Change of Fortune Emboldens Defendant
When it comes to staying a district court litigation pending concurrent patent reexamination, defendants are always arguing to halt the proceedings while plaintiffs urge the court to continue. Yet, in Se-Kure Controls, Inc. vs. Sennco Solutions, Inc. et al. (ND.Ill) the tables were turned.
Plaintiff, Se-Kure asserted three patents against Sennco RE37,590, 5,861,807 and 7,081,882. In an unrelated litigation, the ‘590 was determined to be invalid by another district court and on appeal to the CAFC. Sennco then requested a stay of the litigation based on the ‘590 development. The court granted the stay as to the ‘590 patent only. Shortly thereafter, Sennco pursued patent reexamination of the ‘807 and ‘882 patents at the USPTO (Spring of 2010). As a result of the initiation of the reexamination proceedings, both Sennco and Se-Kure agreed that the ongoing case should be stayed; the court obliged.
In May of 2010, the ‘590 patent was determined invalid at the CAFC, in July of 2010 both the ‘807 and ‘882 patent were being actively reexamined at the USPTO.
In updating the status of the case to the judge in October 2010, Sennco explained to the judge that the PTO is going to gut the claims of the 807 and 882 [Patents] as an expert hunter guts deer. (Who knew Hannibal Lecter was a patent litigator). At the same time, Sennco then asked the judge to lift the stay…wait, what?
With the recent string of good fortune, Sennco seemingly realized that the plaintiff’s patent infringement charges had been significantly undermined. Likewise, with the ‘590 Patent invalidated, Sennco may have been emboldened as to strength of certain pending counter claims. In this regard, the court explained:
To the extent that Sennco argues that the stay should not apply to its counterclaim for antitrust violations related to the prosecution of the now-invalidated ‘590 Patent (see Sennco’s Resp. 7; Dkt. No. 13, Answer 28 ¶¶ 38-45), the court disagrees. Instead, at this point in the litigation, the court finds that proceeding solely on Sennco’s counterclaim rather than simultaneously addressing all the parties’ claims and counterclaims risks a duplication of efforts on overlapping or related issues once the ‘807 and ‘822 Patents complete the reexaminations. Thus, continuing the stay with respect to all the parties’ claims and counterclaims will better support judicial economy and efficiency and will reduce the burden of this litigation on both the parties and the court. The stay, therefore, continues to apply to all the parties’ claims and counterclaims.
Although not exactly the typical scenario, this case serves as a reminder that losing in patent reexamination (once a case is stayed) could result in extra painful consequences for those defendants subject to certain counterclaims.