To Stay or Deny? Recent Motions to Stay Proceedings Pending Reexamination and USPTO Statistics

By Tara J. Williams
February 14, 2010

Over the last several weeks, the Docket Report, a daily e-mail newsletter, reported on several cases involving Motions to Stay Proceedings Pending Reexamination. Whether courts grant these motions or not is of significant interest since the grant of stay of a patent infringement case can significantly delay the underlying infringement case while the USPTO proceeding takes place. According to USPTO statistics, the overall cumulative reexamination pendency (from filing date to certificate issue date) averages 25.4 months in ex parte proceedings, and 36.2 months in inter partes proceedings. Additionally, those same statistics reveal that the number of inter partes reexamination filings rose from 168 in 2008 to 258 in 2009. (Ex parte filings declined from 680 in 2008 to 658 in 2009).

The recently issued orders came from district courts in the Northern and Southern Districts of California, Southern District of Indiana, Northern District of Ohio, and Northern District of Minnesota. An interesting order from the Southern District of California considered a Motion to Stay Proceedings Pending a Patent Reissue.

Each court considered the same general factors: (1) whether the stay will cause undue prejudice or a clear tactical advantage to the nonmoving party; (2) whether the stay will simplify the issues to be determined by trial; and (3) whether discovery is complete or a trial date set. With respect to the first factor, only one court (District of Minnesota) seemed to give much consideration to the argument that plaintiff would be unduly prejudiced by defendant’s continuing allegedly infringing activity during the stay. One court acknowledged that a party may be prejudiced by the delay of the stay if it can be shown that the ability to gather evidence would be compromised by the stay.

Both California district courts provided a time limit for the stay, and that the decision to continue the stay could be revisited after a certain period of time if it was shown that circumstances had changed, and that the stay would unduly prejudice the nonmoving party, or that a final resolution in the reexamination proceeding had not yet occurred.

Jens Erik Sorensen v. Fein Power Tools, Inc. et. al., Case No. 09cv558 (S.D. Cal. Jan. 19, 2010). Motion to Stay Granted. The court stated in conclusive fashion that the stay is appropriate because the litigation was in its early stages, that plaintiff has shown no prejudice would occur, and that the reexamination would simplify issues for the court. At the time of filing the Motion, the PTO had granted the request for reexamination and had rejected all the patent claims. Additionally, the court called for a status conference approximately four months later, and stated that either party could ask for an exception of the stay if it appeared a party would be prejudiced from the inability to obtain discovery that might not be available after the stay.

Spectros Corporation v. Thermo Fisher Scientific, Inc. Case No. C 09-1996 (N.D. Cal. Jan. 20, 2010). Motion to Stay granted. (Request for Reexamination filed four months after suit filed.) The court looked to several factors (i) the case was in the early stages of litigation, no discovery or pre-trial dates set; and (ii) the stay would simplify issues and in fact may resolve all issues in the case. The court did acknowledge that the advantages of reexamination proceeding could be diminished if the reexamination proceeding took longer to conclude than the district court action would have taken. As such the court concluded that it could revisit the issue of a continued stay if the Reexamination proceeding has not been concluded within one year.

Cook Incorporated v. Endologix, Inc. Case No. 1:09-cv-1248 (S.D. Ind. Jan. 21, 2010). Motion to Stay granted. The court concluded that the stay (i) would not unduly prejudice or tactically disadvantage one party over the other; (ii) would simplify issues and streamline proceedings; and (iii) would reduce the burden of litigation in that the Reexamination would most likely result in cancellation or amendment of the scope of the claims. The specific facts the court reviewed were (1) current litigation is in very early stages, no case management plan or discovery, (2) one of the two asserted patents had expired; (3) Defendant not in poor financial health; and (4) the court will benefit from expertise of the PTO as a result of the Reexamination.

Lincoln Electric Company v. Miller Electric Mfg. Co., et al., Case No. 1:106-CV-02981 (N.D. Ohio, Jan. 26, 2010). Declaratory Judgment Action Plaintiff’s Motion to Stay Denied. In this case, Lincoln Electric filed a declaratory judgment action against Illinois Tool Works (ITW) for non-infringement and invalidity of eight ITW patents, and requested reexamination of seven of the patents. Thereafter, ITW, pursuant to 35 USC § 318, moved to stay the underlying declaratory judgment proceeding which the court granted. In Lincoln’s Motion to Lift Stay, the court concluded that the stay should remain and that it will not prejudice Lincoln, especially given the fact that Lincoln filed the reexamination proceedings initially and that Lincoln can still operate in the marketplace and continues to sell the product in question.

National Carpet Equipment, Inc. v. Equipment Development Company Inc. Case No. 0-09-cv-00974) D. Minn., Jan. 28, 2010). Motion to Stay Denied. Equipment Development requested an ex parte reexamination of National Carpet’s patent after National Carpet filed its patent infringement suit against it. In denying the motion, and reviewing the factors, the court found (1) the continued sale of defendant’s accused product would prejudice plaintiff; (2) that the reexamination would not simplify the issues as the patent issues appear uncomplicated; and (3) that although the parties have engaged in discovery, they have made significant progress in the case and have undertaken and agreed to a speedy time line for the case.

One other case of note is Data Network Storage, LLC v. Aberdeen, LLC et al., Case No. 98cv658 (S.D. Cal. Jan. 27, 2010). Motion to Stay Pending Reissue Proceedings Denied. In this case, the court had the opportunity to review the issues related to granting a motion to stay pending the reissue of a patent that was requested by the patentee, as opposed to an inter partes reexamination. The court found that while the underlying case was in the early stages of litigation, other factors weighed in favor of denying the stay. For example, the court noted that the stay could prejudice the plaintiff by a delay in accessing discovery, and by permitting the continued the alleged infringement during the stay. The court emphasized that the circumstances in a reissue differs from an inter partes reexamination in that after the reissue the PTO will either reissue the patent claims with either identical or substantially identical claims to the originally issued patent, or will reissue a patent having additional claims. If the patent reissues with identical claims then no benefit is gained by staying the proceeding as it would have no impact on the outcome. If the patent reissues with additional broadened claims, the defendant would likely be protected by the doctrine of intervening rights, and therefore any delay in the proceeding would similarly not impact the outcome.

It is expected that defendants will continue to seek ways to stay the underlying patent infringement litigation during reexamination proceedings in an attempt to compromise the patent claims, or to prolong litigation. This development can impact litigation for patent infringement plaintiffs. This is particularly true as defendants are increasingly becoming participants in common defense arrangements. Reexamination proceedings may take from twenty-five to thirty-six months, not considering any additional time resulting from an appeal. Some courts appear to be more sympathetic to prejudicial impact on plaintiffs as: (i) the ongoing allegedly infringing activity during the stay; (ii) the possible increasing risk that evidence will become unavailable during the stay (loss of records, lose track of witnesses); (iii) financial health of defendants. If a court does grant the stay, plaintiffs may be able to suggest parameters on the stay, such as the ability of the parties to request an exception or a revisiting of the stay under certain circumstances.

SOURCES:

The Docket Report¸ from Docket Navigator, http://www.docketnavigator.com
United States Patent Offices, http://www.uspto.gov/patents/stats/

© 2010 Law Offices of James Scott Farrin

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Tara J. Williams

Tara J. Williams

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