Case 5:16-cv-06925-LHK Document 195 Filed 04/03/18 Page 1 of 4
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`TWILIO, INC.,
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`Plaintiff,
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`v.
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`TELESIGN CORPORATION,
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`Defendant.
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`Case No. 16-CV-06925-LHK
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`ORDER GRANTING MOTION TO
`STAY PENDING INTER PARTES
`REVIEW
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`Re: Dkt. No. 181
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`This patent infringement case was filed on December 1, 2016. ECF No. 1. On August 23,
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`2017, Defendant TeleSign filed three inter partes review (“IPR”) petitions. See Exhs. A, B, C to
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`ECF No. 181. On March 9, 2018, the Patent Office granted two of TeleSign’s petitions, regarding
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`U.S. Patent Nos. 8,755,376 and 8,837,465. Id. All of the asserted claims of those patents are
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`challenged and at issue in the instituted IPRs.
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`On March 13, 2018, TeleSign filed a motion to stay this case pending resolution of the
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`IPRs. ECF No. 181 (“Mot.”). On March 20, 2018, Plaintiff Twilio filed an opposition. ECF No.
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`186-4 (“Opp’n”). On March 22, 2018, TeleSign filed a reply. ECF No. 189 (“Reply”). The Court
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`finds this matter appropriate for resolution without oral argument pursuant to Civil Local Rule 7-
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`1(b) and hereby VACATES the hearing currently set for April 4, 2018.
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`Case No. 16-CV-06925-LHK
`ORDER GRANTING MOTION TO STAY PENDING INTER PARTES REVIEW
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`Northern District of California
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`Case 5:16-cv-06925-LHK Document 195 Filed 04/03/18 Page 2 of 4
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`“Courts in this District examine three factors when determining whether to stay a patent
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`infringement case pending review or reexamination of the patents: (1) whether discovery is
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`complete and whether a trial date has been set; (2) whether a stay will simplify the issues in
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`question and trial of the case; and (3) whether a stay would unduly prejudice or present a clear
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`tactical disadvantage to the nonmoving party.” PersonalWeb Techs., LLC v. Apple Inc., 69 F.
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`Supp. 3d 1022, 1025 (N.D. Cal. 2014) (citations and quotations omitted). “Courts have inherent
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`power to manage their dockets and stay proceedings, including the authority to order a stay
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`pending conclusion of a PTO reexamination.” Microsoft Corp. v. TiVo Inc., No. 10-CV-00240-
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`LHK, 2011 WL 1748428, at *3 (N.D. Cal. May 6, 2011) (quoting Ethicon, Inc. v. Quigg, 849 F.2d
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`1422, 1426-27 (Fed. Cir. 1988)).
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`With respect to the first factor, the Court finds that the stage of the case favors a stay.
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`Specifically, although the parties have engaged in some written discovery, neither party has taken
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`fact depositions, exchanged expert reports, or produced email discovery. Thus, although the
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`parties have incurred some costs related to discovery, significant discovery-related costs still
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`remain that might be avoided by a stay. See PersonalWeb, 69 F. Supp. 3d at 1026-27 (finding that
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`the stage of the case weighed in favor of a stay despite the parties’ service of over 100 document
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`request, 50 interrogatories, production of over 500,000 pages, and deposition of over 12
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`individuals, because the remaining work—which included expert reports and discovery,
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`dispositive motions, and trial—would be “costly”); Microsoft, 2011 WL 1748428 at *6 (finding
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`that the stage of the litigation weighed in favor of a stay where the parties had exchanged initial
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`disclosures, interrogatory responses, and document discovery, but no depositions had been taken
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`and no expert reports had been exchanged). In addition, a stay would conserve the Court’s
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`resources by ensuring that the Court does not rule on additional discovery disputes or dispositive
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`motions or conduct a jury trial on claims that the Patent Office later invalidates. Furthermore,
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`“since it is possible that this Court and the PTO could reach inconsistent conclusions regarding the
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`same patent, there is a significant concern of wasting resources by unnecessarily proceeding”
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`forward. Ricoh Co. v. Aeroflex Inc., Nos. C03-04669 MJJ, C03-02289 MJJ, 2006 WL 3708069, at
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`Case No. 16-CV-06925-LHK
`ORDER GRANTING MOTION TO STAY PENDING INTER PARTES REVIEW
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`United States District Court
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`Case 5:16-cv-06925-LHK Document 195 Filed 04/03/18 Page 3 of 4
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`*5 (N.D. Cal. Dec. 14, 2006). “If this Court were to deny the stay and proceed to trial, it is
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`possible that the time, resources, and significant efforts of all those involved in such a trial,
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`including a jury, would be wasted.” Id.
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`Second, with respect to whether a stay would simplify the issues in the case, the Court
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`finds that this factor also favors a stay. If the Patent Office invalidates any of the claims at issue,
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`that would narrow the scope of the litigation in this case. See Universal Elecs., Inc. v. Universal
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`Remote Control, Inc., 943 F. Supp. 2d 1028, 1032 (C.D. Cal. 2013) (“[W]aiting for the outcome of
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`the reexamination could eliminate the need for trial if the claims are cancelled or, if the claims
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`survive, facilitate trial by providing the court with expert opinion of the PTO and clarifying the
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`scope of the claims.” (quoting Target Therapeutics, Inc. v. SciMed Life Sys., Inc., No. C-94-20775
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`RPA (EAI), 1995 WL 20470, at *2 (N.D.Cal. Jan. 13, 1995))). In addition, the course of the IPR
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`proceedings, including the arguments that Twilio makes, will inform the course of the remaining
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`proceedings in this Court. See Asylus Networks, Inc. v. Apple, Inc., 856 F.3d 1353, 1359-61 (Fed.
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`Cir. 2017); see also Mot. Exh. D at 9 (Twilio urging another court to stay case brought by
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`TeleSign pending IPR in part by arguing that even if the Patent Office did not invalidate any
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`claims, “the Court and parties would still benefit from the Patent Office’s determinations”).
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`Twilio points out that IPR was denied on the ’021 patent, and argues that the IPR
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`proceedings on the other two patents will not meaningfully simplify the issues in this case as to the
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`’021 patent. Opp’n at 2. Even assuming that the IPR proceedings will have no effect on the ’021
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`patent—something TeleSign disputes, see Reply at 6—the Court finds that the potential
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`simplification of issues related to the other two patents outweighs the delay that will result in the
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`adjudication of the ’021 claims. Indeed, it would make little sense to proceed only on the ’021,
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`thereby risking a second trial on the other two patents if they survive IPR, nor would it make sense
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`to proceed on all three patents when two of them may later be invalidated.
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`Third, the Court finds that granting a stay would not unduly prejudice Twilio. “The delay
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`inherent to the reexamination process does not generally constitute, by itself, undue prejudice.”
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`Akeena Solar Inc. v. Zep Solar Inc., No. 09-cv-5040-JSW, 2010 WL 1526388 (citing Pegasus
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`Case No. 16-CV-06925-LHK
`ORDER GRANTING MOTION TO STAY PENDING INTER PARTES REVIEW
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`Case 5:16-cv-06925-LHK Document 195 Filed 04/03/18 Page 4 of 4
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`Dev. Corp. v. DirecTV, Inc., 2003 WL 21105073, at *2 (D. Del. May 14, 2003)). Twilio argues
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`that it would be prejudiced by a stay because TeleSign is a competitor, and a stay would allow
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`TeleSign to continue competing against Twilio using Twilio’s own patented technology. Opp’n at
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`1. However, Twilio successfully moved for a stay in another case brought by TeleSign, which
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`undercuts Twilio’s argument that the competitor relationship between the two parties leads to
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`increased harm when a case is stayed. Indeed, in that case, Twilio argued that “[i]t does not
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`suffice to simply argue that prolonging the litigation will allow the defendant to sell allegedly
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`infringing products for a longer period of time.” Exh. D at 9. “Any customers or profit lost
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`during a stay can be compensated through damages, including damages caused by the stay.” Id.
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`(quoting Aten Int’l Co. v. Emine Tech. Co., No. 09-843, 2010 WL 1462110, at *7 (C.D. Cal. Apr.
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`12, 2010)).
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`For the foregoing reasons, the Court GRANTS TeleSign’s motion for a stay of this case.
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`This action is STAYED in its entirety pending final exhaustion of the pending IPR proceedings for
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`the ’376 and ’465 patents, including any appeals.
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`The Clerk shall ADMINISTRATIVELY CLOSE this matter.
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`The parties shall submit joint status reports apprising the Court of the status of the IPR
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`proceedings every six months.
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`The parties shall provide notice to the Court within one week of final exhaustion of all
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`pending IPR proceedings, including appeals. In their notice, the parties shall request that this
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`matter be reopened, and that a case management conference be scheduled.
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`The case management conference currently set for April 4, 2018 is hereby VACATED.
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`IT IS SO ORDERED.
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`Dated: April 3, 2018
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`______________________________________
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`LUCY H. KOH
`United States District Judge
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`Case No. 16-CV-06925-LHK
`ORDER GRANTING MOTION TO STAY PENDING INTER PARTES REVIEW
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