Case 3:17-cv-06664-BRM-DEA Document 156 Filed 03/10/21 Page 1 of 10 PageID: 2987
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`NOT FOR PUBLICATION
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`v.
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY
`____________________________________
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`NASDAQ, INC.; NASDAQ ISE, LLC;
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`AND FTEN, INC.,
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`Plaintiffs,
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`MIAMI INTERNATIONAL HOLDINGS,
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`INC.; MIAMI INTERNATIONAL
`SECURITIES EXCHANGE, LLC; MIAX :
`PEARL, LLC; AND MIAMI :
`INTERNATIONAL TECHNOLOGIES, :
`LLC, :
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`Defendants.
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`____________________________________:
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`MARTINOTTI, DISTRICT JUDGE
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`Case No. 3:17-cv-6664-BRM-DEA
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`OPINION
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`Before this Court is an appeal by Plaintiffs Nasdaq, Inc., Nasdaq ISE, LLC, and FTEN,
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`Inc. (collectively, “Nasdaq”) (ECF No. 151) of Magistrate Judge Douglas E. Arpert’s September
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`30, 2020 Memorandum Opinion and Order (ECF No. 150) denying Nasdaq’s Motion for Leave to
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`Amend (ECF No. 138). Having reviewed the parties’ submissions filed in connection with the
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`appeal and having declined to hold oral argument pursuant to Federal Rule of Civil Procedure
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`78(b), for the reasons set forth below and for good cause having been shown, Nasdaq’s appeal
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`(ECF No. 151) is DENIED and Judge Arpert’s Memorandum Opinion and Order (ECF No. 150)
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`is AFFIRMED.
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`I.
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`BACKGROUND
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`This matter has been ongoing since September 2017. Accordingly, the Court writes for the
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`benefit of the parties and will only address the procedural history associated with this appeal.
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`

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`Case 3:17-cv-06664-BRM-DEA Document 156 Filed 03/10/21 Page 2 of 10 PageID: 2988
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`Nasdaq initiated this action on September 1, 2017 by filing a Complaint against Miami
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`International Holdings, Inc., Miami International Securities Exchange, LLC, MIAX Pearl, LLC,
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`and Miami International Technologies, LLC (collectively, “MIAX”), alleging both patent
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`infringement and trade secret misappropriation claims. (ECF No. 1.) MIAX filed a Motion to
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`Dismiss Nasdaq’s Complaint on December 4, 2017 (ECF No. 28), but the motion was
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`administratively terminated pending a motion to disqualify counsel (ECF Nos. 54, 68).
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`On April 12, 2018, MIAX filed a Motion to Stay this action, after filing petitions for
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`Covered Business Method Patent Review (“CBMR”) of the patents in suit with the United States
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`Patent and Trademark Office (“USPTO”), Patent Trial and Appeal Board (“PTAB”). (ECF No.
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`72.) On August 10, 2018, this Court denied MIAX’s Motion reasoning, “it would be wise for the
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`Court to wait to stay the case until the PTAB has instituted review of the challenged petitions.”
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`(ECF No. 103 at 7.)
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`On October 10, 2018, MIAX submitted a letter request for permission to file another
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`Motion to Stay pending the CBMR of the patents-in-suit. (ECF No. 114.) Nasdaq opposed that
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`request as premature. (ECF No. 117.) This Court agreed stating, “[a] renewed motion to stay would
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`still be premature” because at that time the PTAB had not yet instituted the CBMR of all of the
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`patents-in-suit. (ECF No. 119 at 1.)
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`On November 14, 2018, MIAX submitted a second request for leave to file a Motion to
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`Stay. (ECF No. 123.) Nasdaq again opposed MIAX’s request. (ECF No. 129.) This time, on
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`December 3, 2018, this Court entered an Order finding a stay was appropriate because the PTAB
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`had instituted CBMR on all of the patents-in-suit. (ECF No. 130 at 1.)
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`On December 7, 2018, Nasdaq submitted a request to this Court for reconsideration of the
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`Order (ECF No. 130) “on the limited issue of the scope of the stay.” (ECF No. 131.) Specifically,
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`Nasdaq asked the Court to modify the “December 3, 2018 Order to limit the stay to the six patents-
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`in-suit (counts I, II, and IV-VII) and allow discovery to proceed on Plaintiffs’ three trade secret
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`claims (counts VII-X)”. (Id.) MIAX opposed Nasdaq’s request to limit the scope of the stay
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`arguing, inter alia, “that both the patent claims and trade secret claims involve the same areas of
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`technology, the same accused products, and overlapping witnesses. If the stay is lifted on the trade
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`secret claims, it will have the effect of no stay at all on the patent claims.” (ECF No. 132.) On
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`December 13, 2018, this Court denied Nasdaq’s request to modify the stay stating, “[t]his matter
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`is stayed in its entirety.” (ECF No. 133.)
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`On November 18, 2019, Nasdaq informed the Court the PTAB had issued decisions
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`regarding the validity of the patents-in-suit. (ECF No. 135.) The PTAB found the patents-in-suit
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`were invalid. (Id.) Nasdaq explained these decisions were subject to motion practice seeking
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`reconsideration as well as appellate remedies. (Id.) Nasdaq then requested the same relief they now
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`seek—to lift the stay of this action in order to proceed solely with Nasdaq’s trade secret claims.
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`(Id.) On November 19, 2019, MIAX responded it would not be efficient to lift the stay when
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`Nasdaq had not exhausted their appellate remedies with the PTAB or the Federal Circuit. (ECF
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`No. 136 at 1.) MIAX argued courts have held in similar circumstances the court should not lift a
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`stay before the party dissatisfied with the PTAB’s decision exhausts its appellate remedies. (Id. at
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`2 (citing Depomed, Inc. v. Purdue Pharma L.P., No. 13-571, 2016 WL 50505, at *1-2 (D.N.J. Jan.
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`4, 2016); Andrea Electronics Corp. v. Apple Inc., 2019 U.S. Dist. LEXIS 132551 at *4-5 (E.D.N.Y.
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`Aug. 6, 2019); Realtime Data LLC v. Silver Peak Systems, Inc., 2018 WL 3744223, at *2 (N.D.
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`Cal. 2018).) After considering the parties’ submissions, on November 20, 2019, this Court denied
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`Nasdaq’s application and continued the stay. (ECF No. 137.)
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`Case 3:17-cv-06664-BRM-DEA Document 156 Filed 03/10/21 Page 4 of 10 PageID: 2990
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`On February 11, 2020, Nasdaq filed a Motion for Leave to Amend, seeking leave to file an
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`Amended Complaint which removes all patent infringement claims and related allegations from
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`the operative pleading while maintaining the trade secret claims against MIAX – essentially the
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`same relief sought in their November 18, 2019 Letter to this Court. (ECF No. 138-2 at 3.) MIAX
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`opposed the Motion, arguing it would be unfair to allow Nasdaq to drop the patent claims without
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`eliminating the risk of future assertion of these claims in this action or elsewhere, or against
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`MIAX’s affiliates, successors, licensee, and customers. (ECF No. 139 at 4.) Nasdaq filed a Reply,
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`arguing justice requires allowing the proposed amendment because there is still no end in sight to
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`the PTAB proceedings due to the Arthrex decision, and the actions they may take or consequences
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`occurring if the proposed Amended Complaint is permitted are speculative and should not be
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`weighed in the Court’s consideration of the proposed amendment’s prejudice to MIAX. (ECF No.
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`145 at 1, 3.) After filing the Reply, Nasdaq filed a Notice of Supplemental Authority informing
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`the Court of the PTAB’s General Order in Cases Involving Requests for Rehearing Under Arthrex,
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`Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) (“General Order”). (ECF No. 146.)
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`Nasdaq explained the General Order impacted the instant Motion because the General Order
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`further affirmed its argument that “[j]ustice requires allowing the amendment because there is still
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`no end in sight to the procedural morass created by Arthrex.” (Id. at 2.) Judge Arpert declined to
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`lift the stay in order to consider Nasdaq’s Motion for Leave to Amend. (ECF No. 150.) Nasdaq
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`appeals Judge Arpert’s decision. (ECF No. 151.)
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`II.
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`LEGAL STANDARD
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`With respect to a district judge’s review of a magistrate judge’s decision, Federal Rule of
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`Civil Procedure 72(a) states: “The district judge . . . must consider timely objections and modify
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`or set aside any part of the order that is clearly erroneous or is contrary to law.” Id. Similarly, this
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`Court’s Local Rules provide “[a]ny party may appeal from a Magistrate Judge’s determination of
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`a non-dispositive matter within 14 days” and the District Court “shall consider the appeal and/or
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`cross-appeal and set aside any portion of the Magistrate Judge’s order found to be clearly erroneous
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`or contrary to law." L.Civ.R. 72.1(c)(1)(A).
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`A district judge may reverse a magistrate judge’s order if the order is shown to be “clearly
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`erroneous or contrary to law” on the record before the magistrate judge. 28 U.S.C. § 636(b)(1)(A)
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`(“A judge of the court may reconsider any pretrial matter [properly referred to the magistrate
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`judge] where it has been shown that the magistrate judge's order is clearly erroneous or contrary
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`to law.”); Fed. R. Civ. P. 72(a); L.Civ.R. 72.1(c)(1)(A); Haines v. Liggett Grp., Inc., 975 F.2d 81,
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`93 (3d Cir. 1992) (describing the district court as having a “clearly erroneous review function,”
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`permitted only to review the record that was before the magistrate judge). The burden of showing
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`that a ruling is “clearly erroneous or contrary to law rests with the party filing the appeal.” Marks
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`v. Struble, 347 F. Supp. 2d 136, 149 (D.N.J. 2004). A district judge may find a magistrate judge’s
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`decision “clearly erroneous” when it is “left with the definite and firm conviction that a mistake
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`has been committed.” Dome Petroleum Ltd. v. Employers Mut. Liab. Ins. Co., 131 F.R.D. 63, 65
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`(D.N.J. 1990) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 92 L.
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`Ed. 746 (1948)); accord Kounelis v. Sherrer, 529 F. Supp. 2d 503, 518 (D.N.J. 2008). However,
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`“[w]here there are two permissible views of the evidence, the factfinder’s choice between them
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`cannot be clearly erroneous.” United States v. Waterman, 755 F.3d 171, 174 (3d Cir. 2014)
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`(quoting Anderson v. Bessemer City, 470 U.S. 564, 574, 105 S. Ct. 1504, 84 L. Ed. 2d 518 (1985)).
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`The magistrate judge’s ruling is “contrary to law” if it misinterpreted or misapplied applicable law.
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`Kounelis, 529 F. Supp. 2d at 518; Gunter v. Ridgewood Energy Corp., 32 F. Supp. 2d 162, 164
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`(D.N.J. 1998).
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`III. DECISION
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`A.
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`Judge Arpert’s Decision Is Not Clearly Erroneous
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`Nasdaq challenges Judge Arpert’s conclusion that no circumstance has changed warranting
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`lifting of the stay as clearly erroneous. (ECF No. 151-1 at 6.) The Court disagrees.
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`“When a court has imposed a stay, but circumstances have changed such that the court’s
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`reasons for imposing [that] stay no longer exist or are inappropriate, the court also has the inherent
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`power and discretion to lift the stay.” Princeton Digital Image Corp. v. Konami Digital Entm’t
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`Inc., 2015 U.S. Dist. LEXIS 4234 at *5-6 (D. Del. Jan. 14, 2015); see also Network-1 Sec.
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`Solutions, Inc. v. Alcatel-Lucent USA Inc., 2015 U.S. Dist. LEXIS 31452 at *9 (E.D. Tex. Jan. 5,
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`2015) (citing Canady v. Erbe Elektromedizin GmbH, 271 F. Supp. 2d 64, 75 (D.D.C. 2002)). In
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`light of a significant change in circumstances, a court must reevaluate the four factors in section
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`18(b)(1) of the AIA that it originally weighed to determine whether a stay pending CMBR was
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`justified: (1) whether a stay, or the denial thereof, will simplify the issues in question and
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`streamline the trial; (2) whether discovery is complete and whether a trial date has been set; (3)
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`whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a
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`clear tactical advantage for the moving party; and (4) whether a stay, or the denial thereof, will
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`reduce the burden of litigation on the parties and on the court. Pub. L. No. 112-29, § 18(b)(1), 125
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`Stat. 284, 32931 (2011); See Rovi Guides, Inc. v. Comcast Corp., 2018 U.S. Dist. LEXIS 59177 at
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`*6 (S.D.N.Y. April 5, 2018) (“In light of this significant change in circumstances, the Court must
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`reevaluate the same three factors it originally weighed to determine whether a stay pending IPR1
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`1 IPR is a trial proceeding conducted at the PTAB to review the patentability of one or more claims
`in a patent only on a ground that could be raised under 35 U.S.C. §§ 102 or 103. U.S. Pat. & Tm.
`Off., Inter Partes Review, uspto.gov, https://www.uspto.gov/patents-application-process/patent-
`trial-and-appeal-board/trials/inter-partes-review (last modified Sept. 4, 2020).
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`was justified.”) (citations omitted); Network-1, 2015 U.S. Dist. LEXIS 31452 at *9 (citations
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`omitted).
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`1. Nasdaq’s Voluntary Dismissal Alone Is Not Sufficient to Qualify as a
`Significant Change of Circumstance
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`Nasdaq argues Judge Arpert did not consider Nasdaq’s desire to dismiss all of its patent
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`claims against MIAX with prejudice, which should be a change in circumstances that warrants
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`lifting the stay to permit an amendment. (ECF No. 151-1 at 6.) Nasdaq claims the request to dismiss
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`its patent claims with prejudice means this case will be simplified once the stay is lifted and the
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`amendment allowed, and further PTAB proceedings will have no impact on this case going
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`forward. (Id.) The Court disagrees.
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`A voluntary dismissal of a patent infringement claim with prejudice can be a change of
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`circumstance that warrants lifting a stay, when the PTAB proceeding that justified the original stay
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`will “have virtually no effect on” the remaining claims. See Rovi Guides, Inc. v. Comcast Corp.,
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`2018 U.S. Dist. LEXIS 59177 at *6-8 (The court initially stayed all the claims based on two related
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`patents pending the IPR of one of the patents. The patentee then voluntarily dismissed with
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`prejudice all claims based on the one patent under IPR. The court finds the dismissal renders the
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`IPR proceeding unable to affect claims based on the other patent not under IPR, and therefore
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`warrants lifting the stay.) However, different from Rovi, the Court here finds the pending PTAB
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`proceedings of patents-in-suit may impact the remaining claims.
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`“A dismissal with prejudice operates as an adjudication on the merits, so it ordinarily
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`precludes future claims.” Papera v. Pa. Quarried Bluestone Co., 948 F.3d 607, 611 (3d Cir. 2020)
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`(citations and internal quotations omitted); see also Hallco Mfg. Co. v. Foster, 256 F.3d 1290,
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`1297 (Fed. Cir. 2001) (“The dismissal of a claim with prejudice is a judgment on the merits under
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`the law of the Federal Circuit.”). However, with respect to patent litigation, an infringement claim,
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`“for purposes of claim preclusion,” cannot embrace “more than the specific devices” accused of
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`infringement. Young Eng’rs, Inc. v. United States ITC, 721 F.2d 1305, 1316 (Fed. Cir. 1983).
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`“[W]here the alleged infringer prevails,” only “the accused devices have the status of
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`noninfringements,” and the status of a different device is not affected. Id. Therefore, the voluntary
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`dismissal with prejudice of claims based a patent does not mean “any charge of infringement based
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`on the patent is barred.” Id.
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`Here, as Nasdaq admits, discovery involved in the trade secret claims and the patent claims
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`significantly overlaps (ECF No. 83 at 19), because the two sets of claims involve the same areas
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`of technology, the same accused products, and overlapping witnesses (ECF No. 132 at 2). If the
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`stay is lifted on the trade secret claims, it may have the effect of no stay at all on the patent claims.
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`(Id.) Therefore, if the stay is lifted, the discovery that proceeds on the trade secret claims may
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`reveal facts—MIAX’s potentially infringing actions or instrumentalities not identified in Nasdaq’s
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`Complaint—for Nasdaq to raise new infringement claims based on the patents-in-suit. Even if
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`Nasdaq voluntarily dismisses with prejudice of all its current patent claims, the PTAB proceedings
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`of patents-in-suit may still simplify the issues of this case as to these potential new claims, which
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`are not barred by Nasdaq’s voluntary dismissal. Without Nasdaq having agreed not to bring up
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`new claims or defenses in this matter based on the patents-in-suit, it is not a clear error that Judge
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`Arpert did not consider Nasdaq’s voluntary dismissal as a change of circumstances that justifies
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`lifting the stay. See Credit Acceptance Corp. v. Westlake Servs., LLC, 2015 U.S. Dist. LEXIS
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`86691 at *6 (C.D. Cal. July 2, 2015) (“[B]ecause Plaintiff wishes to voluntarily dismiss its claims
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`[with prejudice] and has granted a covenant not to sue, the circumstances may have changed such
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`that the reasons for the stay no longer exist.”).
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`2. The Court Will Not Consider the Supreme Court’s Granting
`Certiorari in Arthrex
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`Nasdaq claims another relevant change in circumstances occurred after the Judge Arpert’s
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`decision. (ECF No. 151-1 at 7.) On October 13, 2020, the United States Supreme Court granted
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`certiorari in Arthrex, Inc, v. Smith & Nephew, Inc., where the United States Court of Appeals for
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`the Federal Circuit held PTAB judges were appointed unconstitutionally. (Id.) As a result, Nasdaq
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`contends it will likely take years for this case to return to the Court’s docket if the motion to amend
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`is not granted. (Id.) The Court will not consider this alleged change in circumstances.
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`The Court may not consider new evidence on appeal that was not presented to the
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`Magistrate Judge, as the Court cannot rely on such new evidence to determine whether the
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`Magistrate Judge’s ruling was clearly erroneous or contrary to law. Kendricks v. The Hertz Corp.,
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`2006 U.S. Dist. LEXIS 85432 at *4 (D.V.I. Oct. 30, 2006) (citing Haines v. Liggett Group Inc.,
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`975 F.2d 81 (3d Cir. 1992) (stating district court is not permitted to receive new evidence in
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`reviewing magistrate’s ruling on non-dispositive matter)); Horner v. Cummings, 2015 U.S. Dist.
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`LEXIS 192544 at *9 (M.D. Pa. Oct. 27, 2015) (citations omitted); Hunt v. Borough of Wildwood
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`Crest, No. 12-6887, 2016 U.S. Dist. LEXIS 135233 at *12 (D.N.J. Sept. 29, 2016). Since the
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`Supreme Court’s granting certiorari in Arthrex occurred after the Judge Arpert’s decision which
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`Nasdaq now appeals, it is new evidence that this Court may not consider.
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`Accordingly, the Court does not find Judge Arpert’s conclusion that no circumstance has
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`changed warranting lifting of the stay is clearly erroneous.
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`B.
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`Judge Arpert’s Decision Was Not Contrary to Law
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`Nasdaq contends Judge Arpert’s decision is contrary to law, as no legal authority was
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`identified to justify the decision to refuse to consider Nasdaq’s Motion to Leave to Amend. (ECF
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`No. 151-1 at 7.) The Court disagrees.
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`The “decision to grant a stay would moot the other motions before” the court. American
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`Casualty Co. v. Continisio, 819 F. Supp. 385, 392 (D.N.J. 1993); see also Testa v. Hoban, No. 16-
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`0055, 2016 U.S. Dist. LEXIS 124479 at *34-35 (D.N.J. Sept. 14, 2016). Here, the Court has
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`ordered “[this] matter is stayed in its entirety.” (ECF No. 133.) Judge Arpert, in his decision now
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`under appeal, has declined to lift the stay. (ECF No. 150 at 15.) As a result, “[t]he parties shall not
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`file other motions in this matter until the stay is lifted.” Aland v. Salazar, 2010 U.S. Dist. LEXIS
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`153745 *10 (D. Idaho Dec. 15, 2010); see also Welch v. Weise, 2020 U.S. Dist. LEXIS 116876 at
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`*3 (D. Nev. July 2, 2020). Therefore, without the stay being lifted, Nasdaq’s Motion to Leave to
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`Amend is moot.
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`Accordingly, the Court does not find Judge Arpert’s refusal to consider Nasdaq’s Motion
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`to Leave to Amend contrary to law.
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`IV. CONCLUSION
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`For the reasons set forth above, Nasdaq’s appeal is DENIED and Judge Arpert’s
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`September 30, 2020 Memorandum Opinion and Order is AFFIRMED.
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`Date: March 10, 2020
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`/s/ Brian R. Martinotti___________
`HON. BRIAN R. MARTINOTTI
`UNITED STATES DISTRICT JUDGE
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`