E-Alert Case Updates

U.S. District Court Examines Motion to Stay Standard

Helios Software, LLC and Pearl Software, Inc. v. SpectorSoft Corporation
No. 15-20 (United States District Court for the District of Delaware, March 25, 2015)
by Richard J. Medoff, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.ded.uscourts.gov/sites/default/files/opinions/cjb/2015/march/15-20.pdf

In Helios Software, LLC and Pearl Software, Inc. v. Spectorsoft Corporation, a case involving a motion to stay the proceedings of a patent infringement suit pending entry of judgment in a related infringement case, the United States District Court for the District of Delaware concluded that staying the case was a proper exercise of its discretion. Thus, Judge Christopher J. Burke granted the motion to stay.

By way of factual background, Defendant SpectorSoft Corporation (“Defendant” or “SpectorSoft”) filed a motion to stay the proceedings in the instant patent infringement case (“SpectorSoft II”), until judgment was entered in a related patent infringement case (“SpectorSoft I”) between Defendant and Plaintiffs Helios Software, LLC and Pearl Software, Inc. (“Plaintiffs”). The patent at issue in SpectorSoft II was a continuation of one of the patents at issue in SpectorSoft I, and a five (5) day jury trial in SpectorSoft I was scheduled to begin on June 15, 2015.

The Court began its discussion of the applicable standard by noting that “a court has discretionary authority to grant a motion to stay,” and that in the exercise of its sound discretion, “a court may hold one lawsuit in abeyance to abide the outcome of another which may substantially affect it or be dispositive of the issues." See Cost Bros., Inc. v. Travelers Indem. Co., 760 F.2d 58, 60 (3d Cir. 1985); Bechtel Corp. v. Local 215, Laborers' Int'l Union of N. Am., AFL-CIO, 544 F.2d 1207, 1215 (3d Cir. 1976); Masimo Corp. v. Philips Elecs. N. Am. Corp., Civil Action No. 11-742-LPS-MPT, 2012 WL 1267979, at *6 (D. Del. Apr. 16, 2012).

Next, the Court explained that it typically considers three (3) factors when deciding a motion to stay: “(1) whether granting the stay will simplify the issues for trial; (2) the status of the litigation, particularly whether discovery is complete and a trial date has been set; and (3) whether a stay would cause the non-movant to suffer undue prejudice from any delay, or allow the movant to gain a clear tactical advantage.” See, e.g., Cooper Notification, Inc. v. Twitter, Inc., Civ. No. 09-865-LPS, 2010 WL 5149351, at *1 (D. Del. Dec. 13, 2010).

The Court then analyzed the facts of the case, noting at the outset that it was “clear enough to the Court that the stay factors would support at least some form of limited stay.” The Court found that a stay could provide for “some degree of simplification” of the issues in SpectorSoft II, in light of the fact that “certain invalidity-related arguments” made in the SpectorSoft I trial would “likely have an impact” on SpectorSoft II. The Court found that the status of SpectorSoft II supported a stay, as the case was “in its infancy.” The Court presumed that a limited stay through the completion of the jury trial in SpectorSoft I would not cause Plaintiffs undue prejudice, nor allow Defendant a clear tactical advantage, in light of the fact that the Plaintiffs “did not contest the entry of that type of stay.”

While the parties agreed that some limited stay was appropriate, they disagreed over when the stay should end. Plaintiffs would accede to a stay only until a date certain soon after the jury trial in SpectorSoft I concluded, and suggested August 7, 2015. Defendant countered that a bench trial on equitable issues and post trial briefing will follow the SpectorSoft I jury trial, and argued that only after judgment has been entered in SpectorSoft I will “all legal and factual issues from the case be firmly settled – and only then will any simplification-related benefits from the stay be fully realized” in SpectorSoft II.

In its analysis of this issue, the Court conceded that the jury’s verdict in SpectorSoft I would “not decide with finality every issue in that case;” however, it was clear to the Court that the verdict itself would “amount to a significant point in the stay calculus.” The Court explained that after the verdict in SpectorSoft I, the Court and the parties would have a “better sense as to whether SpectorSoft II should or should not move forward immediately.” Additionally, the Court explained that it was unclear how long it would take for: “(1) the bench trial on equitable issues in SpectorSoft I to conclude; (2) any post-trial briefing in SpectorSoft I to be completed; and (3) the District Court to render a decision on the matters at issue in that post-trial briefing.” Under those circumstances, the Court found that a stay that concluded only after these additional matters resolved would amount to “a stay of unknown duration, one that might extend for a significant number of months after the SpectorSoft I jury trial is over.” On the record before it, the Court was unwilling to “sign on to a stay of such indeterminate length.”

For those reasons, the Court granted Defendant’s motion seeking a stay of SpectorSoft II, but ordered that the stay would extend until August 28, 2015, and that by July 24, 2015, the parties shall provide the Court with a joint letter, updating the Court as to whether either or both parties intend to move to extend the stay prior to its expiration.