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Judge Andrews grants stay in customer cases

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Judge Richard G. Andrews recently granted stay to 19 of 21 defendants against whom Infinite Data LLC (“Infinite”) filed suit in several related actions. See, e.g., Infinite Data LLC v. Ebay Inc., C.A. No 12-1618 (et al.) (D. Del. Jan. 23, 2014). Mellanox Technologies (“Mellanox”) filed a declaratory judgment against Infinite, alleging noninfringement and invalidity of the patent Infinite is asserting against the 21 defendants. Mellanox has further alleged that “many” of the 21 defendants are “users and/or customers” of Mellanox’s technology, and “many” have requested indemnification from Mellanox. Id. at 1.

Judge Andrews explained that “theoretical reasons for staying ‘customer cases’ is the manufacturer is in a better position, and has a greater interest, in defending its product.” Id. at 3. He found that the “concept is a little more complicated here,” because, among other things, “the customers use the product, and perhaps modify it in doing so,” rather than simply reselling. Id. Nevertheless, Judge Andrews concluded that proceeding with the Mellanox case first could significantly simplify the issues and “advance the ball towards resolution of, at least, many of the cases.” Id. at 2-3. For example, Judge Andrews explained that “Mellanox knows its technology better than defendants” and is probably in a best position to “litigate issues of infringement and invalidity.” Id. at 2. Additionally, if the Mellanox action is fully litigated, it might “resolve infringement or invalidity issues decisively, or if in favor of [Infinite], in such a way that as a practical matter there are fewer issues remaining.” Id.

Judge Andrews explained, however, that “if I am going to force Infinite Data to forego chasing its preferred targets, Infinite Data ought to get something concrete out of it, which would also offer a better chance of locking in the simplification that could result from Mellanox going first.” Id. at 3. Thus, “defendants ought to get one shot at invalidity, and if they are willing to have Mellanox take that shot, then I believe that the balance tips in favor of granting stay.” Id. Specifically, Judge Andrews granted stay to 19 defendants, so long as they agreed to be bound by the final invalidity decision from the Mellanox case “to the extent it involves a Mellanox product, product feature, or product component at issue in the Mellanox declaratory judgment action.” See id. at 4-5. Judge Andrews denied stay for those defendants who did not agree to be bound by the final invalidity decision. Id. at 4.

Judge Andrews had also found the stage of proceedings favored stay, as the Rule 16 conference was postponed, and there was no trial date or formal discovery completed. Id. at 2.

Infinite Data LLC v. Ebay Inc., C.A. No 12-1618 (et al.) (D. Del. Jan. 23, 2014).

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