UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

NST Global, LLC, d/b/a SB Tactical Case No. 19-cv-792-PB v. Opinion No.

SIG Sauer Inc.

MEMORANDUM AND ORDER

NST Global, LLC d/b/a SB Tactical (“Plaintiff” or “SB

Tactical”) filed this patent infringement action, alleging that

SIG Sauer Inc. (“Defendant” or “SIG Sauer”) infringes two of its

patents. SIG Sauer filed petitions for inter partes review

(“IPR”) with the U.S. Patent and Trial Appeal Board (“PTAB”) of

the Patent and Trademark Office (“PTO”), challenging the

validity of all twelve claims in the two asserted patents in

this case. SIG Sauer now moves to stay proceedings in this court

pending the resolution of the IPRs. For the reasons that follow,

Defendant’s motion to stay is granted.

I. BACKGROUND

SB Tactical brought this action alleging direct, induced,

and contributory infringement of two patents it owns:

(“the ’444 Patent”) and

(“the ’021 Patent”). Compl., Doc. No. 1 at 2-3. In its complaint, SB Tactical alleges, inter alia, that SIG Sauer

manufactures and sells several products that share a similar

design to handgun stabilizing braces claimed in SB Tactical’s

patents. Doc. No. 1 at 2–3. SB Tactical filed its complaint on

January 22, 2019 in the U.S. District Court for the District of

Delaware. Doc. No. 1 at 1. SIG Sauer moved to transfer the case

to the District of New Hampshire on March 27. Defs.’ Mot. to

Transfer, Doc. No. 15 at 1. The District of Delaware granted the

motion to transfer on July 9. Transfer Order, Doc. No. 44 at 1.

On September 25, the parties submitted a joint discovery

plan, which proposed the following deadlines:

• Commencement of claim construction discovery: October 10, 2019 • Amendment of pleadings: January 7, 2020 • Exchange of preliminary claim constructions, extrinsic evidence, and identification of references: January 20, 2020 • Filing of joint claim construction and prehearing statement: February 17, 2020 • Completion of claim construction discovery and commencement of non-claim construction discovery: March 9, 2020 • Opening claim construction briefs: March 30, 2020 • Responsive claim construction briefs: April 13, 2020

Proposed Disc. Plan, Doc. No. 65 at 8–9. The parties also

proposed that a claim construction hearing be held “not later

than [sixty] days after service of Responsive Claim Construction

Briefs”; that all fact and expert discovery be complete “[forty-

five] days after service of rebuttal expert disclosures”; that

2 motions for summary judgment be filed “no later than 120 days

before trial”; and that trial occur during the “[t]wo-week

period beginning [January 5, 2021].” Doc. No. 65 at 9–11. I

approved the parties’ plan on September 30, 2019.

On January 23, 2020, SIG Sauer submitted IPR petitions for

the ’444 and ’021 patents. Carroll Decl., Doc. No. 68-2 at 1–2.

Its IPR challenges all twelve claims in the two patents. Doc.

No. 68-2 at 1–2. On January 30, it filed a motion requesting

that I stay proceedings in this court, pending the resolution of

the IPR petition. Def.’s Mot. to Stay pending inter partes

review, Doc. No. 68 at 1.

B. Inter Partes Review

The IPR process was created in 2012 as part of the Leahy–

Smith America Invents Act (“AIA”). See 35 U.S.C. §§ 311–319. IPR

is an expedited procedure for challenging the validity of a

patent before the PTO and PTAB. Id. It replaced the earlier

inter partes reexamination process, which frequently took many

years to complete. See, e.g., PersonalWeb Techs., LLC v.

Facebook, Inc., Nos. 5:13-CV-01356-EJD; 5:13-CV-01358-EJD; 5:13-

CV-01359-EJD,

, at *2 (N.D. Cal. Jan. 13, 2014)

(“IPR, if instituted, will typically conclude within 18 months

of the filing date. In contrast, the average time from filing to

conclusion of the previous inter partes reexamination procedure

3 ranged from 28.9 to 41.7 months.”) (citing

-01

at 48721).

Once a petitioner requests IPR, the patent owner has three

months to file a preliminary response,

; 37 C.F.R

§ 42.107(b), after which the PTO has three months to determine

whether to institute IPR,

(b)(1). The PTO may

institute an IPR only if it determines that “there is a

reasonable likelihood that the petitioner would prevail with

respect to at least [one] of the claims challenged in the

petition.”

(a). If the PTO grants an IPR

petition, the final determination in the IPR must be issued

within one year from the date that the petition is granted.

(a)(11) 1.

Because SIG Sauer filed its petition on January 23, SB

Tactical will have until late April to respond. Depending upon

when SB Tactical responds, the PTO will have until as late as

July to decide whether to institute IPR.

II. ANALYSIS

I have the inherent power to manage my docket by staying

proceedings. Landis v. N. Am. Co.,

, 254–55, 57 S.

1 The one-year deadline may be extended up to six months for good cause shown.

(a)(11).

4 Ct. 163,

(1936). This includes stays of

proceedings pending the resolution of a related matter before

the PTO. Ethicon, Inc. v. Quigg,

, 1426–27 (Fed.

Cir. 1988). It is within my discretion to grant a stay, based

upon an analysis of the same three factors previously used to

grant or deny a stay pending the earlier inter partes

reexamination. See In re Corel Software LLC,

,

952–54 (Fed. Cir. 2019) (reviewing magistrate judge’s

application of “traditional” inter partes reexamination stay

factors to an IPR stay request); accord SurfCast, Inc. v.

Microsoft Corp., No. 2:12–CV–333,

, at *1 (D. Me.

Nov. 14, 2014). These three factors are:

(1) the stage of the litigation, including whether discovery is complete and a trial date has been set; (2) whether a stay will simplify the issues in question and the trial of the case; and (3) whether a stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving party.

SurfCast,

, at *1. “The analysis considers the

totality of the circumstances, and ‘while prior decisions may

prove instructive, the inquiry is largely case[-]specific.’”

ACQIS, LLC v. EMC Corp.,

(D. Mass.

2015) (quoting SurfCast,

, at *1).

As I explain below, I find that the balance of the three

factors tips in favor of granting a stay.

5 A. Stage of the Litigation

Evaluating this prong requires me to “consider the progress

already made in the case.” PersonalWeb Techs., LLC v. Google

Inc.,

, at *4 (N.D. Cal. Aug. 20, 2014). I must

determine “whether litigation has progressed significantly

enough for a stay to be disfavored.” PersonalWeb Techs., LLC v.

Apple Inc.,

(N.D. Cal. 2014). “The

earlier the stage of proceedings, the greater the reason to

grant a stay.” SurfCast,

, at *2.

This factor weighs heavily in favor of granting a stay in

this case. The Markman hearing has not yet been briefed, let

alone held. Cf., e.g. SurfCast,

, at *2 (granting

stay even though Markman order had issued). Non-claim

construction discovery has barely begun. See Qualcomm Inc. v.

Apple Inc., No. 3:17-CV-2403-CAB-MDD,

, at *3

(S.D. Cal. Aug. 29, 2018) (granting stay where “the majority of

fact and expert discovery is still to be completed”). Although

this case was filed over a year ago, much of this time was spent

litigating the motion to transfer, rather than the substantive

issues of the case. Indeed, “the most burdensome stages of the

case[] — completing discovery, preparing expert reports, filing

and responding to pretrial motions, preparing for trial, going

through the trial process, and engaging in post-trial motions

practice — all lie in the future.” IOENGINE, LLC v. PayPal

6 Holdings, Inc., Nos. CV 18-452-WCB, CV 18-826-WCB,

, at *5 (D. Del. Aug. 21, 2019). 2

B. Simplification of the Issues

Courts consider the question of whether a stay is likely to

simplify the issues at trial to be the “most important factor.”

IOENGINE,

, at *8. There are myriad ways in which

an IPR could simplify this case. Specifically,

(1) all prior art presented to the Court will have been first considered by the USPTO with its particular expertise; (2) many discovery problems relating to the prior art can be alleviated by the USPTO examination; (3) in those cases resulting in effective invalidity of the patent, the suit will likely be dismissed; (4) the outcome of the reexamination may encourage a settlement without the further use of the Court; (5) the record of reexamination would likely be entered at trial, thereby reducing the complexity and length of the litigation; (6) issues, defenses and evidence will be effectively limited in pre-trial conferences after a reexamination; and (7) the cost of litigation will likely be reduced.

In re Body Science LLC Patent Litig., No. 12-10536-FDS,

, at *3 (D. Mass. Nov. 2, 2012) (listing ways in which

the inter partes reexamination process may simplify a case)

(quoting Nidec Corp. v. LG Innotek Co., Ltd., No. 6:07cv108,

, at *2 (E.D. Tex. Apr. 3, 2009); accord

Destination Maternity Corp. v. Target Corp.,

,

2 I also consider “whether . . . a trial date has been set.” SurfCast,

, at *1. Although trial in this case has been set, it is scheduled for the two-week period beginning January 5, 2021. Even assuming no changes to the trial schedule, this is not so imminent as to warrant denying a stay.

7 769 (E.D. Penn. 2014) (quoting Gioello Enters. Ltd. v. Mattel,

Inc., No. 99-375,

, at *1 (D. Del. Jan. 29, 2001)

(listing same potential simplification benefits in analysis of

stay pending IPR).

Once IPR has been granted, the issues are likely to be

simplified regardless of which party prevails. Any invalidated

claims will no longer be before the court, and SIG Sauer will be

estopped from presenting to the court “any ground that [it]

raised or reasonably could have raised during [the IPRs]”. 3

(e)(2); see Canatelo, LLC v. Avigilon Corp., No. 12-

1431-JAG,

, at *2 (D.P.R. June 5, 2014) (“If the

patent-in-suit is invalidated, Plaintiff’s patent claims here

evaporates [sic]. Alternatively, in case the patent board rules

in favor of Plaintiff, any invalidity arguments based on prior

art would be moot here. Simplicity is achieved either way.”)

This is especially true where, as here, a party seeks IPR of all

relevant claims. See Uniloc USA Inc. v. LG Electronics U.S.A.

Inc., Nos. 18-cv-06737-JST, 18-cv-06739-JST, 18-cv-06740-JST,

3 To the extent SB Tactical argues that this estoppel will not significantly simplify the issues before the court because SIG Sauer “may find and assert previously unknown prior art upon resumption of the litigation, so long as a skilled searcher conducting a diligent search reasonably would not have been expected to discover the new reference,” Pl.’s Mem. in Opp. of Def.’s Mot. to Stay, Doc. No. 69 at 19, this argument is entirely speculative and I decline to address it.

8

, at *4 (Apr. 29, 2019) (“[T]he requested stay

presents the maximum potential for simplification of issues, as

all the asserted claims are challenged in the IPR petitions.

This high upside mitigates to some extent the risk that the PTO

will deny review.”).

SB Tactical advances two arguments for why this factor does

not favor SIG Sauer, neither of which is persuasive. First, it

argues that, because the PTO has yet to institute IPR, whether

the issues will be simplified is speculative at best. Second, it

argues that simplification will be limited because SIG Sauer’s

invalidity contentions are broader than the scope of IPR. I

address each argument in turn.

1. Pre-institution Stays

Some courts are reluctant to stay proceedings before the

PTO has instituted IPR. The U.S. District Court in Delaware, for

example, “almost invariably den[ies] requests for stays pending

IPR proceedings when the stay requests are filed before the IPR

is instituted.” IOENGINE,

, at *6 (identifying

three Delaware cases where request for pre-institution stay was

denied without prejudice as to petitioner’s right to seek stay

again if IPR were granted). This per se rule, however, is hardly

universal, and courts in numerous other districts across the

country have granted stays before IPR was instituted. See, e.g.,

Uniloc,

, at *7; Neuro Cardiac Techs., LLC v.

9 LivaNova, Inc., No. CV H-18-1517,

, at *5 (S.D.

Tex. Oct. 9, 2018); TAS Energy, Inc., v. San Diego Gas & Elec.

Co., No. 12cv2777–GPC(BGS),

, at *6 (S.D. Cal.

Feb. 26, 2014).

Two considerations persuade me that this factor weighs in

SIG Sauer’s favor, even though IPR has not yet been instituted.

First, if IPR is not instituted, “the stay will be short, only

four months.” TAS Energy,

, at *4. If the IPR

petition is rejected, this stay will be lifted, and the case can

move forward after a relatively brief pause.

Second, if I defer ruling on the stay until July, the

parties and the court will need to move through several labor-

intensive stages of litigation that may ultimately be rendered

meaningless or duplicative. If we continue on the current

schedule, the parties will need to submit their opening and

responsive claim construction briefs. Then, I will hold a

Markman hearing and likely issue a Markman order before the PTO

decides whether to institute IPR. All the while, discovery would

be ongoing. These efforts would be wasted if the PTO then

granted review and invalidated some of or all the claims at

issue. The potential impact of the PTO’s decision is “enough to

await at least the [PTO’s] initial institution decisions before

moving forward.” Provisur Techs., Inc. v. Weber, Inc., No. 5:19-

10 CV-06021-SRB,

, at *2 (W.D. Mo. Aug. 29, 2019)

(analyzing stay under inter partes reexamination system). 4

2. Issues Not Subject to IPR

SB Tactical also correctly notes that SIG Sauer has raised

invalidity contentions that cannot be resolved in IPR. As both

parties concede, IPRs cannot address indefiniteness, written

description, enablement, or new matter issues. Thus, assuming SB

Tactical’s patents survive IPR, those issues would remain for

trial. 5 The IOENGINE court addressed this precise concern, but

ultimately concluded that IPR was nevertheless likely to

simplify the case, noting that

[w]hen a court is deciding whether to grant a stay, there is no requirement that issues in the IPR be identical to those in the litigation. . . . [I]ssues of patent eligibility, inequitable conduct, and validity under section 112 of the Patent Act will never be subject to review in an IPR. But that does not mean that the IPR

4 This determination is bolstered by the Federal Circuit’s decision in VirtualAgility Inc. v. Salesforce.com, Inc.,

(Fed. Cir. 2014). While VirtualAgility dealt with a stay pending a Covered Business Method (“CMB”) patent review, rather than an IPR, the court based its ruling on a consideration of the same factors. In discussing whether it was preferable to wait for the PTAB to institute review before granting a stay, the court “express[ed] no opinion on which is the better practice.”

.

5 Both parties ask me to rule on the merits of SIG Sauer’s invalidity contention. A motion to stay, however, is not the appropriate time to address the merits of the claim, and I decline to do so. Cf. VirtualAgility,

(holding that second-guessing the PTAB’s “more likely than not” determination that a CMB claim would be held invalid “amounts to an improper collateral attack” and that “allowing it would create serious practical problems”).

11 will not significantly simplify the litigation both with respect to the invalidity issues that are addressed in the IPR and with respect to collateral matters such as claim construction and characterization of the state of the art on which the PTAB’s expertise may be helpful in the district court proceeding.

IOENGINE,

, at *10. The fact that IPR cannot —

and was never designed to — resolve these issues does nothing to

diminish the fact that, if instituted, IPR will significantly

simplify the issues before this court.

Because an IPR on some or all relevant claims would

significantly simplify the issues before the court, and SB

Tactical’s arguments to the contrary do not persuade me

otherwise, I conclude that this factor weighs heavily in favor

of granting a stay.

C. Prejudice to SB Tactical

The last factor is “whether a stay would unduly prejudice

or present a clear tactical disadvantage 6 to the non-moving

party.” Uniloc,

, at *5 (quoting TPK Touch Sols.,

Inc. v. Wintek Electro-Optics Corp., No. 13-cv-02218-JST,

, at *4 (N.D. Cal. Nov. 13, 2013)). “Courts are

generally reluctant to grant a stay in a matter where the

6 Apart from noting that “SIG Sauer waited until the last possible day on which it could file the an [sic] [IPR] against each of the patents in suit”, Doc. No. 69 at 6, SB Tactical does not advance any argument that SIG Sauer engaged in dilatory tactics.

12 parties are direct competitors on the rationale that a stay

would likely cause the non-movant to lose substantial profits

and goodwill on the market.” Canfield Sci., Inc. v. Drugge, No.

CV 16-4636 (JMV),

, at *3 (D.N.J. June 13, 2018).

In this case, it is abundantly clear that SB Tactical and

SIG Sauer are direct competitors. While SIG Sauer correctly

points out that “[t]he mere fact that companies might sell

similar products does not prove they are ‘direct competitors’”;

Reply, Doc. No. 72 at 4 n.3 (citing Transocean Offshore

Deepwater Drilling, Inc. v. Seadrill Ams., Inc., CIV. A. No. H-

15-144,

, at *3 (S.D. Tex. Oct. 22, 2015)); but

this is more than a case of similar products. 7 SB Tactical

alleges, and SIG Sauer does not deny, that SIG Sauer used to

sell SB Tactical’s forearm brace with SIG Sauer’s MPX and MCX

pistols, and that SIG Sauer now sells its own brace with these

pistols. The products are aimed at the same customers with

almost pinpoint accuracy.

Although the parties are direct competitors, I do not find

that this factor weighs against a stay to such a degree that it

outweighs the other two factors. This is for two reasons. First,

7 I consider the products to be similar inasmuch as both parties describe them as forearm-gripping stabilizer attachments for handguns. I note this similarity without making any determinations on the merits of the infringement claims.

13 I note that SB Tactical did not request a preliminary injunction

in this case. While failure to seek a preliminary injunction is

not, in and of itself, reason to completely disregard concerns

about prejudice, it is evidence of how serious SB Tactical takes

those concerns. See E.I. Du Pont De Nemours & Co. v. MacDermid

Printing Sols. LLC, CIV. A. No. 10-3409 MLC,

, at

*4 (D.N.J. July 23, 2012) (“While the Court appreciates

[plaintiff]’s concern that [defendant] will continue to sell its

allegedly infringing product during the course of the stay,

thereby further eroding [plaintiff]'s market share and resulting

in substantial loss of profits and goodwill, the Court notes

that [plaintiff] did not seek a preliminary injunction in this

matter.”).

Second, many of the cases cited by SB Tactical that give

great weight to competition concerns are from the inter partes

reexamination era, when stays might have lasted years. See,

e.g., Kaneka Corp. v. JBS Hair, Inc., No. 3-10-CV-1430-P-BD,

, at *1 (N.D. Tex. Apr. 27, 2012) (“[T]he PTO

estimates the average pendency of an inter partes reexamination

at just over three years. . . . Other evidence suggests that the

reexamination process can take more than six years.”); EMG

Tech., LLC v. Apple, Inc., No. 6:09 CV 367,

, at

*2 (E.D. Tex. Nov. 15, 2010) (“[Plaintiff] would be unduly

prejudiced if the Court were to grant the stay because a stay

14 would effectively prevent [plaintiff] from enforcing its patent

rights for as long as [six to seven] years.”). Here, the stay

may be as brief as five months, and in no event is it likely to

last beyond July 2021. SB Tactical’s concerns about competition,

while real, are not so great as to outweigh the other factors I

must consider. See Karma, Inc. v. Allied Mach. & Eng'g Corp.,

No. 4:10-CV-00568-SMR-RAW,

, at *3 (S.D. Iowa

Jan. 29, 2013) (“[T]he present suit involves competing products

[and w]hile the potential for prejudice may exist, it is not

clear that [plaintiff] would be unduly prejudiced, as the factor

requires.”) (emphasis in original).

SB Tactical also raises more generalized prejudice

concerns, such as the likelihood that “witnesses may become

unavailable, their memories may fade, and evidence may be lost.”

Doc. No. 69 at 13. However, “[s]peculation that evidence will be

lost, without more, is insufficient to demonstrate undue

prejudice.” Evolutionary Intelligence, LLC v. Millenial Media,

Inc., No. 5:13-cv-04206-EJD,

, at *6 (N.D. Cal.

June 11, 2014); see also PersonalWeb v. Apple,

(“Courts have repeatedly found no undue prejudice unless

the patentee makes a specific showing of prejudice beyond the

delay necessarily inherent in any stay.”); Canatelo,

, at *2 (rejecting generic prejudicial “horrors” cited by

plaintiff because “[i]t is not enough for Plaintiff to show

15 prejudice; rather, any prejudice must be undue.”) (emphasis in

original). Ultimately, I conclude that this factor weighs

against granting a stay.

IV. CONCLUSION

Two of the three factors (including the “most important

factor,” IOENGINE,

, at *8) weigh in favor of

granting a stay. SIG Sauer’s motion to stay proceedings (Doc.

No. 68) is, therefore, granted. All pending deadlines

established in the discovery plan approved on September 30, 2019

are stayed. Within seven days of the PTO’s institution decision,

the parties are ordered to file a joint case management

statement apprising the court of the PTO’s decision and

requesting such further relief as may be appropriate.

SO ORDERED.

/s/ Paul J. Barbadoro Paul J. Barbadoro United States District Judge

March 24, 2020

cc: Brittany J. Maxey-Fisher, Esq. Samuel E. Cooley, Esq. William R. Brees, Esq. Jason M. Ellison, Esq. Leslie C. Nixon, Esq. Raeann Warner, Esq. Eric G. J. Kaviar, Esq. Helena C. Rychlicki, Esq. Laura L. Carroll, Esq.

16