Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 1 of 11 PageID #: 1593
`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 1 of 11 PagelD #: 1593
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF DELAWARE
`
`NumOeelaOOBB‘a”a’
`
`SK INNOVATION CoO., LTD.,
`
`Plaintiff,
`
`Vv.
`
`LG CHEM, LTD., LG CHEM MICHIGAN
`INC., and LG ELECTRONICSINC.
`
`Defendants.
`
`
`Civil Action No. 19-1637-CFC-SRF
`
`LG CHEM,LTD. and LG CHEM
`MICHIGAN INC.,
`
`Counterclaim Plaintiffs,
`
`SK INNOVATION CoO., LTD.,
`
`Counterclaim Defendant.
`
`MEMORANDUM OPINION
`
`L
`
`INTRODUCTION
`
`Presently before the court in this patent infringementaction is the motion to stay pending
`
`the resolution of twopetitions for infer partes review (“IPR”) filed by defendants LG Chem,
`
`Ltd., LG Chem Michigan Inc.(collectively, “LG Chem”), and LG Electronics, Inc. (“LGE”)
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`(together with LG Chem,“Defendants”).! (D.I. 56) For the following reasons, Defendants’
`
`! The briefing and declarations associated with the pending motionto stay are found at D.I. 57,
`D.I. 58, D.I. 65, D.I. 66, D.I. 70, and DL. 71.
`
`

`

`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 2 of 11 PageID #: 1594
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`motion to stay is DENIED without prejudice.2
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`II.
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`BACKGROUND
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`LG Chem filed a trade secret misappropriation complaint against plaintiff SK Innovation
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`Co., Ltd. (“SKI”) with the International Trade Commission (“ITC”) on April 29, 2019. (D.I. 49,
`
`Ex. A at 3) On September 3, 2019, SKI filed a complaint in this case against Defendants
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`asserting infringement of United States Patent Number 9,698,398 (“the ’398 patent”). (D.I. 1)
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`At the same time, SKI filed an ITC complaint asserting a different patent and commenced
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`corresponding Civil Action No. 19-1638-CFC against LG Chem regarding the alleged
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`infringement of that patent. (C.A. No. 19-1638-CFC, D.I. 1) On September 26, 2019, LG Chem
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`filed ITC complaints against SKI regarding five patents and filed corresponding Civil Action No.
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`19-1805-CFC in this court. (C.A. No. 19-1805-CFC, D.I. 1) Litigation in both Civil Action
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`Nos. 19-1638-CFC and 19-1805-CFC is stayed pending resolution of the related ITC
`
`investigations pursuant to 28 U.S.C. § 1659(a). (C.A. No. 19-1638-CFC, D.I. 11; C.A. No. 19-
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`1805-CFC, D.I. 10)
`
`On November 25, 2019, LG Chem filed its answer, affirmative defenses, and
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`counterclaims in this action. (D.I. 9) SKI answered the counterclaims and filed its motion to
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`strike the affirmative defense of unclean hands on December 23, 2019. (D.I. 17, D.I. 19) A
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`scheduling order was entered on January 13, 2020, setting a fact discovery deadline of December
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`5, 2020 and a trial date of September 20, 2021. (D.I. 24) The parties’ Joint Claim Construction
`
`2 SK Innovation Co., Ltd.’s (“SKI”) motion to strike LG Chem’s affirmative defense of unclean
`hands (D.I. 17) and LG Chem’s motion for leave to file a sur-reply (D.I. 68) remain pending and
`will be addressed separately upon resolution of objections, if any, to the instant Memorandum
`Opinion and Order.
`
`
`
`2
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`

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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 3 of 11 PageID #: 1595
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`Chart is due on June 24, 2020, and the Joint Claim Construction Brief is due on September 16,
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`2020. (Id. at ¶¶ 15-16) A Markman hearing is scheduled for November 10, 2020. (Id. at ¶ 17)
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`On March 31, 2020, Defendants filed a petition for inter partes review (“IPR”)
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`challenging the validity of asserted claims 1-3 of the ’398 patent with the U.S. Patent and
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`Trademark Office (“USPTO”). (D.I. 57, Ex. 2) The Patent Trial and Appeal Board (“PTAB”) is
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`expected to release its institution decision regarding Defendants’ IPR petition in October 2020.
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`35 U.S.C. § 314(b). If the PTAB institutes proceedings on Defendants’ petition, a final decision
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`on the merits of the petitions is expected by October 2021. 35 U.S.C. §§ 316(a)(11).
`
`DATE
`FILED
`4/29/2019
`
`COURT /
`AGENCY
`ITC
`
`9/3/2019
`
`D. Del.
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`9/3/2019
`
`D. Del.
`
`9/3/2019
`
`ITC
`
`CASE NO.
`
`SUBJECT
`
`STATUS
`
`337-TA-1159 Defendants allege trade
`secret misappropriation
`by SKI
`SKI alleges infringement
`19-1637-
`of ’398 patent
`CFC-SRF
`19-1638-CFC SKI alleges infringement
`of ’994 patent
`
`337-TA-1179 SKI alleges infringement
`of ’994 patent
`
`Default judgment
`entered vs. SKI on
`March 18, 2020
`Ongoing
`
`Stayed pending
`resolution of ITC
`action3
`Trial scheduled for
`Sept. 2020
`
`3 Related Civil Action Nos. 19-1638-CFC and 19-1805-CFC are stayed due to the mandatory
`stay requirement pursuant to 28 U.S.C. § 1659(a). Section 1659(a) provides that, when a party to
`both a civil action and an action before the ITC requests a stay of the civil action,
`
`
`the district court shall stay, until the determination of the Commission becomes
`final, proceedings in the civil action with respect to any claim that involves the
`same issues involved in the proceeding before the Commission, but only if such
`request is made within—
`(1) 30 days after the party is named as a respondent in the proceeding
`before the Commission, or
`(2) 30 days after the district court action is filed,
`whichever is later.
`
`
`28 U.S.C. § 1659(a). Consequently, the stay of other matters pending in this district due to
`parallel ITC proceedings has no bearing on the outcome of the instant motion.
`3
`
`
`
`

`

`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 4 of 11 PageID #: 1596
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`9/26/2019
`
`D. Del.
`
`9/26/2019
`
`ITC
`
`3/31/2020
`
`PTAB
`
`
`
`19-1805-CFC SKI alleges infringement
`of ’517, ’241, ’152, ’877,
`and ’626 patents
`337-TA-1181 SKI alleges infringement
`of ’517, ’241, ’152, ’877,
`and ’626 patents
`Defendants allege
`invalidity of claims 1-3 of
`’398 patent
`
`IPR2020-
`00657
`
`Stayed pending
`resolution of ITC
`action4
`Trial scheduled for
`October 2020
`
`Institution decision
`anticipated in
`October 2020
`
`III.
`
`LEGAL STANDARD
`
`A court has discretionary authority to grant a motion to stay. 454 Life Scis. Corp. v. Ion
`
`Torrent Sys., Inc., C.A. No. 15-595-LPS, 2016 WL 6594083, at *2 (D. Del. Nov. 7, 2016) (citing
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`Cost Bros., Inc. v. Travelers Indem. Co., 760 F.2d 58, 60 (3d Cir. 1985)). Courts consider three
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`factors in deciding how to exercise this discretion: (1) whether a stay will simplify the issues for
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`trial; (2) the status of the litigation, particularly whether discovery is complete and a trial date
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`has been set; and (3) whether a stay would cause the non-movant to suffer undue prejudice from
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`any delay or allow the movant to gain a clear tactical advantage. Id. (citing Advanced
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`Microscopy Inc. v. Carl Zeiss Microscopy, LLC, C.A. No. 15-516-LPS-CJB, 2016 WL 558615,
`
`at *1 (D. Del. Feb. 11, 2016)).
`
`IV. DISCUSSION
`
`A. Simplification of Issues
`
`In support of the motion to stay, Defendants argue that the IPR proceedings will likely
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`simplify the issues for trial because Defendants asserted four independent grounds of invalidity
`
`on all three asserted claims of the ’398 patent in the IPR petition, raising the likelihood that the
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`PTAB will institute IPR proceedings on at least one basis. (D.I. 57 at 8) Because each of the
`
`4 See n.3, supra.
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`
`
`4
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`

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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 5 of 11 PageID #: 1597
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`asserted claims is at issue in the IPR petition, Defendants contend that a finding of invalidity by
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`the PTAB could conclude the litigation. (Id. at 9) Defendants allege that staying the litigation
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`would have the added benefit of avoiding the risk of inconsistent results between the PTAB and
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`the court. (Id. at 10)
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`In response, SKI contends that the likelihood of simplification is speculative prior to a
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`decision on institution. (D.I. 65 at 4-5) In the event that the PTAB decides not to institute IPR
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`proceedings, SKI argues that a stay would only result in delay, with no collateral simplification
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`of the issues. (Id. at 5-6)
`
`The issue simplification factor weighs against a stay at this time because the PTAB has
`
`not yet issued a decision on institution. See Advanced Microscopy Inc. v. Carl Zeiss Microscopy,
`
`LLC, C.A. No. 15-516-LPS-CJB, 2016 WL 558615, at *2 (D. Del. Feb. 11, 2016) (observing
`
`that, “[i]f no review is instituted, the asserted basis for a stay will fall away.”). “Generally, the
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`‘simplification’ issue does not cut in favor of granting a stay prior to the time the PTAB decides
`
`whether to grant the petition for inter partes review.” Copy Protection LLC v. Netflix, Inc., C.A.
`
`No. 14-365-LPS, 2015 WL 3799363, at *1 (D. Del. June 17, 2015); see also HIP, Inc. v. Hormel
`
`Foods Corp., C.A. No. 18-615-CFC, 2019 WL 7667104, at *1 (D. Del. May 16, 2019). Under
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`these circumstances, courts in this district typically permit the movant to renew its motion if and
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`when the IPR petition is instituted. Id.; see also KFx Med., LLC v. Stryker Corp., 2019 WL
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`2008998, at *2 (S.D. Cal. May 7, 2019) (“[T]he majority of district courts ‘have postponed
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`ruling on stay requests or have denied stay requests when the PTAB has not yet acted on the
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`
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`5
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`

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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 6 of 11 PageID #: 1598
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`petition for review.’” (quoting Trover Grp., Inc. v. Dedicated Micros USA, 2015 WL 1069179, at
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`*5 (E.D. Tex. Mar. 11, 2015)).
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`Defendants focus in particular on the timing of the parties’ opening claim construction
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`briefs, which overlap with the July 15, 2020 deadline for SKI’s Patent Owner Preliminary
`
`Response (“POPR”) in the PTAB. (D.I. 70 at 2-3) Defendants argue that, absent a stay, the
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`parties may need to revisit the Joint Claim Construction Chart based on statements made in
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`SKI’s POPR which may impact the prosecution history for disputed claim terms. (Id.)
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`Defendants’ position assumes that SKI will make revelations in pre-institution filings that will
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`conflict with or impede the court’s ability to conduct a Markman hearing and construe the
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`disputed claim terms. Assuming arguendo that such revelations are made, the District Judge is
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`in the best position to consider their effect, if any, on claim construction at the appropriate time.
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`Defendants also note that the PTAB’s institution decision may include claim construction
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`analysis which would require supplemental briefing prior to the Markman hearing. (D.I. 70 at 3)
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`Speculation regarding issues that may or may not be addressed in the PTAB’s institution
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`decision is not sufficient to justify a stay. See Invensas Corporation v. Samsung Elecs. Co., Ltd.,
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`C.A. No. 17-1363-MN-SRF, 2018 WL 4762957, at *3 (D. Del. Oct. 2, 2018). The PTAB’s
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`institution decision is due in mid-October, nearly a month before the Markman hearing on
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`November 10, 2020. The record in this case demonstrates that Defendants are familiar with the
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`procedures for notifying the court of subsequent authority following the completion of briefing,
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`6
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`

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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 7 of 11 PageID #: 1599
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`to the extent that such subsequent authority is relevant to issues pending before the court. (D.I.
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`40; D.I. 49)
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`B. Stage of Litigation
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`Defendants contend that the early stage of the litigation weighs in favor of a stay because
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`no depositions have occurred and the claim construction process has not begun. (D.I. 57 at 11-
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`12) In response, SKI argues that this factor weighs against a stay because a scheduling order has
`
`been entered, a trial date has been set, and discovery has begun. (D.I. 65 at 8-9)
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`This factor weighs against granting a stay. Although the case has not yet progressed to
`
`claim construction, the parties have served written discovery requests and have produced
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`technical documents, sales data, license agreements, and prior art. (D.I. 21; D.I. 22; D.I. 33; D.I.
`
`34; D.I. 35; D.I. 44; D.I. 48; D.I. 51; D.I. 53; D.I. 59; D.I. 60) The parties have also exchanged
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`infringement and invalidity contentions. (D.I. 39; D.I. 61) The court entered a scheduling order
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`setting a trial date for September 20, 2021, about a month before the issuance of a final written
`
`decision on the IPR petition if the PTAB grants institution. (D.I. 24) If the court were to enter a
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`stay at this stage of the proceedings pending the PTAB’s anticipated institution decision in
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`October, the trial date would likely be lost even if the PTAB ultimately denies Defendants’ IPR
`
`petition. Under these circumstances, this factor weighs against a stay. See Copy Protection LLC
`
`v. Netflix, Inc., C.A. No. 14-365-LPS, 2015 WL 3799363, at *1 (D. Del. June 17, 2015) (finding
`
`this factor weighed against a stay where a “trial date has been set for . . . around the same time as
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`
`7
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`

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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 8 of 11 PageID #: 1600
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`the IPR petition may be finally decided[ ] and the parties have engaged in a substantial amount
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`of discovery and are set to complete claim construction briefing shortly.”).
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`C. Prejudice
`
`The court, in assessing undue prejudice to the non-movant, may consider: (1) the timing
`
`of the request for review; (2) the timing of the motion to stay; (2) the status of the review
`
`proceeding; and (3) the relationship of the parties. 454 Life Scis. Corp. v. Ion Torrent Sys., Inc.,
`
`C.A. No. 15-595-LPS, 2016 WL 6594083, at *4 (D. Del. Nov. 7, 2016) (citing Neste Oil OYJ v.
`
`Dynamic Fuels, LLC, C.A. No. 12-1744-GMS, 2013 WL 3353984, at *2 (D. Del. July 2, 2013)).
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`The court concludes that first and second subfactors do not support a finding that SKI will suffer
`
`undue prejudice if the case is stayed. Defendants demonstrate that they timely filed the IPR
`
`petition and the motion to stay (D.I. 57 at 13-14), and SKI does not suggest otherwise, (D.I. 65 at
`
`10-14). The third subfactor, regarding the status of the IPR proceeding, weighs against the entry
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`of a stay when considered in conjunction with the other stay factors discussed at §§ IV.A and B,
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`supra. See Princeton Digital Image Corp. v. Konami Digital Entm't Inc., C.A. No. 12-1461-
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`LPS-CJB, 2014 WL 3819458, at *5 (D. Del. Jan. 15, 2014) (“[I]n light of the early stage of the
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`review proceedings here (with the PTO not yet having determined whether to grant review) the
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`length of the expected delay increases the risk of prejudice to Plaintiff.”).
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`The fourth subfactor also weighs against the entry of a stay. Defendants allege that the
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`competitive relationship between SKI and Defendants favors a stay because the relevant market
`
`includes several competitors. (D.I. 57 at 15) Defendants also note that SKI previously licensed
`
`the asserted patent, it does not practice the ’398 patent itself, and it seeks only monetary
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`compensation in the litigation. (Id. at 16) In response, SKI contends that the parties are direct
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`competitors in the United States electric vehicle battery market. (D.I. 65 at 10-11)
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`
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`8
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`

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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 9 of 11 PageID #: 1601
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`The record before the court shows that there is significant potential for prejudice resulting
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`from a stay of the litigation due to the small market for electric vehicle batteries and the
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`competitive relationship between the parties. Defendants acknowledge that “SKI competes with
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`LG Chem and LGE in the electric vehicle battery market.” (D.I. 57 at 15) In proceedings before
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`the ITC, SKI represented that “only Panasonic, AESC, and LG Chem offer lithium-ion EV
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`battery cells that are produced in the United States, and their production capacity is largely
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`committed to Tesla, Nissan, and GM, respectively.” (D.I. 58, Ex. 4 at 3) The likelihood of
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`prejudice is greater where, as here, there are only a few market participants. See FMC Corp. v.
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`Summit Agro USA, LLC, C.A. No. 14-51-LPS, 2014 WL 3703629, at *6 (D. Del. July 21, 2014)
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`(“[E]ven in cases where there were some number of other competitors in the market, so long as
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`plaintiff and defendant were joint market participants and engaged in some level of competition,
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`our Court has tended to find that some amount of potential prejudice is at play.”).
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`SKI would also be at a tactical disadvantage if the court were to stay this litigation
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`because a stay would enable Defendants to delay propounding non-infringement contentions.
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`(D.I. 65, Ex. 4 at 2) Moreover, Defendants could continue to prosecute their affirmative claims
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`against SKI in the ITC proceedings. The fact that Defendants continue to actively pursue relief
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`against SKI on multiple fronts bolsters SKI’s position that it would be disadvantaged by a delay
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`in its litigation against Defendants.5
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`5 Defendants argue that the court should decline to consider the status of any other proceedings
`in connection with the motion to stay. (D.I. 70 at 8) But Defendants cite no authority suggesting
`that the court’s analysis of tactical advantage on a motion to stay cannot account for strategic
`decisions impacting the progress of other proceedings involving the same parties. Defendants’
`suggestion that the court should consider the substantive outcome of litigation in Korea and the
`ITC’s decision awarding default judgment against SKI in a trade secret misappropriation
`investigation is unsupported.
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`9
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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 10 of 11 PageID #: 1602
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`Defendants also suggest that SKI will not be unduly prejudiced by a stay because money
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`damages are an adequate remedy. (D.I. 70 at 8) However, the complaint includes a demand for
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`equitable, injunctive relief. (D.I. 1 at 14, 16) Defendants’ argument is not fully supported on
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`this factual record.
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` On balance, the stay factors weigh against the entry of a stay prior to the PTAB’s
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`decision on institution.
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`V.
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`CONCLUSION
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`For the foregoing reasons, Defendants’ motion to stay the proceedings is DENIED
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`without prejudice to renew following the institution of any IPR proceeding. (D.I. 56) An Order
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`consistent with this Memorandum Opinion shall issue.
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`Given that the court has relied upon material that technically remains under seal, the
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`court is releasing this Memorandum Opinion under seal, pending review by the parties. In the
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`unlikely event that the parties believe that certain material in this Memorandum Opinion should
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`be redacted, the parties shall jointly submit a proposed redacted version by no later than May 22,
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`2020, for review by the court, along with a motion supported by a declaration that includes a
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`clear, factually detailed explanation as to why disclosure of any proposed redacted material
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`would “work a clearly defined and serious injury to the party seeking closure.” See In re
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`Avandia Mktg., Sales Practices & Prods. Liab. Litig., 924 F.3d 662, 672 (3d Cir. 2019) (quoting
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`Miller v. Ind. Hosp., 16 F.3d 549, 551 (3d Cir. 1994) (internal quotation marks omitted)). If the
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`parties do not file a proposed redacted version and corresponding motion, or if the court
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`determines the motion lacks a meritorious basis, the documents will be unsealed within thirty
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`(30) days of the date the Memorandum Opinion issued.
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`This Memorandum Opinion is filed pursuant to 28 U.S.C. § 636(b)(1)(A), Fed. R. Civ. P.
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`72(a), and D. Del. LR 72.1(a)(2). The parties may serve and file specific written objections
`10
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`Case 1:19-cv-01637-CFC-SRF Document 84 Filed 05/15/20 Page 11 of 11 PageID #: 1603
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`within fourteen (14) days after being served with a copy of this Memorandum Opinion. Fed. R.
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`Civ. P. 72(a). The objections and responses to the objections are limited to ten (10) pages each.
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`The parties are directed to the court’s Standing Order For Objections Filed Under Fed. R. Civ. P.
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`72, dated October 9, 2013, a copy of which is available on the court’s website,
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`www.ded.uscourts.gov.
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`Dated: May 15, 2020
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`11
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