As background, TouchTunes filed suit in 2007 alleging infringement of its U.S. Patents and asked the Court for a declaratory judgment of non-infringement and invalidity of six patents owned by defendant Arachnid relating to “computer jukeboxes.” Arachnid filed a counterclaim alleging infringement of four of its patents by TouchTunes on February 15, 2008.

During this period, third-party Ecast, Inc. requested ex parte reexaminations of four of the six patents involved in the counterclaim, U.S. Patent Nos. the 6,397,189 (’189 Patent), 6,970,834 (’834 Patent), 6,381,575 (’575 Patent), and 5,848,398 (’398 Patent). Arachnid noted it may assert infringement claims against TouchTunes based on the patents not undergoing reexamination.

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; 2009-12-15; Denied; District Judge Robert W. Sweet; Touchtunes Music Corp. v. Rowe International Corp. et al (1-07-cv-11450) NYSD

Regarding prejudice to TouchTunes, the Court noted that although the Examiner issued a final rejection, Arachnid is pursuing an appeal to the BPAI. Although, as Arachnid noted, the process of reexamination thus far had been relatively short (only 16 months), there was no suggestion that appeal would proceed with similar dispatch.

The Court outlined the potential delay introduced by the possibility of appeal, for example, directly to the Court of Appeals for the Federal Circuit, or of filing a new civil action against the Director of the PTO, the outcome of which itself would be appealable to the Federal Circuit. In the Court’s view, such delay would “maintain the cloud of litigation” over business and unduly prejudice TouchTunes by perpetuating the harm its declaratory judgment sought to address.

Regarding simplification of the issues, the Court concluded that the two patents not undergoing reexamination were not “tied to the outcome” of Arachnid’s appeal from the Examiner’s rejection of its other four patents insofar as at least one patent was not in the same family, did not share a close technical relationship, did not share common claim terms with those patents, and was directed towards different subject matter.

Judge Sweet also noted that two claims had been confirmed by the Examiner and even if fewer than all the claims are upheld, the Court would still be left to consider non-infringement, lack of written description, anticipation, and obviousness. Thus, even if the Examiner’s rejections were upheld there would still be significant issues before the Court, which weighed against a stay.

Regarding the stage of litigation, discovery was substantially completed including depositions of witnesses and the exchange of approximately 750,000 pages of documents and electronic files. Moreover, the parties had completed claim construction briefing. Thus, the Court concluded that a stay would not serve to preserve judicial resources.

The case is Touchtunes Music Corp. v. Rowe International Corp. et al, case number 1-07-cv-11450, in the United States District Court of Southern District of New York. Reexaminations 90/010,094, 90/010,095, 90/010,097, and 90/010,147 all appealed to BPAI on October 13, 2009.