Cooler Master Co., Ltd. v. Asetek Danmark A/S

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 COOLER MASTER CO., LTD., et al., Case No. 21-cv-04627-HSG 8 Plaintiffs, ORDER GRANTING MOTION TO STAY 9 v. Re: Dkt. No. 34 10 ASETEK DANMARK A/S, 11 Defendant. [12] 13 In June 2021, Plaintiffs Cooler Master Co., Ltd. and CMI USA, Inc. (collectively “Cooler 14 Master”) filed a complaint against Asetek Danmark A/S (“Asetek”) seeking a declaratory 15 judgment that Cooler Master is not infringing seven Asetek patents. See Dkt. No. 1. In December 16 2021, Asetek filed counterclaims, which it later amended, against Cooler Master Co., Ltd. and 17 CMI USA, Inc. alleging they had infringed two Asetek patents. See Dkt. Nos. 20, 26. 18 Now pending before the Court is Asetek’s motion to stay pending inter partes review 19 (“IPR”), briefing for which is complete. Dkt. Nos. 34 (“Mot.”), 38 (“Opp.”), 39 (“Reply”). After 20 carefully considering the parties’ arguments, the Court GRANTS Asetek’s motion to stay. 21 I. BACKGROUND 22 Cooler Master seeks a declaratory judgment of non-infringement regarding seven patents: 23 8,240,362 (the “’362 patent”), 8,245,764 (the “’764 patent”), 9,733,681 (the “’681 patent”), 24 10,078,354 (the “’354 patent”), 10,078,355 (the “’355 patent”), 10,599,196 (the “’196 patent”), 25 and 10,613,601 (the “’601 patent”). See Dkt. No. 1. According to Cooler Master, the patents 26 consist of two patent families. The first is the ’362 patent family, which includes patents ’354 and 27 ’601. Id. ¶ 18. The second is the ’764 family, which includes patents ’681, ’355, and ’196. Id. 1 ¶¶ 12-13, 23-24. 2 Asetek alleges that five of the seven patents at issue in this case are also the subject of 3 instituted IPRs or appeals before the Federal Circuit as a result of separate litigation between 4 CoolIT Systems, Inc. (“CoolIT”) and Asetek. Mot. at 3. For patents ’681, ’354, and ’355, the IPR 5 proceedings resulted in final written decisions in August 2021, and appeals to the Federal Circuit 6 were filed in October 2021. Id. at 3-4. For patents ’196 and ’601, IPR proceedings were instituted 7 in December 2021, and final written decisions are expected by the end of this year. Id.; see 35 8 U.S.C. § 316 (a)(11); 37 C.F.R. § 42.100 (c). Additionally, Asetek represents that claims involving 9 the ’196, ’601, and ’362 patents are set to go to trial before Judge Chen in Asetek Danmark A/S v. 10 Coolit Systems Inc., Case No. 3:19-cv-00410-EMC. Id. at 4 . A review of that case’s docket 11 shows that trial is set for March 2023. 12 II. LEGAL STANDARD 13 “Courts have inherent power to manage their dockets and stay proceedings, including the 14 authority to order a stay pending [IPR].” Ethicon, Inc. v. Quigg, 849 F.2d 1422 , 1426–27 (Fed. 15 Cir. 1988) (internal citations omitted); IXI Mobile (R & D) Ltd. v. Samsung Elecs. Co., No. 15-cv16 03752-HSG, 2015 WL 7015415 , at *2 (N.D. Cal. Nov. 12, 2015). Courts consider three factors in 17 determining whether to grant a stay pending IPR: “(1) whether discovery is complete and whether 18 a trial date has been set; (2) whether a stay will simplify the issues in question and trial of the case; 19 and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non20 moving party.” IXI Mobile (R & D) Ltd., 2015 WL 7015415 , at *2 (quoting Evolutionary 21 Intelligence, LLC v. Facebook, Inc., No. 13-cv-04202-SI, 2014 WL 261837 , at *1 (N.D. Cal. Jan. 22 23, 2014)). The moving party bears the burden of demonstrating that a stay is appropriate. DSS 23 Tech. Mgmt., Inc. v. Apple, Inc., No. 14-cv-05330-HSG, 2015 WL 1967878 , at *2 (N.D. Cal. May 24 1, 2015). 25 Courts in this district have often recognized “a liberal policy in favor of granting motions 26 to stay” pending IPR. See Pragmatus AV, LLC v. Facebook, Inc., No. 11–cv–02168–EJD, 2011 27 WL 4802958 , at *2 (N.D. Cal. Oct. 11, 2011); IXI Mobile (R & D) Ltd., 2015 WL 7015415 , at *2. 1 Marketing, Inc., No. 16-cv-03590-JST, 2017 WL 2591268 , at *2 (N.D. Cal. June 15, 2017). And 2 whether to stay is always within the court’s discretion. 3 III. DISCUSSION 4 A. Factor 1: Stage of the Proceedings 5 The first factor the Court considers is whether the litigation is at an early stage. See AT&T 6 Intellectual Property I v. Tivo, Inc., 774 F. Supp. 2d 1049, 1052 (N.D. Cal. 2011). Specifically, 7 courts consider “whether discovery is complete and whether a trial date has been set.” 8 Evolutionary Intelligence, 2014 WL 261837 , at *1. 9 Asetek contends that this factor favors a stay because the “case is indisputably in a very 10 early stage.” Mot. at 5. Asetek represents that the parties have not engaged in any fact or expert 11 discovery or exchanged infringement or invalidity contentions. Id. The claim construction 12 process has not begun, no substantive or dispositive motions have been filed, and the Court has yet 13 to enter a case schedule. Cooler Master agrees that the case is at a relatively early stage. Opp. at 14 2. 15 Given the early stage of this litigation, the Court find that this factor weighs in favor of a 16 stay. 17 B. Factor 2: Simplification of the Case 18 Asetek contends that “a majority of the patents Cooler Master brought into this action are 19 involved in already-instituted IPRs, appeals therefrom, and/or imminent jury trial, which strongly 20 favors a stay.” Mot. at 7. Asetek argues that these proceedings will simplify the “issues in 21 question and trial of the case.” Id. Cooler Master likewise agrees that the proceedings could 22 simplify this case and that the factor tends to favor a stay. See Opp. at 2-3. 23 The Court agrees that this factor weighs in favor of a stay. As other courts have noted, a 24 crucial consideration under this factor is the status of the institution decision. See GoPro, Inc., [25] 2017 WL 2591268 , at *4. The PTAB issued final written decisions regarding three of the patents 26 at issue in this case, and those decisions are currently on appeal before the Federal Circuit. Mot. at 27 7. And since PTAB is expected to issue final written decisions on two additional patents by the 1 appeals, will simplify the case. 2 C. Factor 3: Prejudice and Disadvantage 3 The final factor considers whether a stay would unduly prejudice the nonmoving party. 4 Courts here consider whether the moving party engaged in dilatory tactics, such as seeking review 5 in an untimely fashion. See GoPro, Inc., 2017 WL 2591268 , at *4. Courts address four 6 considerations when evaluating prejudice: (1) the timing of the IPR petition; (2) the timing of the 7 stay request; (3) the status of review; and (4) the relationship of the parties. See SAGE 8 Electrochromics, Inc. v. View, Inc., No. 12-cv-06441-JST, 2015 WL 66415 , at *3 (N.D. Cal. Jan. 9 5, 2015) (quoting Ever Win Int’l Corp. v. Radioshack Corp., 902 F. Supp. 2d 503, 508 (D. Del. 10 2012)). 11 i. Timing of IPR Petition and Request for Stay 12 Asetek answered Cooler Master’s complaint and filed its counterclaims in December 13 2021. By that time, Asetek and CoolIT had already appealed PTAB’s decisions regarding three of 14 the patents at issue here. That same month, IPR proceedings for another two patents were 15 instituted. On February 9, 2022, Asetek filed the instant motion to stay. Stays pending IPR can 16 result in substantial delay in the district court proceeding, but the current record does not support a 17 finding of purposeful delay or lack of diligence by Asetek. The Court finds that the timing of the 18 IPR petition and motion to stay weighs in favor of a stay. 19 ii. Status of Proceedings 20 The IPR proceedings are well underway. For three of the patents, the proceedings have 21 already resulted in final written decisions now being appealed. And the IPR proceedings for two 22 other patents were instituted in December 2021 with final written decisions expected by December 23 2022. Given the advanced stage of the IPR proceedings, the Court finds that this consideration 24 weighs in favor of a stay. 25 iii. Relationship of the Parties 26 Where parties are direct competitors, the risk of prejudice to the non-moving party is 27 higher than it would be otherwise. See TPK Touch Sols. Inc. v. Wintek Electro-Optics Corp., No. 1 district require “evidence to substantiate an argument that direct competition will result in 2 prejudice to the non-moving party.” Cypress Semiconductor Corp. v. GSI Tech., Inc., No. 13– 3 CV–02013–JST, 2014 WL 5021100 , at *5 (N.D. Cal. Oct. 7, 2014) (collecting cases). 4 Cooler Master represents that it and Asetek are “head-to-head competitors,” and alleges 5 that Asetek “continues to poison the market” by broadcasting that Cooler Master is infringing on 6 Asetek’s patents. Opp. at 2. Cooler Master argues that a stay in this case allows Asetek to 7 continue to “disparage” Cooler Master’s products, which disparagement “can be expected to have 8 a chilling effect on Cooler Master’s sales and harm Cooler Master’s business relations, etc.” Id. at 9 3. 10 Because of this, Cooler Master requests that the Court enjoin Asetek “from making any 11 assertions of infringement or violations of Court orders in the marketplace during the pendency of 12 the stay” and asks that Asetek “be required to post a bond in an amount according to proof during 13 the pendency of the stay.” Opp. at 3. Cooler Master’s request for an injunction is procedurally 14 improper and therefore denied. If it has a meritorious basis for seeking an injunction, Cooler 15 Master should file a motion and fully explain the grounds for its request. The Court also finds that 16 a bond is not warranted at this time, in significant part because Cooler Master’s complaint seeks a 17 declaratory judgment, not monetary damages. 18 Asetek agrees that it is a direct competitor with Cooler Master, but argues that Cooler 19 Master “is a large company with many product lines, and that the liquid cooling products at issue 20 in this case represent only a very small part of Cooler Master’s overall business.” Reply at 4-5. 21 Asetek also argues that Cooler Master’s lack of urgency in pursuing this case, like the eight-month 22 delay in filing its declaratory judgment complaint, demonstrates that Cooler Master “has not 23 suffered undue prejudice and will not suffer undue prejudice during a stay.” Reply at 4-5; see also 24 Mot. at 8-9. 25 Although the parties are direct competitors, Cooler Master has offered no evidence to 26 substantiate its general assertions that a stay will result in competitive injury. Without at least 27 some probative evidence, the Court cannot credit Cooler Master’s assertion of prejudice. The iv. Conclusion as to Prejudice Balancing the factors, the Court finds that the prejudice and disadvantage factor does not [2] weigh against or in favor of a stay. [3] 4 IV. CONCLUSION Having considered the relevant factors in their entirety, the Court finds in its discretion that [5] a stay is warranted, and GRANTS Asetek’s motion. The parties shall file a joint status report [6] every six months from the date of this order to update the Court on the status of the appeals and [7] the IPR proceedings. The parties shall also file a joint status report within five days of (1) the [8] issuance of final written decisions regarding patents ’196 and ’601 or (2) a ruling by the Federal [9] Circuit resolving the appeals regarding patents ’681, °354, and ’355. The Court will assess every [10] six months whether lifting the stay is warranted. [11] IT IS SO ORDERED. [12] Dated: 6/14/2022 [13] HAYWOOD S. GILLIAM, JR. United States District Judge [16] = 17 Z 18