District Court Stay Pending Patent Reexamination By-passed Via ITC

The initiation of patent reexamination parallel to a district court patent infringement proceeding has become quite routine over the past few years. The use of such a parallel reexamination proceeding offers many benefits to defendants, such as helping prove objectively reasonable behavior to avoid a finding of willful infringement, creating a further prosecution history estoppel/disclaimer record for Markman purposes, establishing an intervening rights defense, or demonstrating materiality of a reference underlying an inequitable conduct defense. Yet, one of the most common defendant uses of a parallel patent reexamination is the ability to shut down a district court proceeding altogether in favor of USPTO reexamination proceedings.

Stays pending patent reexamination are granted quite routinely, albeit inconsistently. Depending upon the court, a case may be stayed based upon the mere filing of a request for reexamination, or upon grant even though such requests are granted in roughly 95% of cases. Likewise, once a case is stayed, serial requests for patent reexamination, if tolerated by the judge, can ensure that the validity case remains with the USPTO indefinitely.

So, for those plaintiffs subject to a stay that are being damaged by continued infringement, aside from battling the a continuous stream of patent reexaminations requests for years on end, is there a way to resume the litigation battle without waiting for the reexamination(s) to end?

If you fail to get through to a particular district court judge that decides to stay your case, have you considered going around him? The “ITC end-around” has been used several times over the past year, most recently by Westinghouse Solar.

Westinghouse sued Zep Solar in a U.S. District Court for infringement of U.S. Patents Nos. 7,406,800 and 7,987,641.

In defending the suit, Zep filed a request for patent reexamination of the ‘800 Patent. The USPTO granted the request for reexamination and promptly stayed the case pending the outcome. In the reexamination, the USPTO canceled claims 1-4, 7-9, 11 and 12 of the ‘800 patent. Thereafter, Zep filed a second reexamination directed to the remaining three claims. The second reexamination is ongoing. Reexamination of the ‘641 Patent is also ongoing.

Westinghouse moved to lift the stay but the court denied the motion pending results of the second reexamination. At that point Westinghouse opted for the ITC end-around.

The tactic is simply to take the same dispute to the ITC, where stays pending patent reexamination just don’t happen, and where a stayed district court proceeding of the same dispute is the norm. To date, the ITC mandate to expeditiously adjudicate 337 actions has led to relatively few stays pending reexamination. In some cases, stays have been entered and later reversed by the full Commission. (See Tessera Decision here).

With stays becoming commonplace, and new, speedier post grant proceedings making such decisions even easier for district court judges, patent disputes are expected to continue to migrate away from district courts to the ITC.