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Intellectual Ventures II LLC v. Fedex Corp.

United States District Court, E.D. Texas, Marshall Division

December 22, 2017

INTELLECTUAL VENTURES II LLC, Plaintiff,
v.
FEDEX CORPORATION, FEDERAL EXPRESS CORPORATION, FEDEX GROUND PACKAGE SYSTEM, INC., FEDEX FREIGHT, INC., FEDEX CUSTOM CRITICAL, INC., FEDEX OFFICE AND PRINT SERVICES, INC., GENCO DISTRIBUTION SYSTEM, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE

         Before the Court is Defendants' Urgent Motion to Stay All Deadlines Pending Appeal (Dkt. No. 185) (“the Motion”). Having considered the same, and for the reasons set forth herein, the Court finds that said Motion should be and hereby is DENIED.

         I. Background

         Plaintiff filed this case on August 31, 2016, alleging patent infringement against FedEx Corporation (“FedEx Corp.”), Federal Express Corporation (“FedEx Express”), FedEx Ground Package System, Inc. (“FedEx Ground”), FedEx Freight, Inc. (“FedEx Freight”), FedEx Custom Critical, Inc. (“FedEx Custom Critical”), FedEx Office and Print Services, Inc. (“FedEx Office”), and GENCO Distribution System, Inc. (“FedEx Supply Chain”) (collectively, “FedEx” or “Defendants”). (Dkt. No. 1.)

         On July 27, 2017, Defendants filed a Motion to Dismiss under 28 U.S.C. § 1406. (Dkt. No. 84.) The Court denied that motion on November 22, 2017, primarily based on the fact that the FedEx Defendants actively litigated this case, before and after TC Heartland was decided, thus waiving their right to object to venue. (Dkt. No. 161.) On December 5, 2017, Defendants filed a petition for a writ of mandamus from the Federal Circuit seeking dismissal of several of the Defendants in this case. (Dkt. No. 170.)

         On December 11, 2017, Defendants filed the instant Motion, styled as “Urgent, ” to stay this case pending the Federal Circuit's review of Defendants' mandamus petition. (Dkt. No. 185.) Given the circumstances of this case, the Court ordered expedited briefing on this Motion (Dkt. No. 186), set a hearing for December 19, 2017 (Dkt. No. 187), and suspended certain deadlines in the case until such hearing. (Id.)

         On December 19, 2017, the Court held a hearing on the instant Motion and denied Defendants' request for a stay, with an indication that a fuller written opinion would soon follow. (Dkt. No. 197.)

         II. Legal Standard

         District courts possess an inherent power to manage their own docket, including the power to stay proceedings. Clinton v. Jones, 520 U.S. 681, 706 (1997); see also In re Int'l Med. Prosthetics Research Assocs., Inc., 739 F.2d 618, 621 (Fed. Cir. 1984) (“Absent some overwhelming legal requirement or showing of manifest injustice, this court will not intervene in a district court's management of its calendar or scheduling of events in a matter before that court.”). However, stays are not awarded as a matter of right. Nken v. Holder, 556 U.S. 418, 427 (2009). Indeed, the Supreme Court has recognized that stays are “an intrusion into the ordinary processes of administration and judicial review.” Id. (internal quotation marks omitted). This is particularly true when a stay is sought in the midst of an ongoing case being prepared for trial. See, e.g., In re Franklin Sports Indus., Inc., 937 F.2d 622 (Fed. Cir. 1991) (unpublished) (describing mandamus as an “extraordinary intrusion . . . into the trial management process”).

         As Defendants point out in their briefing, courts traditionally look to four factors in determining whether a stay is appropriate when an order is subject to a pending appeal, including: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Nken, 556 U.S. at 434.[1]

         III. Discussion

         1. Whether Defendants Have Shown a Strong Likelihood of Success on the Merits

         Defendants argue that where a losing party seeks a stay pending the review of an order issued by the same court contemplating the stay pending appeal, the “strong showing” of success factor is relaxed. (Dkt. No. 196 at 6 (“[W]hen a stay pending appeal is sought by a losing party on an issue decided the other way by a district judge . . ., the ‘likelihood of success' prong when seeking a stay pending appeal is slightly modified . . . .”).) However, the cases upon which Defendants rely do not stand for this proposition. Instead, the relaxed “substantial case on the merits” standard applies where the remaining factors “militate” in favor of a stay. See Hilton v. Braunskill, 481 U.S. 770, 778 (1987). This is the same approach the Federal Circuit took in Standard Havens Products., Inc. v. Gencor Industries, Inc., 897 F.2d 511 (Fed. Cir. 1990), upon which Defendants rely, in observing that, with respect to the first factor, a stay is appropriate “where [the] movant establishes that it has a strong likelihood of success on appeal, or where, failing that, it can nonetheless demonstrate a substantial case on the merits, provided the other factors militate in movant's favor.” 897 F.2d at 513 (internal quotation marks and brackets omitted). The other cases cited in Defendants' papers applied a similar standard. See In re Deepwater Horizon, 732 F.3d 326, 345 (5th Cir. 2013) (“[W]here there is a serious legal question involved and the balance of the equities heavily favors a stay . . . the movant only needs to present a substantial case on the merits.”); Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977) (“[A] court, when confronted with a case in which the other three factors strongly favor interim relief may exercise its discretion to grant a stay if the movant has made a substantial case on the merits.”); William Inglis & Sons Baking Co. v. ITT Cont'l Baking Co., 526 F.2d 86, 88 (9th Cir. 1975) (“If the harm that may occur to the plaintiff is sufficiently serious, it is only necessary that there be a fair chance of success on the merits.”); Sweeney v. Bond, 519 F.Supp. 124, 132 (E.D. Mo. 1981) (“The District of Columbia, the Second and the Ninth Circuits have adopted the approach that an injunction pending appeal is appropriate where serious legal questions are presented and the balance of hardships tips sharply toward the moving party.”), aff'd, 669 F.2d 542 (8th Cir. 1982). These cases do not suggest that the standard articulated in Nken relaxes merely because the losing party is the one seeking a stay. Indeed, such an exception to the “strong showing” requirement would swallow the rule because the losing party is generally the one seeking to stay an order pending its appeal of that decision.

         Having considered the Parties' arguments, the Court concludes that Defendants have not made a “strong showing” that they are likely to prevail on the merits of their petition. As the Court explained in its original decision, several of the Defendants in this case actually operate numerous physical retail locations in this District from which they are alleged to have infringed the Asserted Patents. (Dkt. No. 161 at 13-17) Defendants made no effort to dispute this in the instant Motion. Instead, Defendants insist that their petition at least raises novel legal questions and thus a stay is necessary. (Dkt. No. 185 at 7-8.) Even applying that standard, Defendants' arguments fail. While there is uncertainty in patent venue law, the Federal Circuit has addressed the proper standard for interpreting § 1400(b), In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017), and for applying non-rule waiver, In re Micron Tech., Inc., 875 F.3d 1091 (Fed. Cir. 2017). In particular, Micron, the primary basis for the Court's underlying decision on Defendants' Motion to Dismiss, pointed to a long line of cases exploring the contours of non-rule waiver. Micron, 875 F.3d at 1101 (collecting cases); see generally, e.g., Navico, Inc. v. Garmin Int'l, Inc., No. 2:16-CV-00190, 2017 WL 2957882 (E.D. Tex. July 11, 2017); Infogation Corp. v. HTC Corp., No. 16-CV-01902, 2017 WL 2869717 (S.D. Cal. July 5, 2017); Amax, Inc. v. ACCO Brands ...


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