Motion To Sever And Stay Denied Where Customer Defendants Could Not Satisfy Customer Suit Exception Factors

Cambrian Science ("Cambrian") filed a second amended complaint that alleged patent infringement of U.S. Patent No. 6,777,312 (the "'312 Patent"). The second amended complaint alleged infringement against several defendants, certain of which were labeled by the district court as "Customer Defendants." As to the Customer Defendants, Cambrian asserted that they infringed the '312 Patent directly by making, using, selling or offering to sell certain systems. The second amended complaint also alleged claims for contributing and inducing infringement.

The Customer Defendants moved to severe and stay the claims against them based on the "customer suit exception," which provides: "[A]n exception to the venue rule that when two or more patent infringement suits, involving the same or similar parties and issues, are filed, courts normally grant priority to the first-filed suit and enjoin or stay the other suits." Privasys, Inc. v. Visa Int'l, No. C 07-03257 SI, 2007 WL 3461761 at *3 (N.D. Cal. Nov. 14, 2007) (citing Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1463 (Fed. Cir. 1990)). This exception applies "when the first-filed suit in one district is against customers of the infringing manufacturer, while a subsequent suit in another district court is against the manufacturer itself." Id. "The rationale behind the customer suit exception is that the manufacturer is presumed to have a 'greater interest in defending its actions against charges of infringement,' and therefore 'the manufacturer is the true defendant.'" Beck Sys., Inc. v. Marimba, Inc., No. 01 C 5207, 2001 WL 1502338, at *2 (N.D. Ill. Nov. 20, 2001)...