Amazon Loses CAFC Mandamus Bid for Stay Due to ‘Customer Suit Exception’

The U.S. Court of Appeal for the Federal Circuit (CAFC) on Monday denied a petition for a writ of mandamus filed by Amazon.com Services LLC requesting that a district court proceeding be stayed pending the outcome of a separate proceeding against Google involving one of the same patents.

Headwater Research LLC filed suit against Google in the U.S. District Court for the Western District of Texas alleging Google’s Firebase Cloud Messaging (FCM) system infringes Headwater’s U.S. Patent No. 9,198,117. The case was ultimately transferred to the Northern District of California. On the same day, Headwater also filed suit against Amazon alleging that its push messaging system (ADM) infringes both the ‘117 patent and another Headwater patent, U.S. Patent No. 8,667,571. Headwater also alleged Amazon infringes the ’117 patent through its use of Google’s FCM in combination with Amazon’s software.

Amazon then moved for a stay of the case against it pending the outcome of the Google case, invoking the so-called customer suit exception (CSE) to the first-to-file rule.

“The CSE applies where (1) in a first lawsuit, a patentee sues an accused infringer who is a customer, reseller, or user of the accused products and (2) in a second, later-filed lawsuit, the same patents and products are at issue, but the accused infringer is the manufacturer or supplier of those products.” (See “Navigating the Customer-Suit Exception in Texas Courts”).

Amazon requested a stay of the entire case, but in a footnote said that “[i]f the Court is not inclined to stay [the claims directed to Amazon’s ADM product], Amazon respectfully requests that the Court at least sever and stay the FCM claims.” A magistrate judge recommended denying the stay and the district court adopted the magistrate judge’s recommendation. Amazon then filed the petition for writ of mandamus with the CAFC.

The CAFC explained that “The customer suit exception is meant to resolve litigation involving the ‘true defendant’ of the infringement allegations in favor of other co-pending suits where the alleged infringer is simply the customer of the ‘true defendant.’” Here, said the court, Amazon failed to show a “clear and indisputable right to a stay by invoking the customer-suit exception.”

The order further explained that the plaintiff’s allegations in the Amazon suit involved two asserted patents, one of which was not at issue in the Google suit, and that Headwater asserted the ‘117 patent at issue in both suits under two theories of infringement, one of which relates only to Amazon and the other which relates to at least some Amazon software and applications.

Because the district court also considered the traditional stay factors and found the outcome of the Google case would not sufficiently simplify the Amazon case, and because Amazon only raised the request to sever and stay the FCM claims in a footnote, the CAFC denied the petition. In support of the latter argument, the CAFC cited to In re ZTE Corp., in which the court found the petitioner who raised an argument “in a one-line footnote . . . has not shown a clear right to have arguments raised in such a manner considered.”