On November 20, 2009, District Judge Joan B. Gottschall granted defendant Bebe Stores, Inc.’s motion to stay the litigation pending reexamination of the asserted patent U.S. Patent No. 6,032,859 (Patent ‘859) associated with ex parte reexamination proceeding 90/009,459 (filed 04-30-2009). The ex parte request prompting the stay was not filed by an instant party in the suit, but by an anonymous third-party.

Read Court Order: Motion for Stay Pending Reexamination; 2009-11-20; Granted; District Judge Joan B. Gottschall; Card Activation Technologies, Inc. v. Bebe Stores, Inc. (1-09-cv-00406) ILND

The Court noted the stays pending a reexamination are granted when the stay would “(1) reduce the burden of litigation on the Parties and on the Court; (2) simplify the issues in question and streamline the trial, and would not (3) unduly prejudice or tactically disadvantage the non-moving party.” (See Stays)

The Court found that a stay would reduce the burden of litigation and simplify the issues in question. Card Activation argued that the reexamination would not simplify the case at all because it amended its complaint to assert only claims that are not under reexamination. The Court found this argument unpersuasive, noting that the newly asserted claims are actually broader than the claims under reexamination. The Court reasoned that at a minimum, even if the claims under reexamination are not deemed invalid that at least the USPTO proceeding would yield “some administrative findings that will be pertinent to this case.”

The Court was not persuaded that Card Activation would be unduly prejudiced or other otherwise unfairly disadvantaged. Card Activation argued that it would be unduly prejudiced because it is seeking both monetary damages and injunctive relief, and the “average reexamination takes 24.9 months.” The Court discounted Card Activation’s arguments noting that “[t]he licensing scheme that Card Activation is publicly advertising on the Internet makes plain that money will adequately compensate it for whatever losses that it incurs.” Card Activation additionally had contended it would be tactically disadvantaged in that representations at the PTO may bind it in future litigations and because the USPTO applies a lower standard to determine patent invalidity than the courts. The Court seemed to give no weight to this argument, and noted that Card Activation cannot “be prejudiced by the very procedures that allow it to claim monopoly rights in the first place.”

In granting the stay, the Court noted that the Court and the parties have an interest in ensuring that the proceedings are not delayed any more than necessary. As such the Court conditioned the stay, such that either party may move to begin discovery at a status hearing on July 21, 2010 if reexamination is still incomplete by that date.

The case is Card Activation Technologies, Inc. v. Bebe Stores, Inc., case number 1-09-cv-00406, in the United States District Court of in the Northern District of Illinois.