The opinion of the court was delivered by: Judge Caputo
Before me is Plaintiff Arlington's motion to stay the proceedings pending a final determination by the U.S. Patent and Trademark Office ("PTO") regarding the inter partes reexamination of the '831 Patent. (Doc. 138.) Plaintiff brought this motion on February 7, 2008, pursuant to 35 U.S.C. § 318 and Local Rule 7.1.
Defendant Bridgeport initiated the inter partes reexamination proceeding, and it was granted in April of 2007.
Any third-party may at any time, file a request with the PTO for inter partes reexamination of a patent on the basis of any prior art. U.S.C. § 311(a).*fn1 A request for reexamination will be granted if there is "a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications." 35 U.S.C. § 312(a); 35 U.S.C. § 313. At the end of the reexamination process, " when the time for appeal has expired or any appeal proceeding has terminated, the Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent any proposed amended or new claim determined to be patentable." 35 U.S.C. § 316(a). A patent owner or third-party requester may take an appeal from the Director's decision. 35 U.S.C. § 315. Only after the time for appeals has expired or the appeals terminated may the PTO issue a reexamination certificate.
Once an order for inter partes reexamination of a patent has been issued under section 313, the patent owner may obtain a stay of any pending litigation which involves an issue of patentability of any claims of the patent which are the subject of the inter partes reexamination order, unless the court before which such litigation is pending determines that a stay would not serve the interests of justice. 35 U.S.C. § 318. In determining whether to grant a stay of patent litigation, the Court must consider: "(1) whether a stay would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party, (2) whether a stay will simplify the issues, and (3) whether discovery is complete and whether a trial date has been set." In re Laughlin Prods., Inc., 265 F. Supp. 2d 525, 530-31 (E.D. Pa. 2003). The court in Laughlin Products also considered the impact that the reexamination proceedings would have on the pending litigation.
In Gould v. Control Laser Corp., 705 F.2d 1340 (Fed. Cir. 1983), the Federal Circuit Court of Appeals considered the appeal of a stay of proceedings ordered by the district court, pending the conclusion of a reexamination by the PTO. In finding that the district court did not abuse its discretion in ordering a stay, the court noted that
[t]he present stay is not for such a protracted or indefinite period as to render its issuance an abuse of discretion. "[R]eexamination proceedings . . . including any appeal to the Board of Appeals, will be conducted with special dispatch. . . ." Assuming the PTO decision on reexamination is adverse to the patent holder and may therefore be appealed to this court, the stay would not be for a protracted or indefinite period of sufficient length to render its issuance a "final" decision.
Id. at 1341 (quoting 35 U.S.C. § 305).*fn2 The court noted that "[o]ne purpose of the reexamination procedure is to eliminate trial of that issue (when the claim is canceled) or to facilitate trial of that issue by providing the district court with the expert view of the PTO (when a claim survives the reexamination proceeding)." Id. at 1342. The court further held that Congress did not expressly provide for a stay of court proceedings, because
It is believed by the committee that stay provisions are unnecessary in that such power already resides with the Court to prevent costly pretrial maneuvering which attempts to circumvent the reexamination procedure. It is anticipated that these measures provide a useful and necessary alternative for challengers and for patent owners to test the validity of United States patents in an efficient and relatively inexpensive manner.
Id. (quoting H.R.Rep. No. 1307 Part I, 96th Cong., 2d Sess. 4 (1980), U.S.Code Cong. & Admin. News 1980, pp. 6460, 6463) (emphasis added in Gould). Thus, "[w]hen a district court stays patent validity proceedings before it until completion of a reexamination proceeding, that stay must be accepted if the purpose of the reexamination statute is to be preserved." Id.
As noted, Bridgeport, the Defendant, initiated the inter partes reexamination proceeding, while Plaintiff Arlington is the party requesting the stay. The type of reexamination - inter partes versus ex parte - is an important consideration in determining whether to grant a stay. Similarly, it is important to consider whether the party who requested the stay is the same party who requested reexamination. The decision to grant a stay is within the discretion of the trial judge, and a stay should be granted unless the court finds it is not within the interests of justice.
The first consideration is whether the granting of a staywould cause undue prejudice to the non-moving party.
Defendant argues that the granting of a stay would result in undue prejudice, as the reexamination is time consuming and could take several years. Defendant Bridgeport further claims undue prejudice based on the increase in potential liability and cloud of uncertainty over their operations during the time of the reexamination. Furthermore, Defendant notes that undue prejudice would occur because it has already expended substantial resources on the case. Finally, Defendant claims that Plaintiff is requesting a stay based upon tactical advantage.
This case is rather different than many of the cited cases based upon which parties have requested the reexamination and which have moved for a stay. In many cases, the same party moves for both reexamination and for the stay. However, in this case, Defendant Bridgeport is the party that requested reexamination, and Plaintiff Arlington is the party that moved for the stay. Courts will often deny a stay when the same party requests reexamination and a stay at the same time, finding that there would be undue prejudice to the non-moving party, and that the party requesting a stay has delayed requesting either the stay or the reexamination for a tactical advantage.
In Gladish v. Tyco Toys, Inc., 29U.S.P.Q.2d 1718 (E.D. Cal. 1993), the plaintiff moved to stay pending reexamination of prior art references not considered by the PTO in its initial examination process. The court in this case found that defendant Tyco had shown undue prejudice. Id. at *2. The court noted that the plaintiff had engaged in extensive discovery of the defendant, and that discovery had reached the point of depositions. Id. at *2. The court found that the issue of dates was crucial, and that the witnesses may become unavailable, their memories may fade, and evidence could be lost pending a stay for the reexamination hearings. Id. at *2.The court further noted that validity would remain an issue in the cases even after the decision on prior publication. Id. Finally, the court noted that "Tyco has a strong interest in concluding this lawsuit without delay. The reexamination procedure can take a year and involve appeals before appellate tribunals of the PTO and the Court of Appeals for the Federal Circuit. Tyco's customers apparently are informed that plaintiff claims infringement; its biggest customer, Toys R Us, is also named as a defendant." Id. at *3. Therefore, the court considered the effect that the stay would have on the defendant and its market.
In this case, Defendant Bridgeport claims that there could be a "cloud" over Bridgeport's products if the case is stayed. Whether there is empirical evidence via impact on sales is difficult to determine, as Bridgeport's product is new, and could have increased sales given resolution of this patent issue. Although Plaintiff claims Bridgeport's sales have increased, that does ...