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.

CIVIX argued that a MoFo attorney violated the Court’s protective order by participating in reexamination proceedings before the PTO after participation in court depositions designated as confidential.  Specifically, CIVIX maintained that MoFo “engaged in sanctionable misconduct when it prepared and submitted otherwise ‘non-submittable’ declarations to the PTO via a contrived invocation of the ‘litigation exception’ to the bar on third party submissions [in an ex parte reexamination], by first filing the documents as part of a supposed status report before this Court.”

Yahoo did not dispute that filing the status report and attached declarations with the PTO constituted participation in “Patent Prosecution,” as defined by the protective order.  Rather, Yahoo argued that the protective order only applied to patentees and their counsel, not to Yahoo’s counsel.  The Court disagreed, noting that Yahoo’s “reading of the Protective Order as applying only to the patentee’s counsel does not comport with its plain terms.” Yahoo also asserted that the MoFo attorney never saw the confidential information that was submitted to the PTO, and that the prosecution bar in the protective order was personal in nature, and should not be imputed throughout counsel’s law firm.

The Court did not consider these arguments, rather the Court focused on whether there was an intentional violation of the Protective Order, the level of misconduct, and the degree by which CIVIX was prejudiced by the misconduct.    Based on a sworn declaration by the Mofo attorney submitting the declarations to the PTO that he believed the protective order did not apply to him, the Court concluded that evidence of an intentional violation of the protective order did not exist.  The Court observed that “Yahoo’s counsel appears to be walking the line between aggressive advocacy and strategic exploitation/manipulation of the PTO’s rules and this Court’s docket.”  The Court concluded that “[t]he conduct does not, however, rise to the level of misconduct warranting disqualification.”  Finally, although CIVIX highlighted that a portion of a PTO office action issued after the declarations were filed, repeated the precise section of a document quoted in one of the submitted declarations, the Court concluded that this did not show sufficient prejudice to warrant disqualification.

The Case is CIVIX-DDI LLC v. Nat’l Assoc. of Realtors et. al., case number 05-C-6869, in the United States District Court, Northern District of Illinois.

Read the Court’s Order Granting the Stay:  Motion for Stay Pending Reexamination; 2009-10-29; Granted; District Judge Virginia M. Kendall; Magna Carta Holdings, LLC et al v. NextGen Healthcare Information Systems, Inc. et al (1-08-cv-07406) ILND

With regards to the first factor, the Court determined that “[g]iven the PTO’s decision to reexamine all of the patents-in-suit, Magna Carta will not be unduly prejudiced by a stay.”  Apparently influencing the Court was also the fact that litigation was in a very early stage (e.g., no discovery had yet taken place or even been scheduled).  The Court further observed that from a pecuniary standpoint, Magna Carta would not be prejudiced by the stay, because if it is entitled to damages, interest will accrue in its favor during the stay.  The Court dismissed arguments by Magna Carta that reexamination is time-consuming and costly, and that a stay would impede its access to evidence regarding secondary considerations.  The Court noted that a “stay would not prevent Magna Carta from independently gathering such evidence if they are not in possession of it already.”

In weighing the second and third factors, the Court placed significant reliance on the PTO’s statistics that 63% of all patents that undergo ex parte reexamination, either have all claims canceled or some claims amended.  The Court reasoned that even if not all claims were invalidated that it was highly likely that some claims would be either canceled or amended, thereby potentially simplifying the case.

Magna Carta asserted that if the Court grants a stay it should require the Defendant’s to stipulate that they will not rely in court on the same alleged prior art cited in the reexamination petition.  In support, Magna Carta asserted that the Defendants should not be able to have “two bites at that apple.”  In response, the Defendant’s indicated that they would be willing to such a stipulation.  Thus, the Court granted the stay, but required the parties to enter into a stipulation agreement that prevented the use of art relied upon in the reexamination petition in the court case.

The case is Magna Carta Holdings et al v. Nextgen Healthcare Information Systems et al, case number 08-C-7406, in the United States District Court of the Northern District of Illinois.

Yahoo! also argued that CIVIX’s motion to disqualify is untimely, as CIVIX apparently filed its motion more than one year after Yahoo! filed the status update that, as CIVIX alleges, evidences MoFo’s violation of the court’s protective order.  Finally, Yahoo! contends that CIVIX’s motion to disqualify is designed for tactical purposes.

Notably, Yahoo! contends that CIVIX does not understand the “well-established purpose for prosecution bars in protective orders, viz., to prevent a patentee’s counsel from misusing its access to an opponent’s confidential information to craft claims covering its opponent’s products.”  Yahoo! further stated, “[i]t is difficult to fathom what information of CIVIX, a non-practicing entity, Defendants’ attorneys could use to CIVIX’s detriment during reexamination.”  The case is CIVIX-DDI, LLC v. National Association of Realtors, et al., case number 1:05-CV-06869, in the United States District Court for the Northern District of Illinois.

Based on the timeframes for deadlines of events leading up to the deadline for a party’s filing of Final Contentions, the time from a party’s Answer to the final deadline for filing a stay request pending reexamination is approximately twenty-five weeks.

More information on Stays Pending Reexamination can be found at:  http://reexamcenter.com/2009/09/stays/.