When I started practicing here in the District of Delaware (the decade before last), the typical advice was that a patent case would proceed to scheduling and discovery even if the defendant files a motion to dismiss. Lately, though, several of the District of Delaware judges have been holding off on initiating the FRCP 16 scheduling process when the defendant files a motion to dismiss.
Often, as we've discussed, a smart plaintiff in that situation will file a letter asking the Court to direct the parties to conduct an FRCP 26(f) conference, so that discovery can move forward. Most often that seems to work. The Court has said that "In this district, discovery generally proceeds during the pendency of a Rule 12 motion." airSlate, Inc. v. Inkit, Inc., C.A. No. 23-1307-RGA-SRF, D.I. 60 (D. Del. Dec. 5, 2024). But sometimes it does not.
A Successful Effort to Start-Up Discovery
We got some new data points on this recently in Inari Medical, Inc. v. Inquis Medical, Inc., C.A. No. 24-1023-CFC-EGT (D. Del.). There, the defendant filed a motion to dismiss, and the Court did not put an order on the docket directing the parties to initiate the scheduling process.
But, about a month after briefing was completed on the motion to dismiss, the defendant filed a short letter on the docket asking the Court to direct the parties to initiate discovery:
Dear Chief Judge Connolly:
I write on behalf of Plaintiff Inari Medical, Inc. (“Inari”) to respectfully request that the Court set a Rule 16 conference in the above-referenced case. . . . We reached out to counsel for Inquis beginning in November to request that the parties conduct a Rule 26(f) conference. Inquis has not responded at all. We assume that Inquis is taking the position that it need not engage in a Rule 26(f) conference or begin discovery while its motion is pending. However, there is no automatic stay of discovery under the Federal Rules when a motion to dismiss has been filed. To the contrary, Rule 26(f) directs the parties to confer “as soon as practicable” and Rule 16 likewise provides that the Court issue a Scheduling Order “as soon as practicable.”
Accordingly, Inari respectfully requests that the Court set a Rule 16 conference so the parties can confer under Rule 26(f) and submit a proposed schedule to the Court.
Inari Medical, Inc. v. Inquis Medical, Inc., C.A. No. 24-1023-CFC-EGT, D.I. 19 at 1 (D. Del. Jan. 7, 2024).
Chief Judge Connolly immediately agreed. He issued an order that same day directing the parties to submit a scheduling order. Id., D.I. 20.
Just 10 days later, the defendant filed a motion to stay pending resolution of the motion to dismiss, which the Court referred (along with all discovery issues) to Judge Tennyson.
Last week, Judge Tennyson issued an opinion firmly denying the motion to stay. She applied the normal stay factors (simplification, status of discovery, and prejudice). Her language on "simplification" suggests that factor will rarely favor a stay on a motion to dismiss:
The likelihood that Defendant succeeds in dismissing all or even most of the claims raised in the Complaint is low. . . . Because of the various and distinct claims asserted in the Complaint, and the possibility for multiple different outcomes, the Court finds that there is only slight potential for issue simplification. And when this slight potential is viewed alongside the fact that leave to amend is to be freely granted, this factor comes out largely neutral.
Inari Medical, Inc. v. Inquis Medical, Inc., C.A. No. 24-1023-CFC-EGT, D.I. 50 at 3 (D. Del. Jan. 7, 2024).
She found that the status of discovery favored stay, as discovery had begun just a week or so before the motion. She rejected the idea that the amount of work that plaintiff had put in apart from discovery could weigh in their favor:
Despite Plaintiff having apparently invested “significant time, money, and resources on the issues involved” in this case (D.I. 34 at 16), there has been little progress in the litigation itself. A scheduling order was only entered on February 12, 2025. (D.I. 38). Discovery is just getting underway. . . . Contrary to Plaintiff’s suggestion, investing resources in pre-litigation activities does not artificially move this lawsuit into a later stage where a stay is less likely to conserve resources.
Id.
Finally, on prejudice, the defendant made an argument I've never seen before.
Defendant latched onto statements in a recent Form 8-K filing by the plaintiff that "it has not suffered any trade secret misappropriation or intellectual property infringement in the last three years," and that "it was not involved in any litigation that would have a material adverse effect on its business, operations or financial condition." Id. at 4. It argued that these statements showed that the plaintiff would not suffer undue prejudice from a stay.
The Court rejected that argument:
Defendant cites a number of cases in its opening brief to suggest that Plaintiff’s Form 8-K is relevant evidence that the claims in this case lack merit and that a stay would not be prejudicial. . . . But those cases stand for the proposition that a court may take judicial notice of SEC filings and, further, that reliance on public SEC filings is reasonable in the context of making investment decisions. The cases do not stand for the proposition that boilerplate statements in SEC filings offer sufficient evidence of the presence (or absence) of litigable harm such that the merits (or lack thereof) of a case are conclusively established. . . . Those same boilerplate statements likewise do not preclude a potential claim of undue prejudice in opposing a stay.
Id. at 5. The Court also did not accept the idea that the cost of discovery itself could be "prejudice" that warrants a stay:
[T]he financial hardship suffered by Defendant in proceeding with discovery is not sufficient to warrant a stay in this case. . . . The Court recognizes that litigation costs money, but this type of economic harm usually does not constitute the type of “undue hardship” relevant under this prong.
Id. at 7-8. After noting that the plaintiff is a direct competitor who would suffer prejudice from a stay, the Court denied the motion.
All told, this is the exactly the expected result and consistent with years of District of Delaware case law—but it's good to know where Judge Tennyson stands.
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