Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 1 of 11 PageID #: 10517
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF DELAWARE
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`ST. CLAIR INTELLECTUAL PROPERTY
`CONSULTANTS, INC.,
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`Plaintiff,
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`v.
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`SAMSUNG ELECTRONICS CO., LTD.,
`et al.,
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`Defendants.
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`ST. CLAIR INTELLECTUAL PROPERTY
`CONSULTANTS, INC.,
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`Plaintiff,
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`v.
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`SIEMENS AG, et aI.,
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`Defendants.
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`ST. CLAIR INTELLECTUAL PROPERTY
`CONSULTANTS, INC.,
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`Plaintiff,
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`v.
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`LG ELECTRONICS, INC., et ai.,
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`Defendants.
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`Civil Action No. 04-1436-JJF-LPS
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`Civil Action No. 06-403-JJF-LPS
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`Civil Action No. 06-404-JJF-LPS
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 2 of 11 PageID #: 10518
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`ST. CLAIR INTELLECTUAL PROPERTY
`CONSULTANTS, INC.,
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`Plaintiff,
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`v.
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`RESEARCH IN MOTION LTD., et al.,
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`Defendants.
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`ST. CLAIR INTELLECTUAL PROPERTY
`CONSULTANTS, INC.,
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`Plaintiff,
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`v.
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`FUJIFILM HOLDINGS CORPORATIONS,
`et al.,
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`Defendants.
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`Civil Action No. 08-371-JJF-LPS
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`Civil Action No. 08-373-JJF-LPS
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`ORDER ON DEFENDANTS' MOTION TO STAY
`AND REPORT AND RECOMMENDATION ON
`MOTION TO CERTIFY INTERLOCUTORY APPEAL
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`The defendants in these patent infringement actions (collectively, "Defendants") filed a
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`Motion to Stay Expert Discovery and Trial Until Resolution of the Cross-Appeals in Sf. Clair v.
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`Fujifilm I and Any Interlocutory Appeal to the Federal Circuit ("Motion to Stay"). (D.I. 647Y
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`Concurrently, they filed a Motion to Certify the Claim Construction Order for Interlocutory
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`IUnless otherwise noted, all references to Docket Index ("D.I.") numbers are to entries in
`the docket for C.A. No. 04-1436-JJF-LPS. Both pending Motions have been filed in each of the
`actions listed in the case caption.
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 3 of 11 PageID #: 10519
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`Appeal Pursuant to 28 U.S.C. § 1292(b) ("Motion to Certify"). (D.l. 645) Plaintiff, St. Clair
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`Intellectual Property Consultants, Inc. ("St. Clair"), opposes both motions. (D.1. 742; D.1. 744)
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`For the reasons set forth below, the Court denies the Motion to Stay and recommends that the
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`Court grant the Motion to Certify.
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`BACKGROUND
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`St. Clair filed its first action alleging infringement of the patents-in-suit (hereinafter
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`referred to as "the Roberts patents") more than eight years ago. This Court first construed claim
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`terms in the Roberts patents in September 2002, in an action from which no appeal was taken (as
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`the case settled). See c.A. No. 01-557-JJF D.1. 112.
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`In February 2003, St. Clair filed a second infringement action against the various
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`defendants, including current Defendant Fujifilm. See C.A. No. 03-241-JJF ("Fujifilm f'). In
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`Fujifilm 1, this Court issued its order construing the disputed claim terms in the Roberts patents
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`on August 31,2004. See Fujifilm I D.1. 749. Subsequently, in October 2004, two jury trials in
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`FuRfilm 1 ended with verdicts for St. Clair. Final judgment in Fujifilm 1 was entered in
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`November 2009. See Fujifilm I D.1. 1078.
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`In Fujifilm 1, Defendant Fujifilm has filed an appeal in the Federal Circuit. In its appeal,
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`Fujifilm challenges (among other things) this Court's construction of the Roberts patents'
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`"different data format" terms. (D.1. 1079 at 1) St. Clair has filed a cross-appeal in Fujifilm 1.
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`(D.1. 1081) The parties anticipate that briefing on the pending appeal will be completed in May
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`2010, oral argument will be heard in July 2010, and a decision will likely be issued by the end of
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`2010. (D.1. 648 at 1; D.1. 752 at 1)
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 4 of 11 PageID #: 10520
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`Meanwhile, between November 2004 and June 2008, S1. Clair filed the instant
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`infringement actions in this Court. In these actions, S1. Clair again alleges infringement of the
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`Roberts patents. On November 13,2009, I provided recommended constructions of disputed
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`claim terms, including the same "different data format" terms that Judge Farnan had construed in
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`Fujijilm 1. (D.!. 531) On February 24, 2010, Judge Farnan adopted the recommended
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`constructions. (D.!. 719)
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`This Court's construction of the "different data format" terms in the instant actions is the
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`same as the construction that this Court adopted in Fujijilm 1. This Court's construction,
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`however, differs from the construction endorsed by the U.S. Patent and Trademark Office
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`("PTO") during reexamination of the Roberts patents, proceedings that occurred between this
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`Court's 2004 and 2010 claim construction rulings. (D.1. 531 at 13-17; D.1. 648 at 2 (excerpting
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`Judge Farnan transcript statement); D.L 648 at 7 (quoting PTO Examiner stating that Examiner
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`agreed "that in light of the disclosure a very different interpretation than that adopted by the court
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`[in Fujijilm 1] must be made"))
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`THE PARTIES' CONTENTIONS
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`In support of their Motion to Stay, Defendants contend that the continued litigation of
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`these actions will disserve the interests of judicial economy and efficiency as well as unfairly
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`prejudice them with regards to any invalidity issues they may raise. According to Defendants,
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`efficiency would be best served by staying the instant case pending conclusion of the Fujijilm 1
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`appeal because the Federal Circuit's decision there on claim construction will control the
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`dispositive issue of claim construction here. Defendants submit that this will not only simplifY
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 5 of 11 PageID #: 10521
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`the issues for trial in the instant cases, it will also prevent the waste of resources - those of both
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`the parties and the Court
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`if the Federal Circuit adopts a construction that differs from the one
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`adopted by this Court. Defendants also contend they will be prejudiced if they are required to
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`overcome the presumption of patent validity by clear and convincing evidence in a case in which
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`the Court's claim construction differs markedly from the construction the PTO endorsed in
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`permitting the patents to emerge from reexamination without amendment. Defendants further
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`contend that St. Clair will suffer no prejudice if a stay is granted because fact discovery is
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`completed, any delay would be brief, and St. Clair neither competes directly with any Defendant
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`nor is it entitled to injunctive relief.
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`Defendants make essentially the same arguments in support of their Motion to Certify.
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`Defendants insist that these actions clearly satisfy the requirements of28 U.S.C. § 1292(b)
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`("Section 1292(b)") for certification of an interlocutory appeal. Defendants contend that the
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`disagreement between the PTO and the Court regarding proper construction of the claims in the
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`Roberts patents demonstrates there is reasonable ground for difference of opinion as to the proper
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`construction of these claims and that an immediate appeal of this Court's claim construction
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`order would materially advance these cases because the claim construction issues are controlling.
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`Specifically, Defendants assert that they would not infringe under the claim construction
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`endorsed by the PTO.
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`In opposing both motions, St. Clair contends that the balance of the equities weighs
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`against a stay of these actions, primarily because it is likely the Federal Circuit will affirm this
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`Court's claim construction, which has remained consistent across all St. Clair's actions alleging
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`infringement of the Roberts patents. St. Clair emphasizes that, as a matter of settled law, this
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 6 of 11 PageID #: 10522
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`Court's claim construction controls over a conflicting PTO construction. St. Clair also contends
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`that even if the Federal Circuit in the Fujifilm I appeal construes the claim terms differently than
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`this Court has, that ruling will not be dispositive in the instant actions, since St. Clair may still be
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`able to prove infringement under a different construction. St. Clair submits that it will suffer
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`undue prejudice and injury if this action is stayed because it will delay trial currently scheduled
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`for September 2010 - until sometime after the Roberts patents expire in November 2010. St.
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`Clair also points out that a stay will frustrate the Court's Scheduling Order and be wasteful of the
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`significant time and resources that have been already devoted to preparing these cases for trial.
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`Thus, St. Clair contends that denying the stay will promote judicial economy and efficiency in
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`these actions.
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`With respect to the Motion to Certify, St. Clair adds that certification of this Court's
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`claim construction order would be inappropriate because the requirements of Section 1292(b) are
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`not satisfied. St. Clair contends that certification by this Court of an interlocutory appeal will not
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`materially advance this litigation because the Federal Circuit will not grant interlocutory review
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`of a claim construction ruling absent exceptional circumstances not present here. St. Clair
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`further asserts that there is no controlling issue of law for which there is a substantial ground for
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`a difference of opinion because it is well-settled that this Court's claim construction controls over
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`the contrary PTO construction.
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`DISCUSSION
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`The court's power to stay proceedings is incidental to its inherent power to control the
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`disposition of the cases on its docket. See Landis v. North American Co., 299 U.S. 248,254
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 7 of 11 PageID #: 10523
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`(1936). Deciding whether to stay a case is purely a matter of discretion. See Cost Bros., Inc. v.
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`Travelers Indem. Co., 760 F.2d 58, 60 (3d Cir. 1985). In determining how to exercise its
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`discretion with respect to a motion to stay, a court considers such factors as: (1) the length of the
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`stay requested, (2) the "hardship or inequity" that the movant would face in going forward with
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`the litigation, (3) the injury that a stay would inflict upon the non-movant, and (4) whether a stay
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`will simplify issues and promote judicial economy. See Landis, 299 U.S. at 254-55. Generally,
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`ifthere is a chance that a stay would damage the non-moving party, the party requesting a stay
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`must make out a clear case of hardship or inequity in being required to go forward with the
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`litigation. See id. at 255.
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`Weighing the circumstances of the instant actions in light of the competing interests of
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`the parties, I conclude that a stay is not warranted at this time. Defendants assert that further
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`proceedings in these actions should be stayed until after the Federal Circuit resolves the Futifilm
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`I appeal because the Federal Circuit's ruling there may otherwise necessitate relitigation of the
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`instant actions. However, both the timing and outcome of the Fujifilm I appeal are speculative.
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`Notwithstanding Defendants' (and the PTO's) disagreement with this Court's claim construction,
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`it remains possible that the Federal Circuit will affirm this Court's construction of the "different
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`data format" terms. If it does so, a stay will have accomplished nothing but delay - delay of at
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`least six months, and perhaps significantly longer. Moreover, even if the Federal Circuit
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`construes the claims differently than this Court has done, it is not clear that such a ruling would
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`be case-dispositive; whether some or all of Defendants' accused devices infringe under
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 8 of 11 PageID #: 10524
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`alternative constructions appears to be a disputed issue. 2 After the parties and the Court have
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`invested such substantial resources in litigating these actions, and in keeping them on track for a
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`September 2010 trial, I am not persuaded that a stay would promote judicial economy.
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`Defendants insist they face great potential prejudice and hardship in going forward with
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`this litigation on the current claim construction because they may be required to overcome the
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`presumption of patent validity by clear and convincing evidence despite the fact that, they assert,
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`the PTO found the Roberts patents to be valid only based on a narrower construction than this
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`Court has adopted. However, this Court has made no ruling on this issue yet, nor has it been
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`requested to do SO.3 I am not persuaded that this unresolved question - which mayor may not
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`even be addressed in the course of the Fujifilm I appeal - presents a reason to stay these actions.
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`Although the Court declines to stay the instant actions pending the outcome of the
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`Fujifilm I appeal, I do recommend that this Court certify its claim construction order in the
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`instant cases for interlocutory appea1.4 Certification of a district court order for an interlocutory
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`appeal is appropriate "[ w ]hen a district judge ... [is] of the opinion that such order involves a
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`controlling question of law as to which there is a substantial ground for difference of opinion and
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`2 Although Defendants argue at length that St. Clair has conceded that it cannot prove
`infringement under the PTO's construction, see, e.g., D.l. 648 at 5; D.l. 646 at 9, S1. Clair
`vehemently denies it has done so, see, e.g., D.l. 742 at 9; D.l. 744 at 10-11 & n.13.
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`3In my claim construction recommendation, I noted that the issue had been raised and
`indicated that it might need to be addressed in connection with jury instructions. See D.1. 531 at
`17 n.9.
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`4"A magistrate judge, acting pursuant to a reference under § 636(b )[], has no authority to
`issue a dispositive ruling on a motion to certity a district court order for interlocutory appeal
`under § 1292(b)." Vitals v. Citizens Banking Company, 984 F.2d 168, 169-170 (6th Cir. 1993).
`In such circumstances, a magistrate judge is limited to issuing a report and recommendation. See
`id. at 169.
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 9 of 11 PageID #: 10525
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`that an immediate appeal from the order may materially advance the ultimate termination of the
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`litigation." 28 U.S.C. § 1292(b). 'The decision to certifY an order for appeal under Section
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`1292(b) lies within the sound discretion of the district court." In re .41ontgomery Ward & Co.,
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`Inc., 2006 WL 2989270 (D. Del. Oct. 18,2006). Once certified, "[a]cceptance of such an appeal
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`is also subject to the absolute discretion" of the Federal Circuit. Nystrom v. Trex Co. Inc.) 339
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`F.3d 1347, 1351 (Fed. Cir. 2003).
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`The proper construction of the disputed claim terms in the Roberts patents is a controlling
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`question of law as to which there is substantial ground for difference of opinion. This is
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`particularly true of the question of the appropriate construction of the "different data format"
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`terms. The construction of these terms may not be fully dispositive
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`that is, as already noted, St.
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`Clair may be able to prove infringement even under a construction that differs from the
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`construction adopted by this Court - but a definitive, appellate ruling on the meaning of these
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`terms will certainly have, at minimum, a substantial impact on the remaining proceedings in the
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`instant cases. That there is substantial ground for difference of opinion on the proper
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`construction of these terms is evident from the competing views of this Court and the PTO.
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`Finally, immediate appellate review of claim construction in the unique circumstances of the
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`instant cases may materially advance the ultimate termination of the litigation.
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`St. Clair contends an interlocutory appeal will not advance the litigation because the
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`Federal Circuit will not grant the appeal. As other district courts have recognized, "the Federal
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`Circuit rarely grants interlocutory review of claim construction orders." Thomas & Betts Power
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`Solutions, L.L.C v. Power Distrib.) Inc., 2008 WL 779518, at *2 (E.D. Va. Mar. 21, 2008); see
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`also Canon, Inc. v. GCC Int 'I Ltd., 263 Fed. Appx. 57,61 (Fed. Cir. 2006) ("This court does not
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 10 of 11 PageID #: 10526
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`encourage interlocutory appeal from claim construction decisions."); Nystrom, 339 F.3d at 1351
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`(stating that interlocutory appeals are "rarely granted"). In the unusual circumstances presented
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`here, this is not an argument against certifying an interlocutory appeal; rather, it is an argument
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`against staying these cases, unless and until an interlocutory appeal is accepted by the Federal
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`Circuit.
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`While there are certainly characteristics of the claim construction order in the instant
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`cases that distinguish it from the typical claim construction order, there remains a substantial
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`possibility that the Federal Circuit will adhere to its standard practice and refuse to accept an
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`interlocutory appeal. Given this, I do not find a basis to stay these cases at this point. The
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`interests of judicial economy and efficiency will be best served by certification of the claim
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`construction order for an immediate interlocutory appeal and, in thc meantime, continued
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`litigation of these actions.
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`Thus, I recommend certification of an interlocutory appeal from this Court's claim
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`construction order in the instant cases. I further recommend that if Judge Farnan adopts my
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`recommendation to certify and if the Federal Circuit accepts this appeal, then these actions
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`should be stayed. Unless and until that time, however, the balance of equities favors proceeding
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`with this litigation on the current schedule, for all the reasons already discussed.
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`ORDER AND RECOMMENDED DISPOSITION
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`For the reasons discussed above:
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`1.
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`IT IS HEREBY ORDERED THAT Defendants' Motion to Stay (C.A. 04-1436-
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`JJF-LPS D.L 647; C.A. 06-403-JJF-LPS DJ. 333; c.A. 06-404-JJF-LPS OJ. 415; C.A. 08-371-
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`Case 1:04-cv-01436-LPS Document 761 Filed 03/29/10 Page 11 of 11 PageID #: 10527
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`JJF-LPS D.1. 271; C.A. 08-373-JJF-LPS D.1. 189) is DENIED.
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`2.
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`IT IS FURTHER RECOMMENDED that Defendants' Motion to CertifY (C.A.
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`04-1436-JJF-LPS D.1. 645; C.A. 06-403-JJF-LPS D.1. 331; C.A. 06-404-JJF-LPS D.l. 413; C.A.
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`08-371-JJF-LPS D.L 269; c.A. 08-373-JJF-LPS D.L 187) be GRANTED.
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`This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(l)(B), Fed. R.
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`Civ. P. 72(b)(l), and D. Del. LR 72.1. The parties may serve and file specific written objections
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`of no longer than ten (10) pages within ten (10) days after being served with a copy of this
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`Report and Recommendation. Fed. R. Civ. P. 72(b). The failure of a party to object to legal
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`conclusions may result in the loss of the right to de novo review in the district court. See
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`Henderson v. Carlson, 812 F.2d 874, 878-79 (3d Cir. 1987); Sincavage v. Barnhart, 171 Fed.
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`Appx. 924, 925 n.l (3d CiT. 2006). A party responding to objections may do so within ten
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`(10) days after being served with a copy of objections; such response shall not exceed ten
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`(10) pages. No further briefing shall be permitted with respect to objections without leave
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`of the Court.
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`The parties are directed to the Court's Standing Order In Non-Pro Se Matters For
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`Objections Filed Under Fed. R. Civ. P. 72, dated November 16,2009, a copy of which is
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`available on the Court's website, www.ded.uscourts.gov/StandingOrdersMain.htm.
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`Dated: March 28, 2010
`Wilmington, Delaware
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`Han. Leonard P. Stark
`UNITED STATES MAGISTRATE JUDGE
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