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Arkema Inc. v. Honeywell International, Inc.

United States District Court, Third Circuit

September 25, 2013

ARKEMA INC., et al. Plaintiffs,
v.
HONEYWELL INTERNATIONAL, INC., Defendant.

MEMORANDUM

YOHN, J.

Plaintiffs, Arkema Inc. and Arkema France (collectively “Arkema”), bring this action against defendant, Honeywell International, Inc. (“Honeywell”), pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201–2202, seeking a declaration from the court that would invalidate four patents relating to a refrigerant with low global-warming potential called HFO-1234yf, or simply 1234yf. Arkema also seeks a declaration that its manufacture, use, sale, offer for sale, or importation of 1234yf does not infringe upon those patents. Before me is Honeywell’s motion to stay litigation pending the inter partes reexamination of the patents by the U.S. Patent and Trademark Office (“PTO”). For the following reasons, the motion to stay litigation will be granted.

I.FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Honeywell is the owner of four patents relating to the refrigerant 1234yf: U.S. Patent No. 7, 279, 451 (“‘451”); U.S. Patent No. 7, 534, 366 (“‘366”); U.S. Patent No. 8, 033, 120 (“‘120”); and U.S. Patent No. 8, 065, 882 (“‘882”). (Am. Compl. ¶ 7.) The refrigerant is important because, pursuant to European Union Directive 2006/40, all new motor-vehicle platforms and all new cars within the European Union, by 2011 and 2017 respectively, are required to use a refrigerant with a low global-warming potential in their air-conditioning systems. (Id. ¶ 3.) The current refrigerant, HFC-134a, does not meet the directive; however, 1234yf does. (Id. ¶¶ 3–4.)

In an effort to enter the U.S. market for 1234yf free from the threat of litigation, on June 16, 2010, Arkema filed a declaratory judgment action in the Eastern District of Pennsylvania, asking the court to declare invalid patents ‘451 and ‘366—then the only two patents that had been issued. (Compl. ¶¶ 50-55.) Arkema also asked that the court declare any manufacture, use, sale, offer of sale, or importation of 1234yf a noninfringing act with respect to those patents. (Id. ¶¶ 56–60.) In addition to its answer, Honeywell filed counterclaims alleging that Arkema had infringed on both the ‘451 and ‘366 patents. (Countercl. ¶¶ 23–32.)

Prior to the first status conference in this case, Mexichem S.A.B. de C.V. (“Mexichem”), a third party, initiated an inter partes reexamination proceeding against the ‘451 patent with the PTO.[1] (Pls.’ Brief in Opp’n to Def.’s Mot. to Stay [hereinafter “Pls.’ Opp’n Br.”] 2.) Despite the pending inter partes reexamination, Arkema and Honeywell continued to litigate both the ‘451 and ‘366 patents and proceeded with discovery. (Id.) Toward the end of discovery on the ‘451 and ‘366 patents, however, the PTO issued the ‘120 and ‘882 patents. (Id.; Def.’s Mot. to Stay 2.) Subsequently, Arkema moved to amend its complaint to add the newly issued patents. (Pls.’ Opp’n Br. 3; Def.’s Mot. to Stay 2.) I denied that motion so that the litigation could move forward without delay, but, recognizing that it was a debatable issue and, at Arkema’s request, I certified the order denying Arkema’s motion to amend its complaint as a final judgment under Rule 54(b) of the Federal Rules of Civil Procedure, thus making the decision appealable. (Order, Mar. 8, 2012, ECF No. 80.) Thereafter, Arkema exercised its right to appeal, and the Federal Circuit concluded that a case or controversy existed such that amendment of the complaint was proper. See Arkema Inc. v. Honeywell Int’l, Inc., 706 F.3d 1351 (Fed. Cir. 2013). Meanwhile, while the appeal was pending in the Federal Circuit, Mexichem filed additional inter partes reexaminations, thus placing the ‘366, ‘120, and ‘882 patents under review by the PTO. (Pls.’ Opp’n Br. 3.)

Just prior to Arkema’s appeal to the Federal Circuit, the PTO rejected Honeywell’s claims in the ‘451 patent reexamination. (Pls.’ Opp’n Br. 2.) Although Honeywell subsequently amended the claims in that patent for further reexamination, Honeywell extended to Arkema a covenant not to sue on the ‘451 patent, to which the parties agreed. (Id.) Consequently, and by stipulation of the parties, I issued an order dismissing all claims, counterclaims, and defenses with respect to the ‘451 patent. (Order, Feb. 9. 2012, ECF No. 76.)

This case was remanded from the Federal Circuit in March 2013. In accordance with its successful appeal, Arkema amended its complaint to include the ‘120 and ‘882 patents. Subsequently, Honeywell filed an amended answer. On May 23, 2013, Honeywell filed this motion to stay litigation with respect to all patents pending reexamination by the PTO, to which Arkema objects.[2] On August 29, 2013, I held oral argument with respect to Honeywell’s motion for a stay of litigation and agreed to withhold a decision for two weeks while the parties discussed alternatives. By letter of September 19, 2013, the parties informed the court that Honeywell had decided that it would not grant a covenant not to sue on any of the three patents at issue and the parties were unable to reach an agreement on any other basis. Honeywell states that Arkema made it clear that it was unwilling to accept a covenant on the original claims alone and Arkema, as of September 19, 2013, had not changed that position. These arguments balance each other and do not favor or disfavor a stay.

II. LEGAL STANDARD

Pursuant to 35 U.S.C. § 318, [3]

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 (2011). “Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citation omitted). Thus, the grant or denial of a stay is a matter of discretion for the court. “In the exercise of this discretion, district courts balance the following three factors . . .: ‘(1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether discovery is complete and whether a trial date has been set.’” Tyco Fire Prods. LP v. Victaulic Co., No. 10-4645, 2011 WL 4632689, at * 2 (E.D. Pa. Oct. 4, 2011) (quoting Xerox Corp. v. 3Com Corp., 69 F.Supp.2d 404, 406 (W.D.N.Y. 1999)). In addition to considering these factors, “the [c]ourt must weigh the competing interests of the parties and attempt to maintain an even balance.” Dentsply Intern., Inc. v. Kerr Mfg. Co., 734 F.Supp. 656, 658 (D. Del. 1990). While some courts have adopted a “liberal policy in favor of granting motions to stay proceedings pending the outcome of []PTO reexamination or reissuance proceedings, ” ASCII Corp. v. STD Entm’t USA, 844 F.Supp. 1378, 1381 (N.D. Cal. 1994), “[a] court is under no obligation to delay its own proceedings by yielding to ongoing PTO patent reexaminations, regardless of their relevancy to infringement claims which the court must analyze.” NTP, Inc. v. Research in Motion, Ltd., 397 F.Supp.2d 785, 787 (E.D. Va. 2005) (citing Viskase Corp. v. Am. Nat’l Can Co., 261 F.3d 1316, 1328 (Fed. Cir. 2001)).

III.DISCUSSION

Honeywell, the patent holder, seeks a stay of litigation pending reexamination of the patents at issue by the PTO. I will address the three factors used in ...


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