Court Favors Staying Troll Suit

The existence of a competitive relationship between the litigants is often times an important consideration to district court judges considering a stay pending patent reexamination. When weighing the equities whether or not to grant a motion to stay the court action pending USPTO reexamination the trend has been to deny motions for direct competitors. This is because, when staying a litigation dispute between competitors, there is a danger that the delay could cause erosion of market share, customer loyalty, or other intangible business factors….not so with patent trolls.

Patent trolls, also known as “non-practicing entities” to some, do not compete with their infringement targets in the marketplace. Not surprisingly, courts have begun to emphasize the “troll” factor as favoring a stay of the litigation. As explained most recently in Mission Abstract LLC. v. Beasley Broadcast Group Inc. (DED),

Mission Abstract and Defendants are not direct competitors. In fact, Mission Abstract is a non-practicing entity, which does not manufacture or sell the products covered by the patents in suit and seeks to collect licensing fees. (D.I. 43 Ex. E) The relationship between the parties is “[ o ]f particular importance” because “[ c ]ourts are generally reluctant to stay proceedings where the parties are direct competitors.” Vehicle IP, LLC, 2010 WL 4823393, at *2. Because Mission Abstract is a non-practicing entity, this factor favors a stay.

(emphasis added, full order here)

Of course, the courts look to several factors in analyzing the competing interests between parties. Primarily, whether (1) a stay will unduly prejudice, or present a clear tactical disadvantage to, the non-moving party; whether (2) a stay will simplify the issues and trial of the case; and whether (3) discovery is complete and a trial date has been set. Still, in many jurisdictions, patent trolls already have one strike against them

This case was brought to my attention by the great Docket Navigator.