Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page 1 of 8 Page ID #:16558
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`***REDACTED
`
`CIVIL MINUTES - GENERAL
`SACV 20-48 JVS (JDEx)
`
`Case No.
`
`Date October 13, 2020
`
`Title
`
`Masimo Corporation et al. v. Apple Inc.
`
`Present: The Honorable James V. Selna, U.S. District Court Judge
`Lisa Bredahl
`Not Present
`Deputy Clerk
`Court Reporter
`Attorneys Present for Plaintiffs:
`Attorneys Present for Defendants:
`Not Present
`Not Present
`
`Proceedings:
`
`[IN CHAMBERS] Order Regarding Motion for Stay
`
`Before the Court is Defendant Apple Inc.’s (“Apple”) motion to stay proceedings
`pending inter partes review (“IPR”). Mot., ECF No. 196-1. Plaintiffs Masimo Corporation
`(“Masimo”) and Ceracor Laboratories, Inc. (“Ceracor”) (collectively – “Plaintiffs”) filed
`an opposition. Opp’n, ECF No. 209-1. Apple filed a response. Reply, ECF No. 217.
`
`For the following reasons, the Court GRANTS the motion as to claims one through
`twelve.
`
`I. BACKGROUND
`
`The background of this case is well known to the parties, and is only repeated here
`so as to frame the discussion below. Plaintiffs specialize in the development and sale of
`noninvasive technology that monitors physiological parameters. Opp’n at 2-3. Its core
`business is in the production of products that measure blood oxygen content, also known
`as pulse oximeters. Mot. at 15. Apple, the well-known consumer technology company, is
`the creator of the Apple Watch, a leading smart watch. The most recent version of the
`Apple Watch, the Series 6, was announced on September 15, 2020, and notably includes
`the ability to measure “Blood Oxygen.” Opp’n at 7. This patent infringement and trade
`secrets lawsuit, however, goes back to Apple’s hiring of some of Masimo’s employees
`beginning in 2013. Second Amended Complaint (“SAC”), ECF No. 88-2, ¶¶ 19-25.
`
`On January 9, 2020, Plaintiffs filed their complaint against Apple, alleging
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`CV 90 (06/04)
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`APPLE 1037
`Apple v. Masimo
`IPR2020-01521
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`Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page 2 of 8 Page ID #:16559
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`CIVIL MINUTES - GENERAL
`SACV 20-48 JVS (JDEx)
`
`Case No.
`
`Title
`
`Masimo Corporation et al. v. Apple Inc.
`
`Date October 13, 2020
`
`infringement of the ten patents.1 Plaintiffs subsequently filed a First Amended Complaint
`(“FAC”) on March 25, 2020, alleging infringement of two additional patents.2 Then, on
`July 24, 2020, Plaintiffs filed a Second Amended Complaint (“SAC”), removing from the
`case five patents3 and adding allegations of infringement of five new patents.4 Overall,
`there are now twelve patents at issue in the case.
`
`Apple has since filed IPR petitions challenging all asserted claims of all the asserted
`patents.5 pple now asks for the Court to issue a stay pending a determination by the Patent
`Trial and Appeal Board (“PTAB”) of their IPR petitions. See generally Mot.
`
`II. LEGAL STANDARD
`
`“The District Court has broad discretion to stay proceedings as an incident to its
`power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706 (1997); see also
`Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). In deciding whether to
`stay an action pending IPR, a court’s discretion is typically guided by three factors: “(1)
`
`1U.S. Patent Nos. 10,258,265 (“the ’265 patent”), 10,258,266 (“the ’266 patent”), 10,292,628
`(“the ’628 patent”), 10,299,708 (“the ’708 patent”), 10,376,190 (“the ’190 patent”), 10,376,191 (“the
`’191 patent”), 10,470,695 (“the ’695 patent”), 6,771,994 (“the ’994 patent”), 8,457,703 (“the ’703
`patent”), and 10,433,776 (“the ’776 patent”). See generally Complaint, ECF No. 1.
`
`2U.S. Patent Nos. 10,588,553 (“the ’553 patent”) and 10,588,554 (“the ’554 patent”). See
`generally FAC, ECF No. 28.
`
`3The five patents that were removed were the ’266, ’708, ’190, ’191, and ’695 patents.
`
`4U.S. Patent Nos. 10,624,564 (“the ’564 patent”), 10,631,765 (“the ’765 patent”), 10,702,194
`(“the ’194 patent”), 10,702,195 (“the ’195 patent”), and 10,709,366 (“the ’366 patent”). See generally
`SAC, ECF 88-2.
`
`5On August 31, 2020, Apple filed IPR petitions challenging all asserted claims of the ’265 patent,
`the ’776 patent, the ’994 patent, and the ’553 patent. Rosenthal Decl., ECF No. 197, at pages 29-530.
`On September 2, 2020, Apple filed IPR petitions challenging all claims of the ’554 patent and all claims
`of the ’628 patent. Id. at 532-859. On September 9, 2020, Apple filed an IPR petition challenging all
`asserted claims of the ’703 patent. Id. at 861-945. Finally, on September 30, 2020, Apple filed IPR
`petitions challenging all claims of the remaining five patents. Andrea Decl., ECF No. 211-1, at pages 22-
`674.
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`Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page 3 of 8 Page ID #:16560
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`CIVIL MINUTES - GENERAL
`SACV 20-48 JVS (JDEx)
`
`Case No.
`
`Title
`
`Masimo Corporation et al. v. Apple Inc.
`
`Date October 13, 2020
`
`whether discovery is complete and whether a trial date has been set; (2) whether a stay
`will simplify the issues in question and trial of the case; and (3) whether a stay would
`unduly prejudice or present a clear tactical disadvantage to the nonmoving party.”
`Universal Electronics, Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d 1028,
`1030-31 (C.D. Cal. 2013) (quoting Aten International Co., Limited v. Emine Technology
`Co., Limited, 2010 WL 1462110, at *6 (C.D. Cal. Apr. 12, 2010)). The inquiry, however,
`is not limited to these factors and “the totality of the circumstances governs.” Allergan Inc.
`v. Cayman Chemical Co., 2009 WL 8591844, at *2 (C.D. Cal. Apr. 9, 2009) (citation
`omitted). In addition, “[t]here is a liberal policy in favor of granting motions to stay
`proceedings pending the outcome of re-examination, especially in cases that are still in the
`initial stages of litigation and where there has been little or no discovery.” Limestone v.
`Micron Technology, 2016 WL 3598109, at *2 (C.D. Cal. Jan. 12, 2016).
`
`III. DISCUSSION
`
`A.
`
`Stage of the Proceedings
`
`The Court first considers “the stage of proceedings,” including the progress of
`discovery, the status of claim construction, and whether a trial date has been set. See
`Universal Electronics, 943 F. Supp. 2d at 1031. Essentially, where “there is more work
`ahead of the parties and the Court than behind,” this factors weighs in favor of granting a
`stay. See Tierravision, Inc. v. Google, Inc., 2012 WL 559993, at *2 (S.D. Cal. Feb. 21,
`2012).
`
`This case is in its early stages. On September 21, 2020, the Court issued an
`amended scheduling order. ECF No. 204. The Amended Scheduling Order notes that the
`Markman hearing is more than six months away, on April 26, 2021. Id. Fact discovery is
`not scheduled to close until July 5, 2021, while the expert discovery cut-off is not until
`December 6, 2021. Order re Scheduling Dates, ECF No. 37. The parties have not noticed
`or taken any depositions. Andrea Decl., ECF No. 197, ¶ 5. The deadline for the parties to
`submit their preliminary claim constructions is not until January 11, 2021. Amended
`Scheduling Order. Trial is set for well more than a year from now. Order re Scheduling
`Dates.
`
`From these facts it is certainly clear that there is more work ahead of the parties and
`the Court than behind us. Cf. Purecircle USA Inc. v. Sweegen, Inc., 2019 WL 3220021, at
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`Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page 4 of 8 Page ID #:16561
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`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`CIVIL MINUTES - GENERAL
`SACV 20-48 JVS (JDEx)
`
`Case No.
`
`Title
`
`Masimo Corporation et al. v. Apple Inc.
`
`Date October 13, 2020
`
`*2 (C.D. Cal. June 3, 2019) (finding the case to be in its early stages where no depositions
`had been taken, no expert discovery had occurred, claim construction was not complete,
`and trial was nine months away). Plaintiffs’ arguments that this case is not in its early
`stages are unavailing. While it is true that the Court has addressed several motions from
`the parties and the parties have produced approximately 150,000 pages of discovery,
`Opp’n at 19-20, these numbers do not weigh heavily when compared to the substantial
`amount of work in the months of discovery ahead. Nor did Apple’s motion for a protective
`order or Apple’s subsequent challenges to the magistrate judge’s order, see ECF Nos. 54,
`76, and 92, cause undue delay, for it did not significantly impact the schedule mentioned
`above.
`
`The Court therefore finds that this factor weighs in favor of a stay.
`
`B.
`
`Simplification of Issues in Question
`
`The Court next considers “whether a stay will simplify the issues in question and the
`trial of the case.” Universal Electronics, 943 F. Supp. 2d at 1032. Apple has filed IPR
`petitions challenging all of the asserted claims in the asserted patents. Reply at 10. If an
`IPR is instituted and the PTAB issues a final written decision, Apple will be estopped from
`asserting invalidity based on any ground it “raised or reasonably could have raised” during
`the IPR. 35 U.S.C. § 315(e)(2). Apple has also stipulated that if the PTAB “institutes on
`any ground raised in its IPR petitions, Apple will not assert in this litigation that same
`ground against the corresponding claims” even before the issuance of a final written
`decision. Rosenthal Decl., ECF No. 197, ¶ 17; Reply at 13. A final IPR determination is
`expected by March 2021, a month before trial is set.6 35 U.S.C. § 316(a)(11).
`
`Although Plaintiffs argue that granting a stay of proceedings prior to institution is
`“inherently speculative,” Opp’n at 21, “courts in this District have adopted the majority
`position that even if IPR has not yet been instituted, the simplification factor may still
`weigh in favor of a stay.” Purecircle, 2019 WL 3220021, at *3 (collecting cases). This is
`because “many courts have ultimately been persuaded that the potential to save significant
`judicial resources sways the analysis in favor of stay.” Id. at *2. The statistics in this case
`
`6Apple points out that only 3.8% of written decisions are issued more than 13 months after
`institution. Reply at 10 n.4. This means there is a 96.2% chance that the written decision will be issued
`prior to the date for which jury trial is set.
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`Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page 5 of 8 Page ID #:16562
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`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`CIVIL MINUTES - GENERAL
`SACV 20-48 JVS (JDEx)
`
`Case No.
`
`Title
`
`Masimo Corporation et al. v. Apple Inc.
`
`Date October 13, 2020
`
`support such a conclusion, for there is a 56% IPR institution rate as of 2020 and 76% of
`Apple’s IPR requests since the beginning of 2019 have led to institution.7 Rosenthal Decl.
`at 980, Andrea Decl., ECF No. 211-2, at 701. Plaintiffs seek to distinguish Purecircle
`because that case only involved a single patent. Opp’n at 23. But Apple correctly notes
`that the existence of twelve different patents in this case weighs even more heavily in favor
`of a stay because the IPR proceedings have the potential save an even greater amount of
`judicial resources. Reply at 13.
`
`Further, where a defendant is actively involved in the IPR process with respect to all
`of the asserted claims, simplification is likely. See Limestone, 2016 WL 3598109, at *4
`(“Because Defendants have petitioned for review of nearly all claims asserted in this
`action, the outcome of the IPR has the potential to significantly narrow the scope and
`complexity of the litigation.”). If the PTAB cancels all of the asserted claims, the patent
`claims in this action will be rendered moot. Cancellation of only a portion of the asserted
`claims may still significantly reduce the scope of this litigation, particularly as there are
`twelve patents asserted in this case. Notably, only 20% of final written decisions issued in
`IPRs since 2012 have found all the claims to be patentable, meaning that some winnowing
`is likely. Rosenthal Decl., at 985. Furthermore, the record developed during the IPR even
`if institution is denied could inform the claim construction process. Aylus Networks, Inc.
`v. Apple Inc., 856 F.3d 1353, 1362 (Fed. Cir. 2017) (“[S]tatements made by a patent
`owner during an IPR proceeding, whether before or after an institution decision, can be
`considered for claim construction and relied upon to support a finding of prosecution
`disclaimer.”).
`
`Accordingly, the Court finds that this factor also weighs in favor of a stay. The
`outcome of the IPR may significantly narrow the scope and complexity of the litigation and
`the parties’ and Court’s resources are likely to be conserved.
`
`7 Plaintiffs do correctly note that Apple has brought a lawsuit over the NHK-Fintiv Rule, which
`Apple alleges has “dramatically reduced the availability of IPR.” Opp’n at 23; Larson Declaration, ECF
`No. 207-2, 257 ¶ 5. But the NHK-Fintiv Rule relates to those cases where the trial date set in pending
`litigation would be before PTAB reaches a final written decision in the IPR. See id. at 263 ¶ 40, 266 ¶ 56.
`As discussed earlier, such is not the case here.
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`Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page6of8 Page ID #:16563
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`UNITED STATES DISTRICT COURT
`
`CENTRAL DISTRICT OF CALIFORNIA
`
`CIVIL MINUTES - GENERAL
`
`Case No.
`
`SACV 20-48 JVS (JDEx)
`
`Date October 13, 2020
`
`Title
`
`Masimo Corporationet al. v. Apple Inc.
`
`C.
`
`Undue Prejudice or Tactical Advantage
`
`Finally, the Court considers “whether a stay would unduly prejudice or present a
`clear tactical disadvantage to the nonmoving party.” Universal Electronics, 943 F. Supp.
`2d at 1032. “[A] primary issue in an undueprejudice analysis is whetherthe parties are
`competitors such that a stay would causeirreparable harm to the patentee in the market.”
`Core Optical Technologies, LLC v. Fujitsu Network Communications, Inc., 2016 WL
`
`7507760, at *2 (C.D. Cal. Sept. 12, 2016). “Courts are divided on whether infringement
`among competitors necessarily constitutes undue prejudice to the non-moving party.”
`Wonderland Nursery Goods Co., Limited v. Baby Trend, Inc., 2015 WL 1809309at *4
`(C.D. Cal. 2015) (emphasis added). But “[o]|ne relevant consideration in evaluating
`[Plaintiffs] claims of undue harm is whetherthe parties are sole competitors in the
`relevant markets.” Karl Storz v. Stryker Corp., 2015 WL 13727876,at *7 (N.D. Cal. Mar.
`30, 2015). The existence of other competitors in the relevant market “underminesthe
`weight that should be afforded Plaintiffs contentions of undue harm.” Wonderland, 2015
`
`WL 1809309 at *4.
`
`Plaintiffs argue that they compete with Apple, though Plaintiffs do not clearly define
`the market in which they compete. Opp’n at 1, 9-17. Plaintiffs instead warn that Apple
`should not be allowed to “define the market.” Id. at 15. Plaintiffs note that they sell
`consumerpulse oximetry products such as the MightySAT, iSpO2, and MasimoSleep,®
`while Apple has recently launched the Series 6. Opp’n at 10. Apple argues that these
`products do not compete because Plaintiffs’ products are “clinical grade” while the Series
`6 is “not intended for medical use.” Reply at 18. Apple further notes that the MightySAT,
`iSpO2, and MasimoSleepall are fingertip sensors while the Series 6 is a wrist-worn smart
`watch. Reply at 19. Plaintiffs respond by arguing that even though the Series 6 is not
`accurate enough for medical use, Apple is “marketing a device with medical functions
`while winking andinsisting they’re not medical functions.” Opp’n at 14 (quoting Larson
`
`
`Moreover, the Apple products are no threat to Masimo’s oximetry
` devicesused inaclinical or hospitalsetting.
`
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`Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page 7 of 8 Page ID #:16564
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`CIVIL MINUTES - GENERAL
`SACV 20-48 JVS (JDEx)
`
`Case No.
`
`Title
`
`Masimo Corporation et al. v. Apple Inc.
`
`Date October 13, 2020
`
`Declaration, ECF No. 207-2, at 152).
`
`Without detailed economic analysis, it is difficult for the Court to evaluate the extent
`to which the Series 6 is a substitute good for Plaintiffs’ consumer pulse oximetry products.
`There well might be a market for consumer pulse oximetry products broadly and
`consumers may not distinguish between wrist-worn oximeters and fingertip sensors, as
`Plaintiffs suggest. Id. at 13. But even if that were true, and consumers would view the
`Series 6 as a wrist-worn pulse oximeter, Apple points out that a variety of other companies
`also sell products that measure blood oxygen content. Reply at 20-23 (listing products
`from Garmin, Fitbit, and Facelake among others). Therefore, to the extent that Plaintiffs
`and Apple are direct competitors in the broad market for consumer pulse oximetry
`products, they are certainly not sole competitors, which reduces the amount of prejudice
`that Plaintiffs would suffer.
`
`Plaintiffs do point out other ways in which they might be prejudiced by a stay. For
`example, Plaintiffs note that the ’776 Patent will expire in June 2022, so a stay would
`leave the ‘776 Patent “‘in limbo for the majority of its remaining life.
`Carl Zeiss A.G. v. Nikon Corp., 2018 WL 5081479, at *4 (C.D. Cal. Oct. 16,
`2018) (quoting Biomet Biologics v. Bio Rich Med, Inc., 2011 WL 4448972, at *2 (C.D.
`Cal. Sept. 26, 2011)). The Court notes, however, that twelve different patents are at issue
`in this case, not merely one. Delay may result in the loss of evidence or the inability of
`witnesses to recall specific facts. Cf. Jones, 520 U.S. at 701 (noting that a “delaying trial
`would increase the danger of prejudice resulting from the loss of evidence, including the
`inability of witnesses to recall specific facts”). Finally, the Court notes that although Apple
`did not file its first IPR petitions for eight months, Plaintiffs most recently added patents to
`its infringement claims with the filing of the SAC on July 24, 2020. This means that Apple
`has only waited two months to file IPRs for the most recently asserted patents.
`
`The Court therefore finds that this factor weighs slightly against granting the motion.
`
`D.
`
`Totality of the Circumstances
`
`In sum, two of the three factors weigh in favor of granting a stay, whereas the third
`weighs slightly in favor of denying a stay. Having considered the totality of the
`circumstances, the Court GRANTS Apple’s motion to stay pending inter partes review.
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`Case 8:20-cv-00048-JVS-JDE Document 222 Filed 10/13/20 Page 8 of 8 Page ID #:16565
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`CIVIL MINUTES - GENERAL
`SACV 20-48 JVS (JDEx)
`
`Case No.
`
`Title
`
`Masimo Corporation et al. v. Apple Inc.
`
`Date October 13, 2020
`
`While the third factor does weigh against granting a stay, the prejudice to Plaintiffs is not
`substantial as compared to the significant efficiencies and simplification of the issues that
`would come from instituting a stay. Courts, including this one, have issued stays where
`there has been some prejudice shown to the Plaintiffs if the stay would result in substantial
`efficiencies. See, e.g., PureCircle, 2019 WL 3220021, at *4; TeleSign Corp. v. Twilio,
`Inc., 2016 WL 6821111, at *6 (C.D. Cal. Mar. 9, 2016); Delphix Corp. v. Actifio, Inc.,
`2014 WL 6068407, at *3 (N.D. Cal. Nov. 13, 2014). This case is similar. Ultimately, the
`Court concludes that Plaintiffs have not shown sufficient prejudice to tip the balance
`against issuing a stay.
`
`E.
`
`The Trade Secret Case
`
`Finally, the Court notes Apple’s assertion that there is “no reason that the separate
`and independent trade secret case could not proceed.” Mot. at 19. Plaintiffs similarly urge
`the Court to not stay the trade secret case. Opp’n at 24-25. The Court therefore stays only
`the patent infringement case, consisting in claims one through twelve of the SAC.
`
`IV. CONCLUSION
`
`For the foregoing reasons, the Court GRANTS the motion as to claims one through
`twelve. The Court finds that oral argument would not be helpful in this matter. Fed. R. Civ.
`P. 78; L.R. 7-15. Hearing set for October 19, 2020, is ordered VACATED.
`
`The Court asks the parties to meet and confer and notify the Court which parts of
`the order should be redacted within 7 days.
`
`IT IS SO ORDERED.
`
`Initials of Preparer
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