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Seeking a Stay of Patent Litigation: A Factors-Based Analysis

Posted By Scott A. McKeown On 10 February 2010 @ 6:00 In General Information, Stay or Dismissal of Litigation, Stays Pending Litigation | Comments Disabled

Guest Posting by Scott McBride of McAndrews Held & Malloy [1] [1] 

Factorial

Courts have the inherent power to manage their dockets, including the authority to stay patent infringement litigation pending the conclusion of a Patent Office reexamination.  Moreover, the decision to stay litigation is generally discretionary.  Decisions granting stays of patent litigation are typically reviewed under an abuse of discretion standard.  Such decisions can, in certain circumstances, be quite difficult to reverse on appeal.  Although a patent owner has a statutory right under 35 U.S.C. § 318 to seek a stay of patent litigation pending the outcome of an inter partes reexamination proceeding, such requests can be denied if the judge does not believe that a stay would serve the interests of justice. 

Factors generally considered by district court judges when ruling on motions to stay include whether (1) a stay will unduly prejudice, or present a clear tactical disadvantage to, the nonmoving party; (2) a stay will simplify the issues and trial of the case; and (3) discovery is complete and a trial date has been set.  In ITC proceedings, Administrative Law Judges also consider the stage of the reexamination proceedings, efficient use of the Commission’s resources, and alternative remedies available in federal court.

Prejudice

Delay arguably should not be a dispositive issue, as it is common to all stayed cases.  In some cases, courts have found that a delay serves the interests of correctness and finality, by assuring that the Patent Office decision can be taken into account by the court prior to further proceedings.  However, it has been argued, successfully at times, that a delay that is not merely lengthy, but potentially indefinite is prejudicial to the nonmoving party.  Furthermore, the potential efficiency of having some of the issues in the case resolved by the Patent Office has been discounted in certain cases, where it was said to be uncertain when, if ever, the resolution would come.

In some cases in which no injunctive relief is sought, courts have found that a stay would not unduly prejudice the non-movant.  However, in certain other cases, courts have found that where the parties are direct competitors [2], a stay would likely prejudice the non-movant.  Sometimes courts consider that witnesses are more likely to be located if discovery is allowed to proceed because witnesses may become unavailable, their memories may fade, and evidence may be lost while the Patent Office proceedings take place.

Simplification

A stay of litigation may streamline trial, simplify or eliminate issues, or reduce consumption of court and party resources.  In 74 % of completed reexaminations, claims of the patent-in-suit have been eliminated, amended or otherwise limited.  Accordingly, it has been argued that reexamination can simplify trial by eliminating the need to litigate infringement claims.  However, courts may require a requesting party do more than merely proffer oft-cited reexamination statistics and generic judicial efficiency arguments.  Some courts have found a compelling reason to grant a stay when an inter partes reexamination is proceeding with the same parties.  However, there may be significant complex issues, such as infringement, inequitable conduct, and prior public use that will remain after reexamination, which courts have weighed against granting a stay.

Timing

The current stage of the litigation can impact the decision on a motion to stay.  Was the motion to stay filed before or after discovery, claim construction, summary judgment motions or trial?  Courts often have found the advanced nature of a case that is approaching trial may weigh against granting a stay.  But the opposite inference—that a suit in the early stages should weigh heavily in favor of a stay—is not necessarily true.  Stays have been denied in some cases even though there was a lack of a trial date and discovery was at its earliest stages. 

Nevertheless, it could be argued that the key factors that come into play when a district court judge considers whether to grant a stay are whether the movant is a direct competitor, whether the reexamination is ex parte or inter partes, the stage of the reexamination proceeding, the status of the claims under reexamination, the stage of the litigation, and the status of discovery.  In many cases, it may be best to seek stays early, but some courts have seriously entertained a motion to stay very late in a case.  Parties should also consider that stays may affect awards of damages (at least when sought prior to exhaustion of appeals) and may affect the ability to obtain or maintain injunctions.

Conclusion

One litigation strategy may be to carefully select the type of reexamination with an eye towards increasing the chances of obtaining a stay of concurrent litigation.  Timing is important, but some courts have found that it is never too late.  Parties should consider the district court’s and judge’s record for granting stays.  In certain cases, parties have chosen not to rely solely upon Patent Office statistics.  The results of the particular reexamination of the patent-in-suit, for example, sometimes may be more persuasive to certain judges. 

 


[1] [3] Scott McBride is partner in McAndrews, Held & Malloy, Ltd. in Chicago. IL and is serving as a faculty member of the Patent Law Institute’s Reissue and Reexamination Strategies and Tactics with Concurrent Litigation Conference in New York at the PLI Conference Center February 11-12, 2010.  The views expressed herein are not necessarily the views endorsed or supported by McAndrews, Held & Malloy, Ltd. nor any of its clients.


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