Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 1 of 9
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF PENNSYLVANIA
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`14cv0111
`ELECTRONICALLY FILED
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`DRONE TECHNOLOGIES, INC.,
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`Plaintiff,
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`v.
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`PARROT S.A., PARROT, INC.,
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`Defendants.
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`MEMORANDUM ORDER DEFENDANTS’ MOTION TO STAY PENDING APPEAL
`OR IN THE ALTERNATIVE TO STAY PENDING INTER PARTES REVIEW (DOC.
`NO. 112)1
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`I.
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`Introduction
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`The Court has written extensively on this patent infringement case and therefore, will not
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`recount the full procedural posture of this case. See Doc. No. 106 for a complete discussion of
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`the procedural posture to date, summarizing Defendants’ relentless efforts to thwart the “just,
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`speedy, and inexpensive determination” of this action. However, it is necessary to note the
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`following:
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`Plaintiff filed a Complaint against Defendants in January 2014. Doc. No. 1. On May 6,
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`2014, Defendants filed two petitions in the United States Patent and Trademark Office seeking
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`Inter Partes review of the patents that Defendants allegedly infringed. Defendants filed a
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`Motion to Stay Pending Inter Partes Review (or to alternatively transfer venue to the United
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`States District Court for the Eastern District of Michigan) contemporaneously with its Answer.
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`1 This Motion is Defendants’ third motion to stay these proceedings. See Doc. No. 17: Motion to Stay Pending Inter
`Partes Review, and Doc. No. 74: Motion for Relief from the Court’s Order Dated July 25, 2014, or, in the
`Alternative, for a Stay Pending a Petition for Writ of Mandamus.
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 2 of 9
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`Doc. Nos. 16-17. The Court denied Defendants’ Motion to Stay Pending Inter Partes Review
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`and to Transfer. Doc. No. 29.
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`The Parties have been at loggerheads over Defendants’ Court-Ordered discovery
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`obligations since June 2014. Doc. No. 41. Defendants have repeatedly refused to comply with
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`the Court’s Orders to provide complete initial disclosures. Doc. Nos. 51, 61, 74. Plaintiff filed a
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`Motion for Order to Show Cause Why Defendants Should Not be Held in Contempt on August
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`18, 2014. Doc. No. 78. On September 24, 2014, Defendants filed two petitions for writ of
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`mandamus in the United States Court of Appeals for the Federal Circuit. In re: Parrot S.A., 14-
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`156, 14-157. Defendants contend that Writs of Mandamus should issue because: (1) this Court
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`exceeded its authority by compelling Defendants to produce confidential source code without a
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`showing of relevance and without adequate protections; and (2) this Court abused its discretion
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`by refusing to grant Defendants’ Motion to Transfer this case to the United States District Court
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`for the Eastern District of Michigan. Id. This appeal remains pending.
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`The Court held an evidentiary hearing on Plaintiff’s Motion to Show Cause Why
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`Defendants Should Not be Held in Contempt on October 23, 2014. Doc. No. 99.
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`On October 28, 2014, the United States Patent and Trademark Office Patent Trials and
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`Appeals Board issued institutional decisions in both Inter Partes review proceedings. The Board
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`ordered the institution of Inter Partes review as to all claims in both patents based on
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`obviousness or anticipation over prior art. IPR2014-00730, Paper No. 8, 2; IPR2014-0732, Paper
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`No. 8, 2.
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`On November 3, 2014, the Court issued a Memorandum Opinion and Order in which the
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`Court set forth that it was compelled to strike Defendants’ counterclaims and enter default
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`judgment against Defendants for infringement of the relevant patents based upon review of the
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 3 of 9
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`six (6) factors set forth in Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863 (3d Cir. 1984).
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`Doc. Nos. 106-107. Defendants filed an appeal of this Order and seven (7) other underlying
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`Orders to the United States Court of Appeals for the Federal Circuit. Drone Technologies, Inc. v.
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`Parrot S.A., 15-1138.2 This appeal remains pending.
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`Following the entry of default judgment as to liability, the Court ordered the Parties to
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`meet and confer and to file a Proposed Case Management Order as to any remaining issues.
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`11/03/2014 Text Order. The Parties were unable to reach agreement and have filed separate
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`Proposed Case Management Orders. Doc. Nos. 111, 114.3
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`Presently before this Court is Defendants’ Motion to Stay Pending Appeal or, in the
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`Alternative, to Stay Pending Inter Partes Review. Doc. No. 112. Defendants move this Court to
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`stay this matter pending the outcome of their appeal to the United States Court of Appeals for the
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`Federal Circuit. Id. Defendants alternatively move this Court to stay the case pending the
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`outcome of the Inter Partes Review of the patents at issue at the United States Patent and
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`Trademark Office. Id. Plaintiff opposes this Motion in its entirety. Doc. No. 123.
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`II.
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`Standard of Review
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`The Parties agree that this Court has the power to stay this proceeding pending appeal.
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`The following four factors guide a Court’s determination of whether a stay is appropriate:
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`2 Defendants have appealed the following seven (7) Orders: Doc. No. 29: Order on Motion to Transfer, Order on
`Motion for Reconsideration; Doc. No. 77: Order on Motion [for] Relief from the Court’s Order Dated July 25, 2014,
`Order on Motion to Compel; Doc. No. 81: Order on Motion to Compel; Doc. No. 70: Order on Motion to Modify,
`Order on Motion to Bifurcate; Doc. No. 63: Order on Motion to Compel; Doc. No. 107: Order on Motion for Leave
`to File. Doc. No. 48: Order on Motion to Compel.
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`3 The Court notes that Plaintiff has offered to withdraw its claim for willful infringement so that the case may
`proceed solely as to damages. Doc. No. 111, 2. Defendants’ Proposed Case Management Order, which was filed
`after Plaintiff’s Proposed Case Management Order, included dates for both damages and willfulness. Doc. No. 114,
`¶¶ (1)-(2).
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`3
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 4 of 9
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`(1) Whether the stay applicant has made a strong showing that he is likely to
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`succeed on the merits;
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`(2) Whether the applicant will be irreparably injured absent a stay;
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`(3) Whether issuance of the stay will substantially injure the other parties
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`interested in the proceeding; and
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`(4) Where the public interest lies.
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`Standard Havens Prods. v. Gencor Indus., 897 F.2d 511, 512 (Fed. Cir. 1990).
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`District Courts may also stay an action pending Inter Partes Review at the United States
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`Patent and Trademark Office. As set forth by Defendants, District Courts have considered the
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`following in determining whether to stay patent litigation pending Patent Office proceedings:
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`(1) whether a stay would unduly prejudice the nonmoving party or present a
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`clear tactical advantage for the moving party;
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`(2) whether a stay will simplify the issues; and
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`(3) whether discovery is complete and whether a trial date has been set
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`In re Laughlin, 265 F. Supp.2d 525, 530 (W.D. Pa. 2003).
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`III. Discussion
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`A. Defendants Have Not Demonstrated a Strong Showing of a Likelihood of
`Success
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`On July 1, 2014, the Court ordered Defendants to produce the following:
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`[A]ll source code, specifications, schematics, flow charts, or other
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`technical documentation relating to the operation of the accused
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`products (Parrot’s AR.Drone, AR.Drone 2.0, MiniDrone, and
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`Bebop Drone) and any associated remote-controller software
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`applications, including all versions and drafts of Defendants’
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`FreeFlight software app on or before July 9, 2014.
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`Doc. No. 48. As set forth in the Court’s Memorandum Opinion on Plaintiff’s Motion for Order
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`to Show Cause Why Defendants Should Not be Held in Contempt, Defendants have advanced
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 5 of 9
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`numerous arguments in an attempt to skirt their obligation to produce this material. Doc. No.
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`106. The Court rejected each of these arguments and found that Defendants have not complied
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`with this Court’s Discovery Orders. Defendants have appealed these Orders to the United States
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`Court of Appeals for the Federal Circuit through a Petition for Writ of Mandamus and a direct
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`appeal. Defendants contend that these appeals are likely to succeed.
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`Nothing has occurred
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`since the Court entered its Order on July 1, 2014, which would excuse Defendants from their
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`obligation to produce these materials. Defendants contend that their appeals will be successful
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`because this Court has misapplied and misconstrued the relevant facts and law and has abused its
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`discretion in entering default judgment. The Court has rejected Defendants’ arguments as to
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`why they should not have to comply with Orders of Court or why they should be deemed to have
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`complied. Defendants present many of these same arguments to the United States Court of
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`Appeals for the Federal Circuit. This is insufficient to demonstrate that there is a “strong
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`showing that [they are] likely to succeed on the merits.”
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`Defendants alternatively move this Court to stay this litigation pending Inter Partes
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`Review at the Patent Office. Defendants contend that “it is a matter of time” before Plaintiff’s
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`patents are determined to be invalid. The Court finds that this statement is unsupported because
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`Plaintiff has viable arguments to present to the Patent Office. The result of the Inter Partes
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`review is undeterminable, not inevitable.
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`B. Defendants Will Not Be Irreparably Injured if the Court Does Not Stay this
`Case
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`Defendants argue that they will suffer irreparable harm if these proceedings continue
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`because the Parties and Court “will waste resources that can never be recovered.” Defendants
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`also express concern about their ability to recover fees and costs from an “undercapitalized”
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`foreign company. This situation is one of Defendants’ own making. Defendants have repeatedly
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 6 of 9
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`and unsuccessfully sought to evade their obligations in this action. To the extent that parallel
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`proceedings now tax the litigants in terms of funds and resources, Defendants created this
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`situation by instituting proceedings in the Patent Office. Defendants’ self-created parallel
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`proceedings do not demonstrate that Defendant will be irreparably injured by continued
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`proceedings in this first-filed action.
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`Defendants also contend that they will be harmed if a stay is not issued because they will
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`be forced to determine whether to rely on opinion of counsel if the case proceeds as to
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`willfulness. Doc. No. 113, 11. The Court notes that Plaintiff has offered to withdraw its
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`willfulness charge “rather than wasting more precious judicial resources, and in an effort to bring
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`this action to a just, speedy, and inexpensive determination . . . .” Doc. No. 111, 2. It appears
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`that Defendants have rejected this offer. Id. Defendants’ refusal to proceed solely as to damages
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`undercuts their argument that they want to conserve funds and resources.
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`Defendants will not be irreparably injured if the Court does not issue a stay because this
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`Court is a proper forum to resolve these disputes. This litigation allows Defendants to advance
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`arguments and to present defenses. Therefore, Defendants’ rights will be preserved for any
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`appeal. As such, the Court finds that Defendants have not demonstrated that they will be
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`irreparably injured if the Court does not stay this action.
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`C. The Issuance of a Stay will Substantially Injure Plaintiff and Will Not Simply
`the Issues
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`Defendants contend that Plaintiff will not be injured if a stay were to issue because an
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`award of prejudgment interest would “fully compensate Plaintiff for any delay.” Doc. No. 113.
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`Plaintiff has a right to a final determination of its claims in a timely matter. Money would not
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`fully compensate Plaintiff for the delay to resolution of the matter due to Defendants’ dilatory
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`actions or a stay because a delay in justice is not quantifiable. Further, a stay in this matter may
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 7 of 9
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`unfairly advantage Defendants and prejudice Plaintiffs. This is not a risk that the Court is
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`willing to take.
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`The Court was constrained to enter default judgment against Defendants because of their
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`flagrant failure to permit this case to proceed through discovery. The sole remaining issues are
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`damages and willfulness. Granting a stay will not simplify these issues. Defendants contend
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`that determination of damages and willfulness is “unnecessary.” As previously noted, Plaintiff
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`has offered to withdraw its willfulness claim in an effort to simplify the remaining issues. Doc.
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`No. 111, 2. A determination of willfulness will be “unnecessary” if Defendants accept Plaintiff’s
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`offer to withdraw its willfulness claim. It appears that Defendants refuse to agree to proceed
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`solely on damages, perhaps to bolster its arguments in support of their motion to stay. A stay of
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`this litigation would not simply the remaining issues and therefore, this factor weighs against a
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`stay.
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`D. Public Interest Disfavors a Stay because a Stay Would Provide a Clear
`Tactical Advantage for Defendants
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`The public interest strongly disfavors a stay of this matter. Plaintiff has chosen to file
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`suit against Defendants in this Court and public interest favors the “just, speedy, and inexpensive
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`determination” of the Parties’ dispute. Fed.R.Civ.P. 1. Defendants have moved this Court to
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`stay this proceeding on two other occasions and have filed numerous motions to inhibit the
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`progress of this case when those motions have been denied. Doc. Nos. 17, 74. Defendants’
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`obstructionist behavior has stymied any substantive determinations. Substantial time, effort, and
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`money has been expended by Plaintiff and the Court on unnecessary and duplicative motions
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`practice. Defendants’ obstructionist behavior as set forth in this case’s unprecedented procedural
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`posture is not in the best interest of the public or these Parties.
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 8 of 9
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`The public interest is best served by disposition of this case in this forum because
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`granting a stay would incentive future litigants to inhibit proceedings in a United States District
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`Court until proceedings in another Court or before an administrative agency proved to be more
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`advantageous to the litigant. In such a case, litigants could then effectively chose their forum
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`and gain unfair tactical advantages. Granting Defendants’ Motion to Stay pending proceedings
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`before either the United States Court of Appeals for the Federal Circuit or the United States
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`Patent and Trademark Office would inhibit this litigation and be against the public interest.
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`This Court is intimately familiar with the procedural progress of this case. Despite
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`Defendants’ contention that the “early” stage of this case favors a stay, the Court has been
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`heavily involved in proceedings and is prepared to provide a schedule to finalize the remaining
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`issues. The Court will enter a Pre-Trial Order as to damages, this same day, scheduling a trial on
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`damages to begin on April 27, 2014. The Pre-Trial Order and related Case Management Order
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`will provide a schedule that will allow the Parties to obtain a determination of their remaining
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`claims. Therefore, this factor disfavors a stay.
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`IV. Conclusion/Order
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`A review of the relevant factors and the procedural history of this case necessitates that
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`Defendants’ latest attempt to delay and inhibit this litigation be denied. Therefore, the following
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`Order is entered:
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`Case 2:14-cv-00111-AJS Document 125 Filed 11/19/14 Page 9 of 9
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`AND NOW, this 19th day of November, 2014, IT IS HEREBY ORDERED THAT
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`Defendants’ Motion to Stay Pending Appeal or in the Alternative to Stay Pending Inter Partes
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`Review (Doc. No. 112) is DENIED.
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`s/ Arthur J. Schwab
`Arthur J. Schwab
`United States District Judge
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`cc:
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`All Registered ECF Counsel and Parties
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