Patent litigants regularly seek mandamus review for certain types of adverse district court rulings. While a successful petition may result in a reversal and remand, it is less common for the Federal Circuit to agree with a district judge only to have the latter change his mind and reverse himself. That unusual scenario recently came to pass in the East Texas leg of the already complicated dispute between Netlist and Micron Technology, the latter of which filed a mandamus petition after Magistrate Judge Roy S. Payne waited until a scheduled trial was looming to recommend the denial of its motion to stay pending the outcome of multiple inter partes reviews (IPRs) against the remaining patents-in-suit. The appellate court denied that petition, after which—in late January—District Judge Rodney Gilstrap adopted Judge Payne's recommendation over defendant Micron's objection. However, earlier this month, Judge Gilstrap apparently had a change of heart, reversing himself sua sponte (without the request of either party), citing efficiency concerns in a weekend decision staying the case.
The dispute between the two parties began in April 2021, when Netlist filed a pair of Western District of Texas suits against Micron, both of which were stayed pending the outcome of certain IPRs against the patents there in suit. The stays, however, have not quelled expansion of the disputes between these two parties: In December 2023, Micron filed a complaint in Idaho state court accusing Netlist of bad-faith patent assertion under that state's "Bad Faith Assertions of Patent Infringement Act", which Netlist removed to the District of Idaho; the parties have since sparred over a potential remand back to state court, over personal jurisdiction in Idaho, over lack of bad faith, and over whether the dispute should be litigated back in West Texas.
The East Texas case here at issue is the first of two cases filed in that leg of the parties' dispute, Netlist here accusing Micron in a June 2022 complaint of infringing six patents (8,787,060; 9,318,160; 10,860,506; 10,949,339; 11,016,918; 11,232,054) through the provision of various semiconductor products ( 2:22-cv-00203). The '506, '339, '918, and '054 patents had, three months earlier, been targeted by a set of IPR petitions (one each) filed by campaign codefendant Samsung, which filed single petitions against each of the remaining '060 and '160 patents that same August. After the Patent Trial and Appeal Board (PTAB) instituted trial in those IPRs, Micron filed what it has deemed "copycat" petitions that were joined to the Samsung IPRs.
In May 2023, Micron moved to stay that first East Texas action pending the outcome of those PTAB proceedings, noting that final written decisions in the IPRs against the '506, '339, '918, and '054 patents would issue before the trial then scheduled for January 22, 2024, with those against the '060 and '160 patents to follow four months later. The company argued that the parties and the court would all benefit from not having to litigate subsequently invalidated claims; that Micron would not be unduly prejudiced because it would still be able to win damages for the stayed time period; that a stay would be substantially likely to simplify the litigation by "by eliminating most, if not all, issues for trial", as the PTAB had instituted trial against all asserted claims; and that the stage of the litigation, at which point the parties had not exchanged claim construction briefs or begun their expert reports, further favored a stay—as did the potential to save on discovery costs (especially for those related to expert testimony).
However, that motion to stay sat undecided while the stage of the litigation became considerably more advanced, as the court moved forward on various other substantive matters over the ensuing months: Fact discovery closed in September and Judge Payne issued a Markman order in October. By the end of the year, dispositive and evidentiary motions were fully briefed, and the pretrial conference was held on December 20, during which the court heard arguments on the motion to stay. Shortly before, on December 8, Micron had filed a supplement to its motion informing the court that the PTAB had, in October and earlier in December, invalidated "all claims asserted against products sold by Micron"; i.e., those from the '506, '339, '918, and '054 patents. In contrast, it argued that Netlist was now only asserting the '060 and '160 patents against Micron's "HBM3" product design, based on which Micron argues it has not commercially released any products, as "the design is still in qualification staging". This all provided additional justification for a stay, it argued—as did the fact that while Netlist had dropped '506 and '339 patents from the case soon after the PTAB's October invalidity rulings, it was "refus[ing] to withdraw the invalid '918 and '054 patents from this litigation" (emphasis in original), requiring unnecessary work relating to the 47 claims collectively still at issue as a result.
On January 3, Judge Payne recommended that the court deny Micron's motion to stay, beginning by rejecting its arguments on prejudice—finding instead that a stay would "would be prejudicial to Netlist as a direct competitor to Micron" and that additional delays from any appeals from the PTAB proceedings would frustrate Netlist's "well-established interest in the timely enforcement of its patent rights". Additionally, Judge Payne found that the "late stage of the case" also weighed against entering a stay, noting that the case was "on the eve of trial" and citing the aforementioned potential for further delay caused by PTAB appeals. Judge Payne held that "[w]hile the Court typically assesses the stage of the case from the date of filing, here the unique disposition of the ongoing IPR proceedings demonstrates a need to assess the current stage of the case instead" (without further expounding on what was "unique" about the IPRs' "disposition"). Judge Payne also disagreed that the stay would lead to a simplification of the issues based on the mere possibility (at that point) that the patents would be invalidated, in light of the aforementioned circumstances: "The Court is unpersuaded to delay a case on the eve of trial based on a possibility of invalidity rulings and is unconvinced that the alleged simplification outweighs the prejudice discussed above". That third conclusion is further bolstered, per Judge Payne, by Micron's assertion that in the event the IPRs failed, "estoppel is limited to art explicitly asserted in the petition"—observing that this narrower form of estoppel "carries a lesser likelihood of simplification of the issues on the two patents awaiting final written decisions".
Micron objected to that report and recommendation two days later, arguing that to its knowledge, "[n]o court has tried a case under these circumstances": Where four of the patents have been invalidated, for which the company asserts that there "appears to be no precedent anywhere for allowing trial on patents where all claims have been declared unpatentable by the PTAB"; and where the two remaining patents have PTAB final written decisions due in April and "are asserted against a product design that has not yet been commercially released". Among other cited bases for granting the stay, Micron also pushed back on Judge Payne's finding that Netlist is its competitor for the remaining patents: ". . . Netlist is not a competitor for any products allegedly practicing the '060 and '160 patents, and indeed, Netlist's briefing only alleges, without any factual support, to be a competitor on products allegedly practiced by the now invalid '918 and '054 patents" (emphasis in original).
Micron also argued that Judge Payne was wrong to consider the case's status at the time it was decided, countering that Federal Circuit precedent requires the court to consider the "case 'stage' factor . . . from when the motion was filed, not when the court later rules" (emphasis in original). To the contrary, it argued that this factor actually weighs in favor of a stay because the remaining IPRs would see final decisions by April 12, and that any concerns over prolonged stays pending appeal could be addressed by merely staying the case until those decisions issue.
Micron concluded by arguing that in light of the foregoing, it would be unduly wasteful to adopt Judge Payne's recommendation: "To Micron's knowledge, this Court has never allowed parties to use judicial resources, or be forced to waste their own, with a trial under these circumstances".
On the same day that Micron filed its objection, the company also lodged its mandamus petition with the Federal Circuit ( 24-0107), asking the court to vacate the report and recommendation for "clear abuse of discretion" and stay the case pending the "final resolution of the IPR proceedings". Similar to its objection in the district court action, the company argued that the looming situation—a potential trial on a patent for which all claims have been invalidated—is unprecedented. The company further asserted that allowing such a trial to proceed would be "flatly contrary to Congressional intent in enacting the America Invents Act" (AIA) and underscored the impact of Judge Payne's delay in reaching his decision.
However, the Federal Circuit denied Micron's petition, finding fault with Judge Payne for that delay but also with Micron for waiting so long to seek mandamus review:
We are troubled by the district court's delay in resolving Micron's stay motion. At the same time, we are confronting a situation in which Micron, the party seeking a stay, petitioned for this court's intervention only less than three weeks before trial is set to begin. Under the circumstances presented by this case, we cannot say that Micron has shown entitlement to the extraordinary relief of mandamus.
One week later, Netlist filed a brief response in the district court action to Micron's objections, asserting that "Micron's repeated attempts to wrest control of this trial docket away from the Court, including a failed writ of mandamus, should be rejected", incorporating by reference its prior arguments from the motion to stay briefing.
It initially appeared that Judge Gilstrap agreed with Judge Payne, as the former adopted the latter's report and recommendation on January 31, after which point the trial had already been canceled (for reasons apparently not reflected in the docket)—finding that Micron had failed to show that it was "erroneous".
However, on Saturday, February 10, with no further filings having addressed the denied stay, Judge Gilstrap reversed his own order sua sponte, finding instead "that under these particular facts a limited stay is warranted in this case". Recounting the broad contours of those facts—that four patents have been invalidated, with those rulings on appeal, while the PTAB's final decisions are due for the remaining two patents on April 12—Judge Gilstrap echoed Micron's arguments on the waste of resources that would result from holding a trial as matters currently stand: "To put this particular case to trial before a jury in this Court before the PTAB issues its decision on the two remaining patents risks an inefficient consumption of limited judicial resources that makes imposing a targeted stay, until that ruling is received, advisable". Judge Gilstrap then concluded by staying the case pending the issuance of the PTAB's remaining final written decisions.
For more on this litigation, including the latest on the parallel dispute between Netlist and Samsung, see "Termination of Cross-License Agreement Set for March Trial as Filings under Idaho Bad-Faith Patent Assertion Statute Metastasize" (February 2024).
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