United States District Court, W.D. Washington, Seattle
ORDER ON MOTION TO STAY PROCEEDINGS
L. ROBART, United States District Judge
the court is Appian Way Sales, Inc. (“Appian”)
and Puget Lite-Pavers, Inc.'s (“Puget”)
(collectively, “Defendants”) motion to stay
proceedings against Puget. (Mot. (Dkt. # 35).) In addition,
Plaintiff Tile Tech, Inc. (“Tile Tech”) filed a
surreply in which it asks the court to strike certain
material in Defendants' reply. (Surreply (Dkt. # 45).)
The court has reviewed the motion and the surreply, all of
the parties' submissions related to each document, the
relevant portions of the record, and the applicable law.
Being fully advised,  the court GRANTS Defendants' motion to
stay the proceedings against Puget and GRANTS in part and
DENIES in part Tile Tech's request to strike.
Tech, a California corporation, manufactures and sells
various “apparatuses related to paving
subsurfaces.” (Am. Compl. (Dkt. # 13) ¶ 13.) Ramin
Tabibnia, the inventor of U.S. Patent No. 9, 410, 296
(“the '296 Patent”), grants an exclusive
license to Tile Tech, entitling Tile Tech to “make,
use, sell, and offer to sell the patented components.”
(Id. ¶¶ 14-17.) The exclusive license also
grants Tile Tech “the right to sue under the '296
Patent.” (Id. ¶ 17.) The '296 Patent
“discloses an apparatus and methods for elevating a
flat durable walking surface above a sometimes uneven
sub-surface.” (Pl. Resp. at 5.)
November 3, 2017, Tile Tech filed a patent infringement suit
against Defendants. (See generally Compl. (Dkt. #
1).) On December 6, 2017, Tile Tech filed an amended
complaint asserting three separate patent infringement
claims-direct, induced, and contributory-against Defendants.
(Am. Compl. ¶¶ 14-17.) Tile Tech contends that both
Appian and Puget make, use, sell, and offer to sell pave
pedestal products that infringe upon the asserted claims of
the '296 Patent. (Id. ¶¶ 19-37.)
a Washington corporation, makes and sells “pedestal
apparatuses used in connection with the paving of
subsurfaces.” (Ans. (Dkt. # 15) ¶ 1.) Puget is a
Washington corporation and a nationwide distributor of
“Appian's paver pedestal products.”
(Id. ¶ 2.) On December 21, 2017, Defendants
filed an answer denying any infringement and asserting
various counterclaims against Tile Tech. (See generally
id.) The court now considers Defendants' motion to
stay the proceedings against Puget. (See Mot.)
The Legal Standard
move to stay this matter against Puget based on the
“customer suit” doctrine. (See generally
Mot.) Under this doctrine, district courts have the authority
to stay certain patent infringement claims. See Katz v.
Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir.
1990). The “customer suit” doctrine acts as an
exception “to the general rule that favors the forum of
the first-filed action.” Tegic Commc'ns Corp.
v. Bd. of Regents of Univ. of Tex. Sys., 458 F.3d 1335,
1343 (Fed. Cir. 2006). Traditionally, “[w]hen a patent
owner files an infringement suit against a manufacturer's
customer and the manufacturer then files an action of
noninfringement or patent invalidity, the suit by the
manufacturer generally take precedence.” In re
Nintendo of Am., Inc., 756 F.3d 1363, 1365 (Fed. Cir.
2014); see also Spread Spectrum Screening LLC v. Eastman
Kodak Co., 657 F.3d 1349, 1357 (Fed. Cir. 2011);
Katz, 909 F.2d at 1464. The justification for this
exception “is based on the manufacturer's presumed
greater interest in defending its actions against charges of
patent infringement; and to guard against [the] possibility
of abuse.” Kahn v. Gen. Motors Corp., 889 F.2d
1078, 1081 (Fed. Cir. 1989). Furthermore, the manufacturer is
often considered “the true defendant . . . [and] must
protect its customers, either as a matter of contract, or
good business, or in order to avoid the damaging impact of an
adverse ruling against its products.” Katz,
909 F.2d at 1464 (quoting Codex Corp. v. Milgo Elec.
Corp., 553 F.2d 735, 738 (1st Cir. 1977)). A stay is
appropriate when the litigation against the manufacturer
alone will “resolve the ‘major issues'
concerning the claims against the customer.” Spread
Spectrum Screening, 657 F.3d at 1358 (quoting
Katz, 909 F.2d at 1464). The stay
“facilitate[s] [a] just, convenient, efficient, and
less expensive determination, ” and does not burden the
customer with unnecessary litigation. Nintendo, 756
F.3d at 1365.
district courts limited the “customer suit”
doctrine to cases in which a plaintiff brought suit against
the customer and the manufacturer in different districts.
See, e.g., Privasys, Inc. v. Visa
Int'l, No. C 07-03257SI, 2007 WL 3461761, at *3
(N.D. Cal. Nov. 14, 2007) (citing Lifelink Pharm., Inc.
v. NDA Consulting, Inc., No. 5:07-CV-785, 2007 WL
2459879, at *3 (N.D. Ohio Aug. 24, 2007)) (explaining that a
stay against the customer “would run counter to the
goal of fostering judicial economy without enhancing the
product source defendant's ability to litigate the issue
of patent infringement”); Naxon Telesign Corp. v.
GTE Info. Sys., Inc., 89 F.R.D. 333, 339 (N.D. Ill.
1980) (“In this action, where the suit against the
manufacturer and customer would take place simultaneously . .
. the problem addressed in [the ‘customer suit
doctrine'] is not presented.”).
in Nintendo, the Federal Circuit held that the
principles underlying the “customer suit”
doctrine-facilitating a “just, convenient, efficient,
and less expensive determination”-included cases in
which both the manufacturer and the customer were joined in a
single action. 756 F.3d at 1365. In Nintendo, the
manufacturer and the customer were named in the same
proceeding, and the district court denied Nintendo's
motion to sever and stay the claims against the customers.
Id. at 1364. The Federal Circuit, however, held that
“[w]hile the circumstances of this case differ from
those of the customer-suit exception, we agree . . . that the
same general principles govern in that Nintendo is the true
defendant.” Id. at 1365. The issues of
infringement and validity were common to Nintendo and the
customers. Thus, if the plaintiff recovered from Nintendo,
they could not recover from the customers. Id. at
1366. Because “Nintendo's liability is predicate to
recovery from any of the defendants, ” the Federal
Circuit held that “the case against Nintendo must
proceed first, in any forum.” Id.
district courts have followed Nintendo and similarly
extended the principles underlying the “customer
suit” doctrine to cases in which the manufacturer and
the customer are joined in the same action for the same
infringement claims. See, e.g., WP Banquet, LLC
v. Target Corp., No. LACV1602082JAKJPRX, 2016 WL
9450448, at *4-6 (C.D. Cal. Dec. 15, 2016); Opticurrent,
LLC v. Power Integrations, Inc., No. 2:16-CV-325-JRG,
2016 WL 9275395, at *4-5 (E.D. Tex. Oct. 19, 2016);
Werteks Closed Joint Stock Co. v. GNC Corp., No.
6-60688-CIV, 2016 WL 8739846, at *4-6 (S.D. Fla. Aug. 4,
2016), report and recommendation adopted as
modified, No. 16-60688-CIV, 2016 WL 8809716 (S.D. Fla.
Aug. 23, 2016); Capital Sec. Sys., Inc. v. NCR
Corp., No. 1:14-CV-1516-WSD, 2015 WL 3819336, at *2-3
(N.D.Ga. June 18, 2015).
though Nintendo broadened the application of the
“customer suit” doctrine, an important limitation
remains: the manufacturer and the customer must be accused of
the same infringement claim(s) for the exception to apply.
See Nintendo, 756 F.3d at 1366. If the suit against
the manufacturer does not resolve all infringement claims
against the customer, the “customer suit”
doctrine is inapplicable because “the issues of
infringement as to the manufacturer and the customer are
‘not entirely common.'” InfoGation Corp.
v. ZTE Corp., No. 16-CV-01901-H-JLB, 2016 WL 9525235, at
*3 (S.D. Cal. Dec. 21, 2016) (quoting
Erfindergemeinschaft Uropep GbR v. Eli Lilly &
Co., No. 2:15-CV-1202-WCB, 2016 WL 1659924, at *3 (E.D.
Tex. Apr. 26, 2016)); see, e.g., Carucel
Investments, L.P. v. Novatel Wireless, Inc., No.
16-CV-118-H-KSC, 2016 WL 8738221, at *3 (S.D. Cal. May 13,
2016) (explaining that the “customer suit”
exception cannot apply when the action against the
manufacturer would not resolve all charges against the
retailers); Erfindergemeinschaft Uropep, 2016 WL
1659924, at *3 (“Therefore, unlike Nintendo
and other cases involving the customer-suit exception, the
issue of infringement is not entirely common to Brookshire
and Lilly, as proof of infringement by Lilly would not
necessarily establish infringement by Brookshire.”).
Thus, the ...