In our Augmented Reality/Virtual Reality Litigation Update series, we provide continuous updates on legal proceedings involving AR/VR technology. As we follow these developing proceedings, we highlight the technologies involved, the intellectual property at issue, and the litigation strategies of the parties.

In our last post, we discussed the Eastern District of Texas’s order that the three cases be consolidated into a single action. Now, the defendant furniture companies have filed a petition for inter partes review (“IPR”) and filed a motion to stay the district court case.

Generally, courts will grant stays pending IPR to conserve judicial and litigant resources. Courts often consider factors such as prejudice to the nonmoving party, the stage of the trial (e.g., if discovery is complete and a trial date has been set), and if the stay will simplify the issues in question in the litigation.

Here, November 1, 2020, the defendants filed a petition for IPR to challenge the validity of the ’572 Patent. On the same day, the defendants filed a motion to stay the district court case. In their motion, defendants argued that the court should grant the stay because it would not cause AR Design Innovations to be prejudiced, the litigation is still in its early stages, and a stay would simplify the issues before the court. To support their arguments, defendants reasoned that plaintiff AR Design Innovations is a non-practicing entity that does not compete with the defendants in the same market. As such, defendants argued that the plaintiff could not claim “any prejudice beyond a delay in its monetization efforts.” Instead, the defendants argued they would suffer the undue prejudice of litigating a patent that may be invalidated by the Patent Trial and Appeal Board (“PTAB”) if the court denied their motion. The defendants also argued that a stay would simplify the issues for the court because if the PTAB found the ’572 Patent claims invalid, the court would not need to try the infringement issues or the defendants’ defenses.

In its reply the plaintiff argued that the defendants’ motion to stay was premature. It argued that the case was more advanced than the defendants alluded in their motion, and that the PTAB’s institution decision would not be due until “May 2021, after much [of the] discovery, . . . and [ ] claim construction” would be completed. The plaintiff then countered the defendants’ arguments, reasoning that it would experience undue prejudice by having to wait to enforce its rights, that the court has an “established practice” of denying motions when the PTAB has not yet instituted an IPR, and that the defendants’ simplification argument is “speculative at best.”

The court has not yet granted or denied a stay pending IPR.

What does this mean? If stayed, the court would be conserving its own resources, as well as the resources of the parties; however, this would come at the expense of slowing down the district court case for an IPR proceeding that may not be instituted. Alternatively, if the court denies a stay, the litigation will continue as planned while the PTAB determines whether institution is warranted. Under Apple v. Fintiv, denying a stay may make it less likely that the PTAB will institute an IPR. Indeed, the court’s decision is not just important to its own litigation schedule—it is also important to the likelihood of institution before the PTAB.