Stay or Dismissal of Litigation

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You Are Not Special

Speed of Patent Reexamination Not So Special?

As most readers of this blog realize, patent reexamination parallel to a district court/ITC litigation is often initiated in an attempt to stay the more cost prohibitive court proceeding. Court’s will stay the ongoing litigation pending the patent reexamination outcome in the interests of judicial economy. Of course the ultimate determination of whether or not a stay is appropriate varies with the facts of each case, and attitudes toward such practices vary wildly across jurisdictions, and even across judges of the same court. 

Last week’s determination in Osmose, Inc. v. Arch Chemicals, Inc., et. al., 2-10-cv-00108 (VAED, Norfolk) was typical in many respects. With discovery coming to a close, Markman proceedings complete, and trial scheduled in three months time, it seemed the timing alone was enough to deny the motion to stay. While the stay was denied, the court took the opportunity to call out the special dispatch accorded patent reexaminations at the USPTO as….well, not so special.
Continue Reading Virginia Court Derides USPTO’s Special Dispatch

Your Honor…the dog ate our first reexam request

In reviewing the cases each week that analyze staying an ongoing district court patent infringement proceeding pending a concurrent patent reexamination, I am always struck by the length of time defendants will wait before seeking reexamination. In many cases, years are allowed to pass, Markman Hearings come and go, significant discovery is conducted, etc. Equally surprising is the willingness of certain courts to look the other way on such late filing practices.

Not surprisingly, once such a late a request is filed, and the corresponding motion to stay is filed with the court, plaintiffs will point out the late timing of the reexam demonstrates how the defendant is seeking to gain a tactical advantage, and how the new proceeding delay ultimate resolution and unfairly prejudice the plaintiff. To be sure, this practice appears to be waning as defendants begin to recognize the significant benefits of an ongoing patent reexamination, aside from the potential of securing a stay. Yet, for those defendants that continue to adhere to the myopic view of patent reexamination as an unlikely escape hatch only, new and improved rationales justifying delay are required.

Recently, in CCP Systems AG, v. Samsung Electronics Corp., LTD et al. (DNJ) the defendant explained away a 1 year delay with relative ease.
Continue Reading Settlement Discussions Explain Delayed Request for Patent Reexamination

CAFC Mandamus Decision Forces Acer Dispute to CaliforniaLast Friday the CAFC ordered the District Court for the Eastern District of Texas to transfer venue to the Northern District of California (NDCA) in the case of In re Acer. Acer petitioned to the CAFC for the mandamus as to venue in their patent infringement dispute with MedioStream, a company located in the NDCA. At issue in the case is the infringement of U.S. Patents 7,009,655 and 7,283,172. In ordering the transfer of the case, the CAFC cited the location of the plaintiff in the NDCA as well as 12 of 13 defendants.The Acer case follows on the heels of In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir 2008) and In re Nintendo Co., 589 F.3d 1194 (Fed. Cir. 2009). Certainly, convenience, cost, and avoiding an EDTX jury were factors in pursuing the venue dispute to the CAFC. However, as most recently demonstrated by Nintendo, perhaps a more compelling factor is the opportunity to shut down the litigation altogether in a friendlier forum.As discussed in earlier posts, Nintendo is one of many recent defendants to execute the Texas Two-Step, which is characterized by a transfer out of Texas  (step 1), followed up by a motion to stay the case pending reexamination in the new forum (step 2).The ‘655 and ‘172 patents at issue in the Acer dispute are currently subject to inter partes patent reexamination at the USPTO. (95/001,284). Likewise, the ‘172 is subject to inter partes reexamination at the USPTO. (95/001,283). In both reexaminations, all claims stand rejected, and both seem destined for appeal in a matter of months. It is worth noting that as recently as September, defendants have been successful in staying cases in the NDCA based upon a mere filing of reexamination request. With the MedioStream patents on their way to BPAI appeal in a few months time, it may be that not only was a battle lost at the CAFC, but perhaps the w

Last Friday the CAFC ordered the District Court for the Eastern District of Texas to transfer venue to the Northern District of California (NDCA) in the case of In re Acer. Acer petitioned to the CAFC for the mandamus as to venue in their patent infringement dispute with MedioStream, a company located in the NDCA. At issue in the case is the infringement of U.S. Patents 7,009,655 and 7,283,172. In ordering the transfer of the case, the CAFC cited the location of the plaintiff in the NDCA as well as 12 of 13 defendants.

The Acer case follows on the heels of In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir 2008) and In re Nintendo Co., 589 F.3d 1194 (Fed. Cir. 2009). Certainly, convenience, cost, and avoiding an EDTX jury were factors in pursuing the venue dispute to the CAFC. However, as most recently demonstrated by Nintendo, perhaps a more compelling factor is the opportunity to shut down the litigation altogether in a friendlier forum.
Continue Reading In re Acer– Half Way Home

Late Amendment Tips Scales in Favor of DefendantsLast Wednesday, Judge Davis (EDTX) was asked to revisit a motion to stay an ongoing litigation between SouthWire Company v. Cerro Wire, et al. pending concurrent patent reexamination. Previously, the judge had denied a request to stay the case without prejudice (U.S. Patent 7,557,301). In the previous decision, Judge Davis reasoned that as the dispute is between direct competitors, such a stay could prejudice the plaintiff.After the earlier denial, patent reexamination proceedings continued on not only for the ‘301 Patent, but also its parent, U.S. Patent 7,411, 129. The ‘129 is subject to inter partes reexamination (requested by defendant Cerro).Recently, an attempt to amend the ‘129 Patent was denied as untimely since it was not introduced prior to the Action Closing Prosecution (ACP).  However, the ‘301 Patent was not as far advanced, and, after a first action, an amendment was submitted. (June 2010). In deciding the renewed request to stay the case, the court found that the amendment tipped the scales in favor of a stay.The court (decision here) explained:. . . Southwire’s inconsistent statements to the PTO favor a stay. In pursuing its patent claims in this Court, Southwire contends the ‘301 patent claims are valid. However, Southwire stated to the PTO that the revised claims, “particularly as amended, are not anticipated or rendered obvious by the cited prior art.” Id. at 9 (emphasis added). Southwire chose to preliminarily amend its claims, and it is upon those particular amendments that it now asserts the ’301 patent is valid over the prior art. Accordingly, it would waste the Court’s time and resources to construe the original ’301 patent’s claims. A stay would simplify and resolve any inconsistencies between Southwire’s representations to the Court and the PTO regarding the scope and validity of the ’301 patent. Southwire’s inconsistent positions regarding validity and its amendments changing the ’301 patent’s scope before the Court has conducted a Markman hearing strongly favor staying this case.With respect to the impact of the ongoing reexamination of the parent case, the court reasoned:Reexamination is not necessarily such an extraordinary circumstance that justifies a stay, and the Court previously denied a stay in this case. However, the specific facts here tip the scales in favor of a stay: Southwire substantively amended the independent claims of the patent-in-suit to avoid the prior art cited in the reexamination, Southwire has made inconsistent representations regarding the validity of the asserted claims, the Court has not yet construed the claims, and the PTO’s rejection of the parent patent has proceeded to the appeal stage of the reexamination proceedings. Standing alone, these factors do not merit a stay pending reexamination; but in combination they do.Thus, even where a stay is initially denied, an advancing reexamination may present further opportunities for defendants. Practically speaking, amendment options for many Patentees are considered non-existent due to the potential creation of an intervening rights defense. For Patentees involved in parallel litigation, this latest development will further serve to reinforce the general aversion to such claim changes in patent reexaminati

Last Wednesday, Judge Davis (EDTX) was asked to revisit a motion to stay an ongoing litigation between SouthWire Company v. Cerro Wire, et al. pending concurrent patent reexamination. Previously, the judge had denied a request to stay the case without prejudice (U.S. Patent 7,557,301). In the previous decision, Judge Davis reasoned that as the dispute is between direct competitors, such a stay could prejudice the plaintiff.

After the earlier denial, patent reexamination proceedings continued on not only for the ‘301 Patent, but also its parent, U.S. Patent 7,411, 129. The ‘129 is subject to inter partes reexamination (requested by defendant Cerro).

Recently, an attempt to amend the ‘129 Patent was denied as untimely since it was not introduced prior to the Action Closing Prosecution (ACP).  However, the ‘301 Patent was not as far advanced, and, after a first action, an amendment was submitted. (June 2010). In deciding the renewed request to stay the case, the court found that the amendment tipped the scales in favor of a stay.
Continue Reading Changing Gear in Patent Reexamination Stalls Related Litigation

Participation in USPTO pilot program held against PatenteeIn August of this year, the USPTO introduced a pilot program aimed at reducing the pendency of ex parte patent reexamination. The program entitled “Pilot Program for Waiver of Patent Owner’s Statement in Ex Parte reexamination Proceedings” is triggered once a new ex parte reexamination request is accorded an initial filing date. Once a Patentee agrees to waive the patent owner response period (since such statements are rarely filed), the USPTO is able to issue an office action together with the grant of an ex parte reexamination (just like inter partes reexamination).Not surprisingly, many Patentess opt to maintain their right to file an Owner Statement in ex parte patent reexamination.In my earlier posts on the pilot program I questioned the affect participation in this program would have on a district court’s decision to stay a parallel litigation. The impact of a Patentee’s participation in the pilot program was recently considered in Brass Smith LLC v. RPI Industries Inc. (D.NJ).Perhaps realizing that NJ is rather “stay friendly,” the plaintiff decided to cooperate with the USPTO and waive their right to a patent owner response period. Brass informed the court of the participation in the program, stating that the reexam would now move faster. Brass also proposed that RPI agree to stop selling/marketing the infringing products until the reexam was completed in exchange for the stay. (see my post of last month on the self imposed injunction tactic). The thinking of Brass seemed to be that, since  the NJ court was likley to grant the stay anyway, Brass may as well try to angle for some sort of benefit.  Ignoring, the attempt at striking a bargain, the court just stayed the case, in part, citing the accelerated reexamination schedule as justification.The court’s opinion and order (here)  summarized the background events, as:On October 18, 2010, counsel for BSI sent a letter to the Court and to counsel for RPI, indicating that it has agreed to participate in the PTO’s “Pilot Program for Waiver of Patent Owner’s Statement in Ex Parte Reexamination Proceedings,” which is “designed to reduce the pendency time of reexamination proceedings.” (Doc. No. 59, hereinafter “BSI Letter”). BSI’s letter further asserts that BSI has contacted RPI and offered to resolve RPI’s motion by stipulating to a stay of the case during the pendency of the reexamination proceedings, so long as RPI refrains from selling, referencing, or showing the allegedly infringing product during the same time period. (Id.). According to the letter, as of October 18, 2010, RPI has not responded to BSI’s proposal.In performing the familiar factor based analysis to determine the relative inequities of staying the litigation, such as potential prejudice to the plaintiff as a result of the reexamination pendency delay, the court explained:….. “any delay would not be for such a protracted or indefinite period to constitute an abuse of discretion.” Cima Labs, Inc. v. Actavis Grp. HF, C.A. No. 07-893 (DRD), 2007 U.S. Dist. LEXIS 41516 (D.N.J. June 7, 2007) (internal citations omitted). Indeed, BSI itself recently informed the Court that it agreed to participate in the PTO’s Pilot Program, which may reduce the pendency of the reexamination by approximately three to five months. (emphasis added)Many patent reexaminations are sought, at least in part, for the purposes of obtaining a stay. As such, it appears that the decision to participate in the pilot program may be very carefully considered going forward.

In August of this year, the USPTO introduced a pilot program aimed at reducing the pendency of ex parte patent reexamination. The program entitled “Pilot Program for Waiver of Patent Owner’s Statement in Ex Parte reexamination Proceedings” is triggered once a new ex parte reexamination request is accorded an initial filing date. Once a Patentee agrees to waive the patent owner response period (since such statements are rarely filed), the USPTO is able to issue an office action together with the grant of an ex parte reexamination (just like inter partes reexamination).

Not surprisingly, many Patentess opt to maintain their right to file an Owner Statement in ex parte patent reexamination.

In my earlier posts on the pilot program I questioned the affect participation in this program would have on a district court’s decision to stay a parallel litigation. The impact of a Patentee’s participation in the pilot program was recently considered in Brass Smith LLC v. RPI Industries Inc. (D.NJ).

Perhaps realizing that NJ is rather “stay friendly,” the plaintiff decided to cooperate with the USPTO and waive their right to a patent owner response period. Brass informed the court of the participation in the program, stating that the reexam would now move faster. Brass also proposed that RPI agree to stop selling/marketing the infringing products until the reexam was completed in exchange for the stay. (see my post of last month on the self imposed injunction tactic). The thinking of Brass seemed to be that, since  the NJ court was likley to grant the stay anyway, Brass may as well try to angle for some sort of benefit.  Ignoring, the attempt at striking a bargain, the court just stayed the case, in part, citing the accelerated reexamination schedule as justification.
Continue Reading Chilling Effect of the USPTO Patent Reexamination Pilot Program?

The Emergence of Patent Reexamination as a Litigation Bargaining Chip As discussed last week, defendants may opt to creatively present their motion for stay pending patent reexamination to increase the likelihood of a favorable district court determination. This tactic appears to be gaining traction as more defendants seek to reap the benefits of a concurrent patent reexamination.In order to adapt to the defendants “sweetening of the deal,” plaintiffs are now finding themselves forced to do a bit of bargaining themselves. In Software Rights Archive LLC., v Google Inc., AOL LLC, Yahoo! Inc., IAc Search & Media, Inc., and Lycos, (NDCA) the court has seemingly mediated a bargain, and in the process, simplified issues for trial. In order to avoid the stay of the litigation, plaintiff SRA was asked to agree to the following conditions:1. Within 15 days of this order, SRA shall narrow its asserted claims to 20. 2. Within 30 days of this order, defendants shall narrow their invalidity contentions to 3 anticipatory references and 3 obviousness combinations per claim. 3. Within 10 days after a claim construction order has been issued, SRA shall narrow its asserted claims to 10 per defendant (no more than 12 total). 4. Within 15 days after a claim construction order has been issued, defendants may amend their invalidity contentions to substitute new anticipatory references or obviousness combinations upon a showing of good cause. To establish good cause, defendants must show why the court’s claim construction requires amendment of their invalidity contentions.Although the above conditions were ultimately proposed by the Court, it appeared that the Defendants had proposed even further limitations. In explaining the denial of the motion to stay, contingent upon the above conditions, the court alluded to further defendant proposals.Moreover, with respect to those claims that survive reexamination, defendants argue that they should not be bound by the results of the reexamination unless SRA agrees to forgo its right to an examiner interview and that they should still be permitted to argue obviousness based on the combination of prior art references that were submitted for reexamination with prior art that was not submitted.While most think of patent reexamination in simple terms as a means to stay a litigation or invalidate patent claims, these are but the most basic of uses of a much more versatile litigation tool. Indeed, patent reexamination that is conducted concurent to litigation has been illustrated by past posts as of great strategic value in pre-trial and post trial applications.  As this new trend in creative motion practice demonstrates, patent reexamination is also bargaining chip defendants are wise to embrace.

As discussed last week, defendants may opt to creatively present their motion for stay pending patent reexamination to increase the likelihood of a favorable district court determination. This tactic appears to be gaining traction as more defendants seek to reap the benefits of a concurrent patent reexamination.

In order to adapt to the defendants “sweetening of the deal,” plaintiffs are now finding themselves forced to do a bit of bargaining themselves. In Software Rights Archive LLC., v Google Inc., AOL LLC, Yahoo! Inc., IAc Search & Media, Inc., and Lycos, (NDCA) the court has seemingly mediated a bargain, and in the process, simplified issues for trial.
Continue Reading Horse Trading: Trends in Stays Pending Reexamination

Creative Motions Undermine Delay PrejudiceEarlier this week, we explored an often overlooked rule that could be used by creative defendants to accelerate inter partes patent reexamination. The rule, 37 CFR 1.953(b), allows parties to an inter partes patent reexamination to essentially skip directly to the appeal stage after first action. Assuming, the parties were to agree to an expedited RAN practice, for example, as a component of an order staying a pending district court action, the examination phase of inter partes reexamination would be accelerated. Thus, the thinking is that creative defendants may seek to leverage this rule to undermine Patentee opposition to a stay. (i.e. based upon the argument that the necessary delay to conduct inter partes reexamination is unduly prejudicial).Consistent with our suggestion to creatively address delay concerns, last week, a decision of the Federal District Court for the Western District of Pennsylvania demonstrated the general effectiveness of this tactic. (although a bit more “brute force” than our proposal)In TDY Industries Inc., v. Ingersoll Cutting Tool Co., (W.D.P.A) Ingersoll filed a request seeking inter partes patent reexamination of TDY’s U.S. Patent 7,244,519 (95/001,417). The request for patent reexamination was made only two months after filing of the complaint with the court. The defendant moved to stay the case shortly thereafter, but the determination on the reexamination request remained outstanding. To address the issue of prejudicial delay, Ingersoll stipulated to a self imposed restraining order of sorts. Essentially, Ingersoll agreed not to deal in products allegedly covered by the ‘519 Patent for a predetermined time frame. In granting the stay, the court explained the weight given to the offer, noting:Turning to undue prejudice, the Court finds TDY’s complaints substantially mitigated by Ingersoll’s agreement to “no longer make, use, offer to sell, sell, import or distribute any [of the allegedly infringing] products in the United States, until the earlier of: (a) the date on which the [Patent] Examiner issues a Right of Appeal Notice . . . in the pending Reexamination, or (b) September 15, 2013, [i.e.,] 3 years away, a period longer than the average time between the filing of a reexamination request and issuance of a reexamination certificate.”Clearly, it is a rare defendant indeed that would offer a self imposed injunction in favor of a stay. Still, creative undermining of the Patentees most powerful argument, especially with respect to inter partes reexamination, may be a growing tre

Earlier this week, we explored an often overlooked rule that could be used by creative defendants to accelerate inter partes patent reexamination. The rule, 37 CFR 1.953(b), allows parties to an inter partes patent reexamination to essentially skip directly to the appeal stage after first action. Assuming, the parties were to agree to an expedited RAN practice, for example, as a component of an order staying a pending district court action, the examination phase of inter partes reexamination would be accelerated. Thus, the thinking is that creative defendants may seek to leverage this rule to undermine Patentee opposition to a stay. (i.e. based upon the argument that the necessary delay to conduct inter partes reexamination is unduly prejudicial).

Consistent with our suggestion to creatively address delay concerns, last week, a decision of the Federal District Court for the Western District of Pennsylvania demonstrated the general effectiveness of this tactic. (although a bit more “brute force” than our proposal)…

Continue Reading Stays Pending Patent Reexamination: Sweetening the Deal

EndAroundThe greatest season of the year, is neither winter, spring, summer or fall, it is football season. Despite the fact that my Eagles are looking hapless these days, and my fantasy football teams are already in the toilet (thanks a lot Larry Fitzgerald), still the NFL season is always exciting. Teams once left for dead rise again, Hail Mary’s are answered (unless Jason Avant is involved, curse his name) and last second strategies rule the day.

What does all of this have to do with patent law?….nothing really, patent law is nowhere near as exciting. Yet, every once in awhile a new strategy appears that changes the game. Much like the NFL, patent practice is a “copycat league,” so, very likely coming to a patent litigation near you….the “ITC end-around.”
Continue Reading The ITC End-Around District Court Stays Pending Patent Reexamination

reexampendency

(click to enlarge)

One of the threshold questions in considering patent reexamination, whether a patent owner, or third party is:

How long will it take?

This question is also the subject of significant debate when litigants in a concurrent district court proceeding argue for/against staying the proceeding. Defendants will often point to the published PTO statistics which identify a 24-28 month pendency to conclusion (NIRC). Conversely, Patentee’s point out that these published number do not account for appeal processing. As can be seen from the chart above, reexaminations that are contested through to appeal, are taking roughly 5 years (ex parte or inter partes). Thus, it is quite disingenuous for defendants
Continue Reading How Long Does Patent Reexamination Really Take?

ar123551342397313When evaluating a request to stay litigation pending reexamination, district courts generally consider three factors: (1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether a stay will simplify the issues in the litigation and facilitate the trial of that case; and (3) whether discovery is complete and a trial date is set.

In an recent opinion, U.S. Magistrate Judge Janie S. Mayeron denied defendants’ motion to stay litigation pending ex parte reexamination because, among other reasons, the reexamination proceedings could not streamline the case. J. Blazek SKLO Podebrady s.r.o. v. Burton Int’l Enterprises, Case no. 08-cv-2354 (D. Minn. June 11, 2010).  At first blush, Judge Mayeron’s rationale for denying the stay seemed illogical as it is certainly the case that, cancellation or amendment of the claims in the patents under reexamination could moot issues of validity, enforceability, infringement, and even damages.

Upon closer inspection, however, this case presents an unusual set of facts in that the
Continue Reading Stay Pending Reexamination Denied Because Defendant Did Not Raise Invalidity Defense