In recent posts, we have discussed the Northern District of California’s surprising stay of a patent infringement suit in view of an undecided reexamination request. Likewise, our colleagues at the ITCblog have discussed the opposite extreme, the International Trade Commission (ITC). The ITC seems to grant stays pending reexamination in only the most extreme of circumstances due to their statutorily mandated time to decision.
In the Eastern District of Texas, stays although historically disfavored, are beginning to emerge in stipulated form. For example, in Visto Corp. v. Research in Motion Ltd, et al, 2:06cv181 (E.D. Tex. July 2, 2008) as well as the Premier v. HP and Premier v. Microsoft cases, stays were provided in stipulated form. In the Premier case Judge Folsom wrote that “[T]he Court determines that a stay should be counterbalanced with an appropriate stipulation so that neither side will be prejudiced by the other side getting “two bites at the apple.”” As such, the corresponding the order provided:
It is further ORDERED that within fourteen (14) days, Defendants shall either (1) file with the Court a signed copy of the following stipulation, or (2) notify the Court in writing of their decision not to sign the following stipulation:
As a condition of the stay, Defendant may not argue invalidity at trial based on one or more prior art printed publications that were submitted by Yahoo! or those provided by Apple, either to the PTO directly or to Premier during the Apple litigation, in the reexamination proceedings, as well as, those prior art printed publications submitted in any newly requested reexamination process. However, Defendant will be permitted to rely for obviousness on the combination of printed publication references that were submitted by petitioner in the reexamination with prior art that was not so submitted. Any Defendant seeking a request for reexamination must do so within ninety (90) days of filing its stipulation.
It is further ORDERED that as to each Defendant entering into the stipulation, a stay of all proceedings shall ensue.
More recently, the Eastern District of Virginia has weighed in on stays pending reexamination.
In Telecommunication Systems, Inc. v. Sybase 365, Inc., 2-09-cv-00387 (E.D. Va December 23, 2009, Order) (Doumar, J.) the Defendant’s motion to stay the patent litigation pending the outcome of inter partes reexamination was denied. A principal reason for denying the stay of the patent litigation was “the average pendency for an inter partes reexamination is 41.7 months. . . .” The court acknowledged that [Defendant] “is correct, of course, that some courts have granted stays pending reexamination despite the prospect of a drawn-out PTO proceeding. But [stated that] the prejudice to the non-moving party must be measured not only by the delay attendant to a PTO examination, but also in terms of the length of an alternative proceeding in a district court. This judicial district holds the record for the fastest disposition of patent cases, resolving cases on average within half a year. Thus, the prejudice which would result from a stay in the present case is more significant than it would be if the parties were litigating in a district where judicial proceedings take longer to resolve.”
As can be appreciated, patent assertion is a significant undertaking, typically costing on the order of hundreds of thousands of dollars in pre-litigation investigation and due diligence alone. The ability of a defendant to essentially shut down a litigation almost immediately in fora such as California, for 40 months or more, is a game changing advantage in many cases. Thus, aside from weighting the “patent friendliness” of fora such as the Eastern District of Texas, patent holders with limited portfolios and/or infringed claims would be wise to assess the “reexamination friendliness” of their chosen forum.
In view of recent trends, the type of reexamination filed, as well as the forum location are factors that would appear to significantly impact the likelihood of obtaining a stay. Patent Holders would appear to be best situated in this regard on the “rocket docket” of the Eastern District of Virginia or the ITC as both appear to be plaintiff friendly with regard to stay determinations.
In our next post we will examine how the business of the plaintiff affects the stay calculus in the E.D. of Texas.