Issue: Motion to Stay Pending Ex Parte Reexamination and Preclusion
Judge: District Judge Margaret M. Morrow
Order: Granted
Date: July 16, 2010

Aspex Eyewear and Contour Optik initiated this infringement action against Revolution Eyewear involving U.S. Patent No. RE37,545. In 2008, the court granted defendant’s motion to stay the proceeding pending resolution of related claims in the Central District of California filed in 2002. The 2002 action was transferred to Judge Virginia Phillips prior to trial and the jury returned a verdict against Revolution on September 21, 2007.

On August 27, 2009, plaintiffs filed a request to lift the stay in the present case and defendant opposed since, at the time, the 2002 action was on appeal in the Federal Circuit. The Federal Circuit subsequently affirmed the district court’s judgment on April 29, 2009. Just prior to the Federal Circuit’s ruling, however, Revolution filed a request for ex parte reexamination of the claim subject in both litigations. Judge Philips denied Revolution’s request for a stay of execution of judgment in the 2002 action finding that Revolution had delayed its request for reexamination until significant litigation, including a jury trial, had been completed, and had failed to demonstrate a likelihood that its reexamination request would be successful. Given that the reexamination process was in its early stages, Judge Phillips found that Revolution’s predictions of success were “nothing more than speculation.”

On January 4, 2010, the PTO issued a non-final office action that rejected the subject claim as obvious.

Since the court originally stayed the matter believing that final resolution of Revolution’s liability in the 2002 action would be controlling and clarify the issues (and all litigation and appeals in the 2002 action were now completed), the original basis for a stay no longer existed. As such, normally the court would reopen the matter. Revolution, however, argued that the PTO’s reexamination of the patent-in-suit supported maintaing the stay, contending that this was particularly true given the PTO’s rejection on grounds of obviousness.

Plaintiffs argued that Revolution should not be rewarded for its “negligence in delaying the filing of its request for reexamination until the eve of the Federal Circuit’s decision in the 2002 action.” They suggested that the delay was particularly egregious given Revolution’s reliance on a reference that was before the PTO at the time the patent issued. The court found that: “Revolution has paid a price for its dilatoriness, however, in that it has been required to pay a multimillion judgment in the 2002 action. Vis-á-vis this matter, which is in its infancy, Revolution’s reexamination request is less dilatory. Consequently, the court concludes that this factor weighs in favor of maintaining the present stay.”

The court also considered the issue of preclusion. Specifically that while the subject claim was found “not invalid” in the 2002 action, the Court did so on grounds other than obviousness. Here the PTO provisionally rejected the claim as unpatenable on different grounds. In its order staying the action pending completion of proceedings in the 2002 action, the court noted the possibility that Revolution would assert a new invalidity defense and commented that the defense might be barred by collateral estoppel because it “could most probably have been raised in the 2002 action.” Although the court made that comment before it learned of the reexamination proceeding, plaintiffs argued that the PTO’s reexamination is irrelevant because the final judgment in the 2002 action had a collateral estoppel effect. Here the court here declined to decide the issue since neither party cited any authority addressing whether this impacts the preclusion analysis.

The Court found that: “The record the parties have presented … does not adequately address the preclusive effect of the 2002 judgment on plaintiffs’ allegations in this case, or whether the outcome of the reexamination proceeding would alter that preclusive effect in any way. Should plaintiffs wish to request that the court lift the stay for the limited purpose of litigating the preclusion issue, including the impact of the reexamination proceeding on the preclusive effect of the 2002 judgment, they may file a properly noticed motion requesting that relief.” Order p. 10.

The Court concluded that, until such time as the preclusive effect of the 2002 judgment in light of the reexamination proceeding becomes clear, the conservation of judicial and party resources weighed in favor of maintaining the stay since the parties now contemplated securing expert testimony on willful infringement and plaintiffs seek to add a new defendant whom they allege actively induced Revolution’s patent infringement. Discovery would be required concerning sales of the products at issue, including those that were not accused in the 2002 litigation. The court was not persuaded that the extended process of reexamination would unfairly prejudice the plaintiff noting that, since only the patent owner can appeal the PTO’s final decision in an ex parte reexamination, mere inherent delay did not support a finding of prejudice.

Read or Download Order (PDF): Motion for Stay Pending Reexamination; 2010-07-16; Granted; District Judge Margaret M. Morrow; Aspex Eyewear, Inc et al v. Revolution Eyewear Inc (2-07-cv-05042) CACD

Issue: Motion to Stay Pending Ex Parte Reexamination
Judge: Magistrate Judge Don J. Svet
Order: Denied
Date: July 14, 2010

Defendants moved to stay pending ex parte reexamination of the patent-in-suit. Plaintiff opposed arguing that the motion was premature since the request had not yet been granted. Moreover, as the patent owner, plaintiff argued they stand to incur substantial costs while the requester bears only the filing fee and that the reexamination will not resolve all issues or create an estoppel against the defendants. Plaintiff also alleged that defendants requested the reexamination for “the dilatory purposes of stalling this litigation and enabling them to duck out of this litigation of the next couple of years” citing that Basic’s CEO was aware of the patent-in-suit since 1998. Plaintiff further contended that this was not a case where the PTO’s expertise would be “particularly helpful” or needed by the Court since the design of a dental implant kit is not so technical that the court cannot understand the patentability issues.

In support of their motion to stay, defendants asserted that “nearly 85% of the Requests for Reexamination are granted” and contended that it takes “18-24 months for the Typical Reexamination to be concluded.” Plaintiff countered that a trial before this court “would almost certainly be concluded well before the reexamination process concludes” even if it takes the PTO the average 26.5 months to issue a reexamination certificate. Defendants agreed that it would take at least 18-24 months for a reexamination to be concluded and “more like four years if an appeal is taken.”

In denying Basic’s motion, the Court found that although no trial date had been set, the court already held a scheduling conference, entered its Scheduling Order, and discovery was well underway: “The Court notes that at this time the PTO has not granted the reexamination request. Moreover, even if the PTO grants the reexamination, it is likely that not all of the issues regarding the patent before the Court will be resolved in the reexamination proceeding. Thus, the Court will have to adjudicate the infringement and validity of at least some patent claims along with the issues not before the PTO. Therefore, the PTO reexamination may not simplify the issues before the Court … Moreover, granting a stay would unduly prejudice Plaintiff and present a clear tactical advantage for Defendants.” Order p. 6.

Read or Download the Order (PDF): Motion for Stay Pending Reexamination; 2010-07-14; Denied; Magistrate Judge Don J. Svet; D’Alise v. Basic Dental Implant Systems, Inc. et al (1-10-cv-00016) NMD

Issue: Motion to Reconsider Motion for Stay Pending Reexamination
Judge: District Judge Robert S. Lasnik
Order: Denied
Date: July 12, 2010

Motiva’s motion for reconsideration of the Court’s June 11, 2010 order granting defendants’ motion to stay the litigation pending reexamination of the patent-in-suit was denied. Defendants requested the stay because the USPTO granted their request for inter partes reexamination of U.S. Patent No. 7,292,151. See Reexamination Control No. 95/000,540.

Plaintiff argued that the Court erred because it “did not consider the total time it takes for reexamination and exhaustion of all appeals: more than seven years.” Motion at p. 1. The Court countered this assertion explaining that: “The seven year delay plaintiff noted occurred in one cited case. It is speculative to conclude that this case will face a similar delay. Most importantly, plaintiff is incorrect in assuming that the Court failed to consider the potential delay. In fact, the Order explicitly noted that the intervening delay is ‘likely to be protracted.’ Order at p. 3. The Court is familiar with the appellate process and aware of how long appeals can take. Plaintiff’s contention that the Court was unaware of the delays inherent in that process is unsupported and unfounded.”

Second, plaintiff argued that the benefits of a stay would be lower than the Court apprehended because the USPTO had yet to issue an office action and: “Without an office action, the Court does not know if the PTO will reject or confirm the claims and has very little information on the likelihood that claims will survive.” Motion at p. 4. The Court rejected this rationale as similarly speculative, noting that equally speculative is whether the USPTO will reject or confirm claims. The Court reiterated that it should not expend significant resources litigating claims that may be eliminated or substantially altered.

Read or Download Order (PDF): Motion to Reconsider Motion for Stay Pending Reexamination; 2010-07-12; Denied; District Judge Robert S. Lasnik; Motiva LLC v. Nintendo Co Ltd et al (2-10-cv-00349) WAWD

Issue: Plaintiff’s Motion to Lift Stay Pending Reexamination
Judge: District Judge Greg Kays
Order: Denied
Date: July 12, 2010

Multiprens requested reexamination of the patents-in-suit and the Court stayed the litigation proceeding on April 9, 2009 pending the outcome. The USPTO confirmed both claims of Patent No. 5,853,164 on December 18, 2009 and confirmed all but one of the claims of Patent No. 5,979,876 on March 5, 2010. See Reexamination Control Nos.  90/010,411 and 90/010,412.

Kinedyne responded that it is “virtually certain” that the USPTO will ultimately confirm the remaining claim however the Court disagreed with making such an assumption: “The Court has no basis to evaluate this assertion. The Court stayed the proceedings pending reexamination and the parties agree that reexamination is ongoing. Since the reason for the stay still exists, lifting it is not appropriate at this time. But the Court is cognizant of Plaintiff’s desire to move the case forward and shares its interest in judicial economy.” Order, p. 1.

Plaintiff’s Motion to lift the stay was denied and the parties ordered to file a joint status report within 30 days and every 30 days thereafter informing the Court of the status of the remaining claim’s reexamination. The Court indicated that it would at that point consider lifting the stay regardless of whether reexamination is complete.

Read or Download Order (PDF): Motion to Lift Stay Reopen; 2010-07-12; Denied; District Judge Greg Kays; Kinedyne Corporation v. Multiprens USA, Inc. (4-08-cv-00755) MOWD

Issue: Emergency Motion to Stay Injunction Pending Appeal
Judge: Magistrate Judge Cathy Ann Bencivengo
Order: Denied
Date: June 25, 2010

Mytee’s motion for a Stay of Injunction Pending Appeal was denied.

On January 20, 2010, following a jury verdict in favor of Harris Research, Inc. finding asserted claims of Harris’ U.S. Patent Nos. 6,298,577 and 6,266,892 infringed and not invalid, the Court granted Harris’ request for a permanent injunction under 35 U.S.C. § 283 against Mytee Products, Inc. On February 16, 2010, Mytee filed an appeal with the U.S. Court of Appeals for the Federal Circuit. On April 12, 2010, Mytee filed a motion for a stay of the injunction pending the appeal and Harris filed an opposition.

A court may stay an injunction pending appeal pursuant to Federal Rule of Civil Procedure 62(c). The Court considered four factors in ruling on Mytee’s Rule 62(c) motion: (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.

Notably, in its motion for Stay of Injunction Pending Appeal, Mytee informed the Court that in January, 2010 the USPTO  granted its ex parte and inter partes requests for reexamination of the two Harris patents at issue in the litigation. See 90/010,690 and  95/001,235.

The Court found that: “The likelihood of success on an appeal from the judgment in this case is not increased by a reexamination proceeding before the USPTO that involves different prior art. The USPTO may ultimately find the Harris patents invalid but that proceeding is not part of the issues on appeal before the Federal Circuit …  The allowance of a reexamination does not create a strong likelihood of success on the merits of the appeal from the judgment in this case. Mytee must appeal from the record in this case, and the reexamination proceeding is considering art that was not before this Court.” Order, p. 3.

Ultimately the Court found that Mytee had not made a strong showing that it is likely to succeed on the appeal given the absence in the record of evidence presented by Mytee as part of the summary judgment proceedings. The Court found that Mytee had not demonstrated that it would be irreparably injured absent a stay. The Court rejected Mytee’s contention that Harris would be not irreparably harmed by continued sales of the infringing product because the parties are not direct competitors and money damages would be adequate to compensate Harris for any ongoing sales pending the appeal. Finally, the Court found that Mytee had not demonstrated that the public interest clearly lies in favor of a stay.

Download or Read Complete Order (PDF): Emergency Motion to Stay Injunction and or Execution of Judgment; 2010-06-25; Denied; Magistrate Judge Cathy Ann Bencivengo; Mytee Products Inc v. Harris Research, Inc (3-06-cv-01854) CASD

Read the full decision here: Blazek Sklo Poderady v. Burton International, (D. Minn., June 11, 2010)(CA 08-2342)

On June 16, 2008 Blazek brought a lawsuit against defendants asserting infringement of the patents-in-suit.  To avoid the expense of litigating the infringement suit, the defendants sought an ex parte reexamination of the patent but waited to submit the reexamination until five days before the close of fact discovery.  Prior to that, the defendants did not participate in discovery.  Plaintiff Blazek served an infringement claim chart, but defendants did not respond to it and the defendants did not submit a prior art statement as required by the court’s scheduling order.  The defendants also did not identify any experts or submit expert reports as required by the court’s scheduling order.

After submitting the reexamination request, essentially on the eve of trial, the defendants asked the court to stay the litigation arguing that the plaintiffs would not be prejudiced by a stay and that a stay would streamline the issues for trial.  The court denied the stay.  Citing the 36-month average pendency for ex parte reexaminations, the court held a near three-year delay would prejudice the plaintiff because the inventor was nearly 80-years old and ailing:  ”waiting more than 3 years to resume this case could very likely result in the loss of critical evidence, if not a very important witness.”  The Court also found it relevant that the defendants delayed seeking the reexamination request until fact discovery closed and the case was trial-ready.  The defendants admitted that they knew of the prior art patents on which they sought the reexamination request at least four months before seeking the reexamination.  The Court found it was significant that the defendants sought the stay for the tactical reason of avoiding the cost of litigation and concluded “defendants cannot ‘have their cake and eat it too.’”  Finally the court held that there would not be a streamlining of issues based on the results of the reexamination because the defendants did not assert invalidity of the patent as a defense.

A timely filed patent reexamination may sometimes be effective in staying a concurrent litigation.  But, as this case illustrates, it is no guarantee.  A determination whether to stay a litigation in lieu of a pending reexamination is invariably a balancing test that considers the totality of the circumstances.  The sole factor weighing in favor of a stay in this case was the mere chance that, three years down the road, the patent-in-suit could be invalidated.  Not surprisingly, this was insufficient for this district court judge and the defendant will likely pay heavy price for ignoring the pending litigation.

On October 13, 2009, Pitney Bowes sued Zumbox, Inc. alleging infringement of Pitney Bowes’s U.S. Patent Nos. 6,690,773 (“the ’773 patent”), 7,058,586 (“the’586 patent”), and 7,478,140  (”the ‘140 patent”), each directed to delivery systems for digital mail.  On January 22, 2010, Zumbox submitted requests at the USPTO for inter partes reexamination of all claims in each of the three patents-in-suit.  One month later, Zumbox moved the district court to stay the litigation pending the reexaminations.  On March 15, 2010, the USPTO granted the inter partes reexamination of the ’140 patent and issued a first non-final Office action that rejected all 20 claims in the ’140 patent.  On April 16, 2010, the USPTO granted inter partes reexaminations of the ’586 and ’773 patents but issued Office Actions that same day preliminarily confirming the claims in those patents.

In granting Zumbox’s motion to stay, the court found three factors weighed in its favor.  First, the case was “in its earliest stages—the Case Management Conference was held in February 2010. Second, the court found that the reexaminations would likely result in a simplification of the issues.  The court observed that all of the claims in the ’140 patent were preliminarily rejected by the USPTO meaning the parties would not need to litigate any issue relating to the ’140 patent infringement.  The Court also stated that the USPTO’s confirmation of the patentability of the claims in the remaining two patents (if made final) also would benefit the litigation by allowing the court to rely on the “office’s expertise, analysis of the claims, and evaluation of the relevant prior art.”  The court also noted that the absence of counter-claims brought by defendant weighed in favor of staying the litigation and that the high likelihood that some claims would be canceled or amended in the reexaminations likely would narrow or clarify the issues for claim construction and trial.

Third, the court found a stay would not unduly prejudice the plaintiff.  Pitney Bowes waited over six months from the filing of its lawsuit to seek any injunctive relief and in its Complaint asked for only permanent injunctive relief, not preliminary injunctive relief.  Pitney Bowes fought the stay motion by citing to the Central District’s decision in Allergan v.Cayman Chemical Co. denying a motion to stay pending reexamination. Allergan Inc. v. Cayman Chemical Co., No. SACV 07-01316-JVS (C.D. Cal. Apr. 9, 2009). The court distinguished this case from the decision in Allergan because Pitney Bowes unlike the Allergan plaintiff was not exploiting the patents-in-suit:  “non-patent exploiters” or NPEs “have a more difficult time obtaining injunctions” because they cannot adequately demonstrate irreparable harm under the Supreme Court’s recent decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).” That is, any delay could be addressed by monetary damages.  This decision and the Allergan case are among a small number of stay decisions where a court considered whether a patent-owner plaintiff was currently exploiting its patents, even where the patent-owner plaintiff does not fit the traditional definition of NPE as a “non-practicing entity.”  Neither decision clarifies whether exploitation of a patent includes practicing the patent, licensing the patent, or both.

Intermec countered that any stay at this point, after the parties had engaged in years of litigation including the exchange of expert reports, depositions of 41 individuals, exchange of 24 expert reports, 26 days of expert depositions, and complete briefing of dispositive motions on more than 25 issues, would “reward an attempt to gain a tactical advantage in this litigation by circumventing the Court’s discovery orders” as undue prejudice.  Although this was stated in Intermec’s opposition to the motion, the Court did not explicitly identify these issues in its order.  Rather, the Court simply stated that “[A]fter careful consideration, the Court agrees with the parties that a conditional stay pending the PTO’s determination on the request for reexamination is appropriate. A conditional stay will serve the interests of both parties, as exemplified by each party’s brief on this matter.”

Read Court Order: Motion for Stay Pending Reexamination; 2009-12-23; Granted; District Judge Ralph R. Erickson; Alien Technology Corporation v. Intermec, Inc. et al (3-06-cv-00051) NDD

Thus, the Court ordered the alternative proposed by Intermec (and agreed to by Alien) that the litigation be stayed until February 10, 2010 pending the PTO’s decision whether or not the request raised a substantial new question of patentability. The Court would then enter a partial final judgment, such that Intermec could appeal the non-infringement summary judgment decision if the stay is to be maintained throughout reexamination.

The case is Alien Technology Corporation v. Intermec, Inc. et al, case number 3-06-cv-00051, in the United States District Court of the Southeastern Division of North Dakota. Reexamination 95/001,265 filed November 11, 2009.

Spectrum further urged that despite the pending reexaminations, Sorensen proceeded to initiate not only the present lawsuit but numerous others, at least 23 of which had been granted stays pending reexamination of the ‘184 patent, in many cases by the present Court. Spectrum also suggested that the statutory mandate of “special dispatch” had been compromised by Sorensen’s petitioning for (and receipt of) multiple extensions of time to respond to each Office Action.

Ultimately, the Court concluded that a stay was appropriate because the litigation was in its early stages, Sorensen had not established undue prejudice, and the reexamination would simplify issues for the Court and save expense for the parties. Moreover, plaintiff could move to vacate if the reexamination did not take a “reasonable” amount of time. The Court further provided that any party could apply for an exception to the stay for “specific, valid” reasons believed to require discovery in order to preserve evidence that would otherwise be unavailable after the stay.

Read the Order: Motion for Stay Pending Reexamination; 2009-12-23; Granted; District Judge Barry Ted Moskowitz; Sorensen v. Spectrum Brands, Inc. et al (3-09-cv-00058) CASD

The Court was evidently not persuaded by Sorensen’s 23 page opposition to the motion, which began: “An ex parte reexamination of a patent is like a baseball game with an undetermined number of innings …[t]his Court cannot predict the final outcome of the ‘184 patent reexamination and it can no longer wait for the game to end.”

The case is Sorensen v. Spectrum Brands, Inc. et al, case number 6-09-cv-00116, in the United States District Court of the Southern District of California. Reexaminations 90/008,976 filed on December 21,2007 and 90/008,775 filed on July 30, 2007.

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.