The Nielsen Company, LLC v. TVSquared LTD

Background

The Nielsen Company (US) LLC sued TVSquared LTD for patent infringement. TVSquared argued that the patent was ineligible under 35 U.S.C. § 101. After the case was transferred to the Southern District of New York, TVSquared moved to dismiss the complaint. While that motion was being briefed, TVSquared moved under Federal Rule of Civil Procedure 26(c) to stay, or pause, discovery until the court ruled on the motion concerning Nielsen’s complaint. Nielsen opposed the stay.

Legal standard

The court explained that the party seeking a discovery stay must show good cause. A pending motion to dismiss does not automatically pause discovery. Courts generally consider whether the challenged claim appears clearly without merit, how broad or burdensome the discovery would be, and whether delaying discovery would unfairly harm the party opposing the stay.

Reasons for denying the discovery stay

First, the court found that TVSquared had not made the required strong showing that Nielsen’s claim was unmeritorious. The court stated that both sides had legally and factually reasoned positions and that TVSquared had not argued that the court lacked jurisdiction or that Nielsen could not identify relevant legal authority. The court did not decide whether the patent was eligible under Section 101.

Second, the court found that TVSquared had not adequately explained why discovery would be burdensome or unusually broad. TVSquared referred generally to technical and financial topics and a large number of documents, but did not state how long discovery would take, what it would cost, or provide another specific indicator of an excessive burden.

Third, the court found that Nielsen would likely face prejudice from a stay. The court noted that Nielsen and TVSquared operate in media-industry data analytics and are direct marketplace competitors. It rejected the argument that Nielsen would not be prejudiced merely because Nielsen had not sought a preliminary injunction.

Rulings

The court denied TVSquared’s motion to stay discovery. The court also denied, at that time, TVSquared’s request to schedule oral argument on its motion concerning the pleadings. The court stated that it could later notify the parties if oral argument became necessary and directed the clerk to terminate the motions at Docs. 110 and 113.