates in August and September 2016 and final infringement and invalidity contentions on dates in late December 2016 and mid-January 2017. The schedule also required the parties to exchange by January 31, 2017 claim terms and phrases that they contend require construction by the Court. By operation of Local Patent Rule 1.3, fact discovery was to be completed by February 28, 2017-a point about which the Court reminded counsel in early February. Regarding claim construction, the schedule set by the Court required filing of the opening brief on March 7, 2017, the response on April 4, 2017, and the reply on April 18, 2017, with the claim construction hearing set for May 19, 2017. (A few weeks ago, the Court extended the briefing schedule by two weeks but did not move the claim construction hearing date.)

         In late August 2016, Kranos moved the Court to stay proceedings in this case pending a decision by the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB) on inter partes review (IPR) petitions that Kranos had filed with regard to all three patents in suit and all of the claims of the patents asserted by Riddell against the two defendants. Xenith joined in the motion to stay, though it had not filed its own IPR petitions. On October 7, 2016, the Court denied the motion as premature because the PTAB had not yet determined whether to institute IPR proceedings.

         Kranos has now renewed its motion to stay. On February 10, 2017, the PTAB granted Kranos's IPR petitions in part. Specifically, the PTAB granted review, on specified grounds, with regard to 23 of the 53 claims asserted by Riddell against Kranos. The PTAB did not grant review on the other 30 claims. Kranos contends that a stay pending conclusion of the IPR proceedings will ultimately streamline the case and reduce the burden on the parties and the Court. Xenith, which as just noted did not petition for IPR, has joined in Kranos's motion to stay. Riddell opposes defendants' motion.

         Discussion

         A court has the inherent authority to stay proceedings in a case to conserve its own time and that of the parties. Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). In considering whether to grant a stay, a court exercises its judgment by "weigh[ing] [the] competing interests and maintain[ing] an even balance." Id. Generally speaking, a court considers whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; whether a stay will simplify the issues and the trial; and how far the proceedings in the case have advanced. Courts also may consider whether a stay or denial of a stay would reduce the burden of litigation on the parties and the court. See, e.g., Invensys Sys., Inc. v. Emerson Elec. Co., No. 6:12-CV-00799, 2014 WL 4477393, at *1 (E.D. Tex. July 25, 2014); Ignite USA, LLC v. Pacific Market Int'l, LLC, No. 14 C 856, 2014 WL 2505166, at *2 (N.D. Ill. May 29, 2014).

         1. Prejudice and tactical disadvantage

         Delay alone is not enough to tip the balance or to constitute unfair prejudice, as it is present in any case in which a stay is sought. See, e.g., NFC Tech. LLC v. IFTC Am., Inc., No. 2:13-CV-1058, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015); Ignite USA, 2014 WL 2505166, at *2. Here, however, Riddell does not rely merely on the proposition that a stay will delay determination of its claims. Both Kranos and Xenith are direct competitors of Riddell. Riddell contends that it will be unfairly prejudiced by a stay; it says it "should not have to continue to compete with, and lose market share to, . . . companies who simply copied Riddell's helmet to remain relevant in the market." Pl.'s Resp. at 8. Competition between the parties can weigh in favor of a finding of undue prejudice. See VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1318 (Fed. Cir. 2014). On the other hand, Kranos points out that Riddell did not move for a preliminary injunction, and that is a factor appropriately considered in assessing the degree of prejudice. See Id. at 1319. Riddell says, however, that it made this decision in order to conserve its resources. Riddell was also entitled to rely on the fact that the Court would keep the litigation moving expeditiously as contemplated by this district's local patent rules. The Federal Circuit has acknowledged that a party's failure to move for a preliminary injunction "is not dispositive" of the issue of undue prejudice and that there can be "a variety of reasons that a patentee does not move for a preliminary injunction." Id.

         More significantly, Riddell argues persuasively that staying the case pending the IPR proceeding instituted by Kranos would cause Riddell a tactical disadvantage. Under the statute governing the interaction between IPR proceedings and patent infringement litigation in court, the petitioner in an IPR proceeding-in this case, Kranos-is estopped from asserting in litigation any ground for invalidity that it raised or reasonably could have raised during the IPR. 35 U.S.C. § 315(e)(2). Thus if, for example, the PTAB rejects a particular ground of invalidity asserted by Kranos, Kranos cannot re-assert that ground in this lawsuit. In other words, an alleged infringer that institutes IPR proceedings faces a tradeoff. But this same bar will not apply to Xenith, which did not seek institution of IPR proceedings but which would benefit from favorable rulings in the IPR instituted by Kranos. Thus the defendants collectively will get two bites at the invalidity apple if the Court stays this case pending conclusion of the IPR proceedings.

         The Court concludes that the prejudice / tactical disadvantage factor weighs against a stay, though not as much as Riddell contends.

         2. Simplification of the issues / reducing the burden of litigation

         There are a number of ways in which an IPR proceeding may simplify the issues for litigation:

• Any prior art presented to the Court will have been first considered by the PTAB, with ...

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