On November 17, 2009, Magistrate Judge Caroline Craven denied VTech’s motion to stay pending the outcome of ex parte reexaminations of two of the six patents-in-suit alleged to cover over 90% of the accused cordless phone models asserted by Motorola in this infringement suit.  The Court further denied defendant’s motion to stay pending the Federal Circuit’s decision on a petition of mandamus to transfer the case to Oregon.

Read the Court’s Order Denying the Stay:  Motion for Stay Pending Reexamination; 2009-11-17; Denied; Magistrate Judge Caroline Craven; Motorola Inc v. Vtech Communications, Inc. et al (5-07-cv-00171) TXED

The two patents, U.S. Pat. No. 5,157,391 (’391 Patent, Weitzen) and U.S. Pat. No. 5,394,140 (’140 Patent, Wong) are currently undergoing one or more ex parte reexaminations before the USPTO.  The court noted that the CRU finally rejected every asserted claim of both the ‘391 and ‘140 patents and the former is set to expire before the end of 2009.  It further noted that the same two patents have been asserted in a separate action against Research in Motion, Ltd. (“RIM”), which is now pending as Research in Motion, Ltd. v. Motorola, 3:08-CV-0284-G (N.D. Tex. 2008) where a stay had been granted by Judge Ed Kinkeade on June 15, 2009.

In its motion VTech argued that final rejection of all the claims of the patents representing 90% of the allegedly infringing products would simplify issues and furthermore that a stay would not exclude any legal remedy currently available to Motorola.  In opposition, Motorola argued that delay of the proceedings for an “indefinite period of time” would allow VTech additional time to sell infringing cordless telephones in competition with Motorola-branded products, citing that ex parte reexaminations “typically average from approximately 30-40 months long or longer” and that the subject patents “could be in proceedings for another two years or more.”

In assessing whether there would be undue prejudice, the Court noted that stays of proceedings are not favored when parties are competitors, citing Motorola’s contention that the resulting harm would be irreparable and not fully compensable by money damages insofar as the VTech’s activities were: “[t]hreatening Motorola’s royalty stream; reducing the ability of Motorola’s licensee to make a profit and remain financially viable; and compromising Motorola’s goodwill in the marketplace.”  The Court found it sufficient that Motorola showed its cordless phones are sold by a licensee that competes directly with VTech, thus weighing against a stay.

Furthermore, the Court took particular notice of the fact that RIM requested reexamination of the two patents in September 2008.  After the USPTO granted their requests in November of 2008, they timely moved for a stay in February of 2009 in the N.D. of Texas. VTech, on the other hand, waited approximately ten months to request a stay in the present case, during which time the Court noted: “Motorola prepared for and participated in a tutorial and claim construction hearing, noticed or defended 50 depositions, filed or responded to more than twenty briefs relating to VTech’s failed transfer motion and VTech’s multiple motions to amend its invalidity contentions, pursued fact discovery, and is now conducting expert discovery.”  As such the Court found VTech “unreasonably delayed” in seeking a stay, causing undue prejudice to Motorola.

With respect to simplification of issues, the Court found that regardless of the USPTO outcome, issues of patent infringement, validity, and damages would still require disposition by the Court.  Moreover, since only two out of the six patents-in-suit would be affected, the Court considered Motorola’s assertion that it might have to modify its damages calculations and request additional discovery.  As noted by the Court both parties had completed fact discovery; exchanged expert reports; the Court issued its claim construction order; the deadline for filing dispositive motions was less than a month away; and trial was scheduled for February 2010.  In emphasizing that trial is only three months away and fact discovery concluded, in combination with the considerations addressed above, all factors weighed against a stay.

The case is Motorola Inc v. Vtech Communications, Inc. et al, case number 5-07-cv-00171, in the United States District Court of in the Eastern District of Texas.  The ‘391 Patent is associated with ex parte reexaminations 90/010,279 (filed on 09-16-2008) and 90/009,509 (filed on 07-01-2009).  The ‘140 Patent is associated with ex parte reexamination 90/010,278 (filed on 09-16-2008).