Setting the Stage for a Showing of PrejudiceObtaining a stay of an ongoing district court infringement action is one of the many benefits of patent reexamination concurrent with litigation. Defendants that are able to obtain a stay pending patent reexamination can avoid cost prohibitive litigation discovery during the course of the USPTO proceeding. In addition to cost savings, there are also tactical advantages to the USPTO proceeding. Unlike the courts, in patent reexamination, the USPTO does not recognize the presumption of validity. Moreover, the USPTO does not require the “clear and convincing” standard to demonstrate invalidity in patent reexamination, but employs the more liberal “preponderance of the evidence” standard. As such, defendants can enhance the strength of their invalidity defense via patent reexamination. As defendants increasingly employ patent reexamination as a litigation tool, patent owners must adapt their game plan.Patent Owners often select patent friendly forums for their perceived reluctance to invalidate U.S. Patents, such as the Eastern District of Texas. Such forums are oft times equally reluctant to stay an ongoing infringement action in favor of a patent reexamination proceeding. However, for those Patent Owners forced into less friendlier fora, what steps can be taken to avoid a stay pending patent reexamination?One of the factors generally considered when ruling on a  motion to stay is whether or not the stay will unduly prejudice, or present a clear tactical disadvantage to, the non-moving party. In the case of direct competitors, court’s will often give greater weight to the potential business prejudice in delaying the court action. Therefore, to emphasize this potential for prejudice, and to anticipate the need to demonstrate such, it is imperative that Patent Owners move for a preliminary injunction.In weighing the relative merits of staying an ongoing court action between competitors, the Patent Owners request for injunctive relief is given significant weight. As recently discussed in Osmose, Inc. v. Arch Chemicals, Inc., et al., 2-10-cv-00108 (VAED, Norfolk) (previous post here)Although Osmose has not filed a motion for a preliminary injunction, the complaint does seek injunctive relief. Osmose therefore might be prejudiced by a multi-year stay that could allow defendants to both continue selling the allegedly infringing products and further increase their market share.   Further, last week it was emphasized that the timing of the request for injunctive relief may also impact the relative equities of staying the case. In Richtek Technology Corp., et al., v. uPI Semiconductor Corp. et. al., 3-09-cv-05659 (NDCA), the court emphasized that:Richtek has not filed a motion for a preliminary injunction in this year-and-change-old district court action. Although Richtek expressed intent to eventually file a preliminary injunction motion at the October 2010 case management conference and in its early January discovery dispute letter brief, it did not even request permission to file such a motion until nearly a week after motion practice was suspended in mid-January (Dkt. Nos. 108 at 14, 229 at 2, 242). If the threat of irreparable harm truly were imminent, then Richtekwould not have dragged its feet this long. Richtek has not shown that it would suffer irreparable harm or clear tactical disadvantage as a result of a stay of this action.For Patent Owners anticipating a motion to stay pending patent reexamination, an early motion for preliminary injunction can go a long way in demonstrating potential prejudice relative to a direct competit

Obtaining a stay of an ongoing district court infringement action is one of the many benefits of patent reexamination concurrent with litigation. Defendants that are able to obtain a stay pending patent reexamination can avoid cost prohibitive litigation discovery during the course of the USPTO proceeding. 

In addition to cost savings, there are also tactical advantages to the USPTO proceeding. Unlike the courts, in patent reexamination, the USPTO does not recognize the presumption of validity. Moreover, the USPTO does not require the “clear and convincing” standard to demonstrate invalidity in patent reexamination, but employs the more liberal “preponderance of the evidence” standard. As such, defendants can enhance the strength of their invalidity defense via patent reexamination. 

As defendants increasingly employ patent reexamination as a litigation tool, patent owners must adapt their game plan. Patent Owners often select patent friendly forums for their perceived reluctance to invalidate U.S. Patents, such as the Eastern District of Texas. Such forums are oft times equally reluctant to stay an ongoing infringement action in favor of a patent reexamination proceeding. However, for those Patent Owners forced into less friendlier fora, what steps can be taken to avoid a stay pending patent reexamination?

One of the factors generally considered when ruling on a  motion to stay is whether or not the stay will unduly prejudice, or present a clear tactical disadvantage to, the non-moving party. In the case of direct competitors, court’s will often give greater weight to the potential business prejudice in delaying the court action. Therefore, to emphasize this potential for prejudice, and to anticipate the need to demonstrate such, it is imperative that Patent Owners move for a preliminary injunction.

In weighing the relative merits of staying an ongoing court action between competitors, the Patent Owners request for injunctive relief is given significant weight. As recently discussed in Osmose, Inc. v. Arch Chemicals, Inc., et al., 2-10-cv-00108 (VAED, Norfolk) (previous post here)

Although Osmose has not filed a motion for a preliminary injunction, the complaint does seek injunctive relief. Osmose therefore might be prejudiced by a multi-year stay that could allow defendants to both continue selling the allegedly infringing products and further increase their market share.   

Further, last week it was emphasized that the timing of the request for injunctive relief may also impact the relative equities of staying the case. In Richtek Technology Corp., et al., v. uPI Semiconductor Corp. et. al., 3-09-cv-05659 (NDCA), the court emphasized that:

Richtek has not filed a motion for a preliminary injunction in this year-and-change-old district court action. Although Richtek expressed intent to eventually file a preliminary injunction motion at the October 2010 case management conference and in its early January discovery dispute letter brief, it did not even request permission to file such a motion until nearly a week after motion practice was suspended in mid-January (Dkt. Nos. 108 at 14, 229 at 2, 242). If the threat of irreparable harm truly were imminent, then Richtekwould not have dragged its feet this long. Richtek has not shown that it would suffer irreparable harm or clear tactical disadvantage as a result of a stay of this action.

For Patent Owners anticipating a motion to stay pending patent reexamination, an early motion for preliminary injunction can go a long way in demonstrating potential prejudice relative to a direct competitor.