On December 18, 2009, Magistrate Judge John D. Love denied Bell’s motion for a stay pending the resolution of ex parte reexaminations of the patents-in-suit U.S. Patent Nos. 5,388,101 (’101 Patent) and 5,481,546 (’546 Patent) even though Bell offered not to challenge validity based on prior art considered therein and to abide by the Court’s claim construction in an earlier case involving the same patents. Co-defendants Sensus USA Inc. f/k/a Sensus Metering Systems, Inc. and Vehicle Manufacturers, Inc. did not join Bell in the motion.

The Court previously denied a motion to stay a year prior when the PTO had only just granted the requests filed by defendant USA Mobility, Inc. in a different case involving the same patents. In August 2009, the PTO rejected all of the claims of the patents-in-suit. Bell contended that the claims against it would be eliminated if EON, the plaintiff,  was to substantively amend the patents-in-suit and that its stipulations would simplify the issues for trial. Bell further advised that it no longer operated the infringing service, no longer entitling EON to a preliminary injunction.

In deciding whether to stay litigation, the Court considered the customary factors of undue prejudice or tactical disadvantage to the non-moving party, simplification of issues or trial, and whether discovery is complete or the trial date set (See Stays). Read Court Order: Motion for Stay Pending Reexamination; 2009-12-18; Denied Without Prejudice; Magistrate Judge John D. Love; EON Corp. IP Holdings, LLC v. Sensus Metering Systems, Inc. (6-09-cv-00116) TXED

Regarding undue prejudice, the Court expressed concern that the delay could be significant in terms of length if appealed or if Bell subjected EON to serial ex parte reexaminations. Also, because Bell was no longer involved in the infringing service the Court reasoned: “Bell has little incentive to maintain documents and employees relating to its alleged infringement,” citing that memories may fade and evidence may be lost. Thus, EON would be unduly prejudiced.

Regarding simplification of the issues based on Bell’s proposed stipulations, the Court stated “stipulations alleviate, though do not eliminate” concerns regarding rearguing of issues already advanced in ex parte reexamination, which lacks estoppel provisions. Ultimately, Magistrate Love was not convinced that the prejudice and tactical disadvantage perceived for EON would be offset by such stipulations, although he noted they are viewed favorably by the Court.

As stated in the Order: “[t]he Court is unmoved by the fact that the PTO has initially rejected all of the claims of the patents-in-suit.” Citing December 2008 PTO statistics, the Court observed that at the final action it is more than twice as likely that all claims will be confirmed than cancelled. Moreover, a conclusion by the PTO would not eliminate the need to consider inequitable conduct and laches. This view of the outcome weighed against granting the stay.

The Court further noted that the remaining defendants in this and the related case would still have the option of raising the invalidity issues Bell’s stipulation would avoid. Thus, it remarked that while a stay may result in “cost savings to Bell” it would not simplify the issues for other parties or the Court. This fact, as a practical matter, weighed against granting the stay.

Regarding the stage of litigation, the Court noted that despite being served with a summons in June 2009, Bell did not answer until August 31 after four extensions of time. Moreover, the parties had begun the discovery process. Acknowledging that while the litigation was not at a stage sufficiently advanced to weigh against granting a stay, it did not weigh in favor either, making it a neutral factor. Overall, issues of prejudice outweighed other considerations.

The case is EON Corp. IP Holdings, LLC v. Sensus Metering Systems, Inc., case number 6-09-cv-00116, in the United States District Court of Eastern District of Texas. Reexaminations 90/010,383 and 90/010,382 both filed on January 9, 2009.