Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Antitrust claims stayed in light of validity and infringement claims filed in another jurisdiction, (Mar 6, 2014)

By Jody Coultas, J.D.

The federal district court in San Francisco stayed an antitrust case alleging a conspiracy to fix the price of patent licenses in light of patent litigation in the Northern District of Illinois testing the validity and infringement of the patent at issue (Cascade Computer Innovation LLC v. RPX Corp., March 4, 2014, Rogers, Y.).

In an antitrust case filed by Cascade Computer Innovations against RPX Corp., the court ordered all parties to show cause why the action should not be stayed pending the resolution of the litigation testing the validity and infringement of one of several patents Cascade allegedly owned. A stay was appropriate based on the possibility of the Illinois litigation narrowing the issues involved in the current suit, according to the court. The court stayed the action for 120 days.

Cascade argued that the only reason to stay this case would be if the patent issues being litigated in Illinois would be an absolute defense to the antitrust suit. Previous cases have held that, in cases presenting both patent and related antitrust claims, courts commonly stay the antitrust claims pending resolution of the patent issues. Although those cases typically involve a patent defendant’s antitrust counterclaims, while Cascade brought both patent and antitrust claims, the difference did not matter to the court. If the Illinois litigation determines that Cascade’s patent was invalid, any damage stemming from a refusal to negotiate a license under that patent may well prove to be illusory. Thus, the Illinois litigation could narrow, or moot entirely, the antitrust issues before the court.

A stay of 120 days was appropriate and would not cause an unreasonable delay in the current suit, according to the court. Cascade also argued that a stay was inappropriate due to the probable length of the Illinois litigation, and that stays for an indefinite term are disfavored as a matter of law. The Illinois litigation had already reached an advanced stage and was moving quickly, contradicting Cascade’s claim that the Illinois cases would take more than three years. The stay entered was not indefinite.

Cascade would not be prejudiced by entry of a stay, according to the court. Although Cascade was small relative to the defendants, that fact did not suggest that Cascade would be prejudiced by the stay. Cascade’s argument that it would lose the possibility of recovering anything from defendants’ antitrust violations weighed in favor of a stay, rather than against. If the Illinois litigation revealed that the patent was invalid, then the lost opportunities may be nothing more than a just result. The court was confident that the Illinois court would appropriately weigh any issue of patent validity in light of all the relevant circumstances. The stay was too brief to suggest evidence would be lost due to fading memories and witness unavailability.

Public interest did not bar entry of a stay, according to the court. Cascade argued that the public interest favored timely resolution of the antitrust issues. While the public interest always favors timely resolution of cases, that interest does not necessarily outweigh the public’s countervailing interest in efficient resolution of cases. The most efficient course was to resolve the patent validity and infringement issues before the antitrust case.

The case is No. 12-CV-1143 YGR.

Attorneys: Ashley E. LaValley (Niro Haller & Niro) and Martin L. Fineman (Davis Wright Tremaine LLP) for Cascades Computer Innovation LLC. Alfred Carroll Pfeiffer, Jr. (Latham & Watkins LLP) for RPX Corp.

Companies: Cascade Computer Innovation LLC; RPX Corp.

Cases: Antitrust CaliforniaNews