Nike, Inc. v. Lululemon USA Inc.

Background

Nike sued Lululemon USA Inc. and Curiouser Products Inc. doing business as Mirror, alleging infringement of six Nike patents: U.S. Patent Nos. 8,620,413; 9,278,256; 9,259,615; 10,188,930; 10,232,220; and 10,923,225. The alleged infringement concerned Lululemon’s sale and development of The Mirror Home Gym and related products.

Lululemon filed petitions asking the Patent Trial and Appeal Board (PTAB) to conduct inter partes review (IPR) of the patents. IPR is a patent review proceeding before the PTAB. Lululemon moved to stay, or pause, the federal case while any resulting IPR proceedings took place.

Legal standard

The court explained that a federal district court has authority to stay a case while a patent review is pending. Courts in the district generally consider three factors: whether the review will simplify the issues and trial, how far the litigation has progressed, and whether the stay would unfairly prejudice the party opposing it. The party seeking the stay bears the burden of showing that it is justified.

Court’s analysis

The court found that each factor favored a stay. First, a PTAB decision could simplify the federal case. For example, if the PTAB invalidated asserted patent claims based on anticipation or obviousness, the district court might not need to address whether those claims were invalid for lack of patentable subject matter under 35 U.S.C. § 101. The court also reasoned that the PTAB’s claim-construction standard was the same standard used by district courts, which increased the potential usefulness of the PTAB’s work even before the Board decided whether to institute review.

Second, the court found that the case was still at a relatively early stage. Although discovery had begun, no fact depositions had been noticed or taken, no claim-construction hearing had occurred, and the court had not set deadlines for completing fact or expert discovery or for trial. The court evaluated the litigation’s stage when Lululemon filed its stay motion and concluded that discovery was not substantially complete.

Third, the court found that a stay would not unduly prejudice Nike. Nike had waited more than three years after becoming aware of the alleged infringing activity before filing suit and had not sought a preliminary injunction. The court also noted that it did not appear Nike currently offered competing products practicing any of the asserted patents. The parties agreed that the PTAB would decide whether to institute two reviews by May 17, 2023, and the remaining institution decisions by July 20, 2023. The court concluded that even a five-month wait would not create undue prejudice under the circumstances.

Ruling

Judge Ronnie Abrams granted Lululemon’s motion to stay the proceedings. The action was stayed for the duration of any PTAB IPR proceedings concerning the asserted patents. The clerk was directed to terminate the motions pending at Docket Entries 36 and 95 and to stay the action. The parties were ordered to file a joint status letter within 10 days after the PTAB decided whether to institute the IPR proceedings.