BiTMICRO LLC v. Intel Corporation

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION [7] 8 BITMICRO LLC, Case No. 5:23-cv-00625-EJD 9 Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART MOTION TO 10 v. STAY PENDING INTER PARTES REVIEW 11 INTEL CORPORATION, 12 Defendant. Re: ECF No. 70 13 Defendant Intel Corporation (“Intel”) moves to stay this patent infringement case pending 14 inter partes review (“IPR”). See Intel’s Notice of Mot. and Mot. to Stay Pending IPR (“Mot.”), 15 ECF No. 70. For the reasons discussed below, the Court GRANTS IN PART AND DENIES IN 16 PART Intel’s motion. 17 Intel manufactures semiconductor chips. See Compl., ECF No. 1 ¶ 51. Its products are 18 incorporated into servers, computers, and mobile phones, such as processors, flash memory, SSDs, 19 and field-programmable gate arrays. Id. Plaintiff BiTMICRO LLC (“BiTMICRO”) owns certain 20 patents containing solid state drive (“SSD”) and integrated circuit technology invented by 21 BiTMICRO Networks, Inc. Id. ¶¶ 1–2. 22 BiTMICRO filed a complaint against Intel in the Western District of Texas on March 30, 23 2022, alleging infringement of the following six U.S. Patent Nos.: 7,826,243 (“’243 patent”); 24 9,135,190 (“’190 patent”); 8,010,740 (“’740 patent”); 9,858,084 (“’084 patent”); 10,120,694 25 (“’694 patent”); and 6,496,939 (“’939 patent”) (collectively, the “Asserted Patents”). Id. ¶¶ 52– 26 58. The inventions contained in the Asserted Patents specifically relate to memory controllers, 27 mapping tables for memory devices, storage device security, memory saving during power loss, 1 microchip configuration, and system booting. Id. ¶ 14. The complaint alleges that Intel, either 2 directly or through its subsidiary SK Hynix, imports or sells the following infringing products: 3 vertically stacked integrated circuits; SSDs with SLC caching capabilities; “persistent memory” 4 products; Non-Volatile Memory Express (NVMe) SSDs; Optane SSDs; Optane memory products; 5 FPGA products; RAID Controllers that include modules and adapters, along with RAID 6 Maintenance Free Backup Units (RMFBU); and SSDs with power loss protection. Id. ¶¶ 52–59. 7 In August 2022, Intel filed a motion to transfer venue to this district. Before the motion 8 was granted, the parties completed claims construction briefing in November and December 2022. 9 See ECF Nos. 33, 39, 43, 47. In February 2023—shortly before the Markman hearing was 10 scheduled to be heard—Intel’s motion was granted, and the case was transferred to this district. 11 See ECF No. 55. 12 In March and April of 2023, Intel filed seven IPR petitions challenging all the Asserted 13 Patents. See ECF No. 68. Four of these petitions are expected to receive institution decisions by 14 October and November 2023. Mot. at 3. The last institution decision is expected by December 20, 15 2023. See opp’n at 5; Intel’s Reply in Support of Mot. to Stay (“Reply”), ECF No. 74 at 3–4. On 16 June 12, 2023, Intel moved to stay the case pending IPR. See Mot. BiTMICRO opposes the 17 motion. See BiTMICRO’S Opp’n to Intel’s Mot. to Stay Pending IPR (“Opp’n”), ECF No. 73. 18 BiTMICRO requests that if the Court is inclined to enter a stay, it should expire on December 20, 19 2023, by which time the Patent Trial and Appeal Board (“PTAB”) will have issued IPR decisions 20 on all of the Asserted Patents. Id. at 18. 21 “Courts have inherent power to manage their dockets and stay proceedings, including the 22 authority to order a stay pending conclusion of a PTO reexamination.” Microsoft Corp. v. TiVo 23 Inc., No. 10-CV-00240-LHK, 2011 WL 1748428 , at *3 (N.D. Cal. May 6, 2011); Ethicon, Inc. v. 24 Quigg, 849 F.2d 1422 , 1426–27 (Fed. Cir. 1988). Courts “examine three factors when 25 determining whether to stay a patent infringement case pending review or reexamination of the 26 patents: (1) whether discovery is complete and whether a trial date has been set; (2) whether a stay 27 will simplify the issues in question and trial of the case; and (3) whether a stay would unduly 1 prejudice or present a clear tactical disadvantage to the nonmoving party.” PersonalWeb Tech., 2 LLC v. Apple Inc., 69 F. Supp. 3d 1022, 1025 (N.D. Cal. 2014) (citations and quotations omitted). 3 First, Intel contends that the proceedings are in their early stage. Intel asserts that “the 4 parties have exchanged only one set of written discovery requests and responses” and substantial 5 fact discovery still lies ahead. Mot. at 4–5. BiTMICRO argues, however, that prior to the case 6 transfer, Judge Albright entered a scheduling order in this case which stated that all pretrial 7 proceedings must be completed by December 17, 2023. Opp’n at 6. According to BiTMICRO, 8 Intel has not demonstrated good cause why this Court should modify or vacate Judge Albright’s 9 case schedule. Id. at 7. This Court has not yet entered a scheduling order in this case, and this 10 Court is not bound by the case schedule entered prior to transfer. The Court recognizes that, 11 shortly before the case was transferred to this district, the parties completed claim construction 12 briefing and were prepared to attend the Markman hearing. Nevertheless, the briefing will need to 13 be updated in accordance with this district’s Patent Local Rules. 14 Since the PTAB has not yet decided whether to move forward with IPR review on any of 15 the asserted claims, the Court finds that a full stay is not yet warranted. Accordingly, this factor 16 weighs in favor of granting a partial stay at this time. See Evolutionary Intel., LLC v. Apple, Inc., 17 No. 13-CV-04201-WHA, 2014 WL 93954 , at *2 (N.D. Cal. Jan. 9, 2014) 18 Turning to the second factor, Intel argues that a stay will simplify the issues at trial. The 19 Court agrees. If any of Intel’s IPRs are successful, some or all of the claims could be found 20 invalid. Viavi Sols. Inc. v. Platinum Optics Tech. Inc., No. 5:20-CV-05501-EJD, 2021 WL 21 1893142, at *1 (N.D. Cal. May 11, 2021) (“[A] stay pending the PTAB's decision on whether to 22 institute IPR petitions will promote efficiency by avoiding the expenditure of limited judicial 23 resources between now and when the last PTAB institution decision will be rendered.”); see also 24 Finjan, Inc. v. Symantec Corp., 139 F.Supp.3d 1032, 1037 (N.D. Cal. 2015) (“Were the Court to 25 deny the stay until a decision on institution is made, the parties and the Court would expend 26 significant resources on issues that could eventually be mooted by the IPR decision.”). This is 27 particularly true here, where Plaintiff asserts six patents “relating to five different areas of 1 technology and seven distinct types of accused products.” Mot. at 6. Although the PTAB has not 2 yet decided whether to institute IPR as to any claims, “[g]ranting a four-month stay to provide the 3 PTAB time to consider whether to grant inter partes review will minimize the risk of inconsistent 4 results and conserve resources.” Evolutionary Intel., LLC, 2014 WL 93954 , at *3. Accordingly, 5 the second factor also favors granting a partial stay. 6 Turning to the third and final factor, Intel contends that BiTMICRO will not be prejudiced 7 by granting a stay because Plaintiff is a non-practicing entity that does not practice any of the 8 Asserted Patents. Mot. at 10. However, BiTMICRO argues that it would be tactically 9 disadvantaged by the possibility of lost evidence and faded memories. Opp’n at 9–13. Because 10 the PTAB has not yet granted IPR, if the Court were to fully stay the case there would be no 11 activity in this case for more than a year. BiTMICRO is concerned that this timeframe would drag 12 out even further if Intel were to appeal any of the petitions. Opp’n at 11. The Court believes that 13 entry of a partial stay alleviates many of BiTMICRO’s concerns. 14 BiTMICRO also contends that it is prejudicially delayed in reviewing Intel’s source code. 15 According to BiTMICRO, under both the transferor district’s and this district’s rules BiTMICRO 16 may access source code before litigating validity. Opp’n at 14. Pursuant to Judge Albright’s case 17 schedule, Intel was purportedly required to produce its source code by September of 2022,1 which 18 was interrupted by the case’s transfer to this district. Id. BiTMICRO asserts that without this 19 source code, it would be prejudiced by being “forced to litigate those same [validity] issues at the 20 PTAB without access to this information.” Id. at 14. BiTMICRO notes that even under this 21 district’s Patent Local Rules 3-1, 3-3, and 3-4(a), Intel would have been required to produce its 22 source code within two months of the parties’ initial case management conference. Id. at 14–15. 23 The parties appeared before the undersigned on June 8, 2023 for an initial case [24] 25 1 There appears to be some disagreement over what was due to be produced on this date. Intel contends that Judge Albright ordered Intel “to produce documents sufficient to show the operation 26 of the accused products, which Intel timely provided by producing copies of confidential specifications and engineering documents.” Reply at 9; see also ECF No. 45 at 2. Regardless, 27 source code must be produced with invalidity contentions under this district’s Local Rules. See Patent L.R. 3-3, 3-4(a). 1 management conference (“CMC”). During the CMC, Intel informed the Court of its intention to 2 file a motion to stay pending IPR. See ECF No. 69. As a result, the Court has delayed entry of a 3 case schedule. Pursuant to Patent Local Rule 3-1, within 14 days of the CMC, “a party claiming 4 patent infringement shall serve on all parties a ‘Disclosure of Asserted Claims and Infringement 5 Contentions.’” Within 45 days of serving these disclosures, the party opposing a claim of patent 6 infringement must serve invalidity contentions, including the production of source code. Patent 7 L.R. 3-3, 3-4(a). While 45 days has not yet lapsed as of the date of entry of this Order, “[t]he 8 Northern District of California’s Patent Local Rules exist to further the goal of full and timely 9 discovery and provide all parties with adequate notice and information with which to litigate their 10 cases.” Verinata Health, Inc. v. Sequenom, Inc., No. 12-CV-00865-SI, 2014 WL 4100638 , at *1 11 (N.D. Cal. Aug. 20, 2014) (quotation marks and citation omitted). To advance this goal and to 12 reduce any additional prejudice to BiTMICRO, the Court will impose the condition that 13 BiTMICRO is permitted to review Intel’s source code during the stay. 14 Finally, BiTMICRO also requests that the Court permit it to take discovery regarding 15 obviousness and secondary considerations of nonobviousness while responding to Intel’s late-filed 16 IPRs. Opp’n at 16. BiTMICRO contends that discovery in IPR proceedings is “severely limited,” 17 and even if it could take this discovery, there are practical difficulties, such as duplication of 18 efforts, to doing so that would purportedly prejudice BiTMICRO. The Court denies this request. 19 First, the Court notes that the PTAB’s rules should determine what the parties are permitted to 20 produce and rely upon. Second, “the limited nature of PTAB discovery reduces the potential for 21 duplication of efforts.” Immunex Corp. v. Sanofi, No. 17-CV-2613-SJOPLAX, 2018 WL 22 11211727, at *2 (C.D. Cal. Jan. 18, 2018). 23 In sum, to avoid the risk of an indefinite stay and balance the interests of both parties while 24 conserving judicial resources, the Court will GRANT IN PART AND DENY IN PART Intel’s 25 motion and enters a partial stay until the PTAB issues institution decisions. Accordingly, this 26 action is STAYED until December 20, 2023 with the condition that Intel is ordered to permit 27 BiTMICRO to conduct source code review during the stay. 1 The parties are further ordered to file a joint status report within one week of the date of 2 || the PTAB's decision regarding Apple’s petitions for IPR. Either party may move to extend the 3 stay upon the PTAB’s decision. 4 IT IS SO ORDERED. 5 || Dated: July 27, 2023 [7] EDWARD J. DAVILA 8 United States District Judge [16] = 17 Z 18 [27] 28 || Case No.: 5:23-cv-00625-EJD ORDER GRANTING IN PART AND DEN. IN PART MOT. TO STAY PENDING IPR