Palo Alto Networks, Inc. v. Packet Intelligence LLC

Background

Palo Alto Networks brought this declaratory-judgment action seeking a ruling that it did not infringe Packet Intelligence’s patents. Palo Alto Networks moved to stay, or pause, the case because the Patent Trial and Appeal Board had instituted inter partes reviews of four of the five patents involved. Those reviews covered 31 of the 33 asserted claims. The Board had denied review of the fifth patent, the ’099 Patent.

The case had gone through claim construction, and discovery was scheduled to close on December 22, 2020. Expert discovery had not begun, no depositions had been taken, and trial was scheduled for August 30, 2021. The parties had said they intended to ask the Board to reconsider its decisions. Packet Intelligence argued that the stay would be premature, that substantial discovery had already occurred, and that it would be prejudiced by delay.

Court’s analysis

The court applied three factors used for requests to stay a patent case during Patent Trial and Appeal Board review: the stage of the case, whether the review would simplify the issues, and whether the stay would unfairly harm the opposing party.

For the first factor, the court noted that a trial date had been set but discovery was incomplete. Fact discovery had not closed, expert discovery had not started, and several costly stages of the case remained. The court treated this factor as supporting a stay.

For the second factor, the court found that the Board’s review of four patents would almost certainly help determine patent validity and could eliminate the need to try infringement issues. The Board’s refusal to review the ’099 Patent did not defeat the motion because that patent was related to the others and the reviews could still simplify the case. This factor also supported a stay.

For the third factor, the court considered when Palo Alto Networks requested review, when it requested the stay, the status of the reviews, and the parties’ relationship. Palo Alto Networks had filed its review petitions five months before the statutory deadline and had promptly sought a stay after learning that review would be instituted. The court concluded that Packet Intelligence had identified mainly the ordinary delay inherent in a stay, rather than specific additional prejudice. This factor therefore supported a stay.

Disposition

The court granted Palo Alto Networks’ motion to stay. The court did not separately dismiss or resolve the patent-infringement issues. It stated that Packet Intelligence could file a motion to lift the stay if the Patent Trial and Appeal Board’s decision on the expected rehearing requests warranted lifting it.