By Scott A. McKeownThe competitive relation between the litigants is a recurring theme of E.D. of Texas determinations on whether or not to grant a motion to stay the infringment action in view of a pending reexamination. In other words, where the litigants are direct competitors, the trend has been to deny motions for staying the litigation.
| January 13, 2010
As noted in Motorola Inc v. Vtech Communications, Inc. et al (5-07-cv-00171) E.D. TX,(Order) (Craven, C.)Stays of proceedings are not favored when parties are competitors. Nidec Corp. v. LG Innotek, Co., 2009 WL 3673433, * 4 (E.D. Tex. Apr. 3, 2009); O2 Micro Int’l Ltd. v. Beyond Innovation, 2008 WL 4809093, *2 (E.D. Tex. Oct. 29, 2008) (“The parties are direct competitors in the market and a denial of timely enforcement of the plaintiff's patent rights does indeed undulyprejudice the plaintiff.”) Here, Motorola has not only shown that its cordless phones are sold by a licensee that competes directly with VTech, but the Court is also not convinced, as urged by VTech, that any harm to Motorola would be fully compensable by money damages. (emphasis added) More recently, in National Oilwell Varco, L.P. v. Auto-Dril, Inc., Case No. 5-09-cv-00085 (D.C. EDTX January 5, 2010, Order) (Ward, J.) Auto-Dril's motion to stay the patent infringement litigation pending the outcome of a reexamination proceeding was denied despite the fact that the litigation was "in the early stages of litigation and discovery [had] not yet begun." "Plaintiff contends that a stay would delay the possibility of them obtaining an injunction to prevent ongoing infringement by the defendant and that the defendant is a thinly capitalized company without great resources. The parties are direct competitors and a denial of timely enforcement of either party’s patent rights would indeed unduly prejudice that party." (emphasis added) As noted earlier this week, the friendliness of a forum to motions for stay pending reexamination may be emerging as a significant consideration. The factors influencing forum selection include the type of reexamination filing, forum location, and, at least in Texas the competitive relation of the litigants.