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A plaintiff or a defendant can file a motion to stay the proceedings before the court. But courts are not obligated to stay litigation when a request for an inter partes or ex parte reexamination request is granted by the United States Patent and Trademark Office ("PTO"). It is up to the court's discretion. The case reference that I have observed most often in patent infringement motions to stay is Ethicon, Inc. v. Quigg, 849 F.2d 1422 (Fed. Cir. 1988). Id. at 1426-27 ("Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination").
Plaintiff's Motion to Stay
A plaintiff may find it advantageous to ask for a stay in order to fix claim problems through a PTO reissue examination before continuing with litigation against an infringer. The problems with the claims may not have been apparent to the plaintiff prior to the plaintiff's first attempt at enforcing the patent against an alleged infringer. A common defense to infringement is to contend that the plaintiff's claims are invalid. In stating that the claims are invalid, the defendant may uncover a flaw or a weakness in the claims that the plaintiff can repair through a reissue examination. In a reissue examination, the patent owner must agree to release the parent patent back to the PTO upon the reissue of the parent patent. The reissued patent will have a different identifier preceded with "RE." Therefore, the initial filed complaint will not contain the reissued patent and the plaintiff must amend the complaint to contain the reissued patent. Here, a stay is helpful to the plaintiff in putting the case on hold until the plaintiff can fix the patent before any deadlines expire to amend the complaint.
The inter partes reexamination also presents an opportunity for the plaintiff to ask for a stay of the litigation proceedings pending the outcome of the PTO action. In a recent case the Federal Circuit noted that the wording of 35 U.S.C. § 318 suggests a plaintiff can obtain a stay under a inter partes reexamination:
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.
The Procter & Gamble Co. v Kraft Foods Global, Inc., 2008 WL 5101824, at *5 (Fed. Cir. Dec. 5, 2008) (emphasis omitted).
In Procter & Gamble, the court noted that the defendant and not the plaintiff had requested the stay. The plaintiff argued, without success, that the defendant should not have been able to ask for a stay because section 318 applied only to plaintiffs. The court noted that section 318 did not remove the discretion of the court to grant a stay to the defendants. But section 318 does allow the plaintiff to ask for a stay in the case of an inter partes reexamination proceeding. This makes sense as both parties would be before the PTO in the reexamination. Thus, a parallel effort in district court could become a duplication of efforts and not an efficient use of the court's time.
Defendant's Motion to Stay
More often, it is the defendant that requests a stay by asking that the court wait for the outcome of a concurrent PTO ex parte reexamination or inter partes rexamination. Chances are that by the time a plaintiff files a patent infringement claim, the defendant is intimately familiar with the plaintiff's patent claims. The plaintiff may have resorted to litigation after failing to convince the defendant to purchase a license agreement. Or the defendant may have made a business decision to directly copy or design around the invention. Either way, the defendant has had time to prepare for litigation. A wary defendant would have become familiar with the prior art that may be used as a defense or to submit to the PTO to request a reexamination of the plaintiff's patent.
During my federal clerkship, I was assigned a few motions to stay based on the defendant's request to the PTO for a reexamination of the plaintiff's patent. Being new to this process, my initial thoughts were that since the PTO had examined the prior art and the patent, the PTO would reject the reexamination. But after observing a few more motions to stay, I came to the conclusion that presenting prior art to the PTO to establish a substantial new question of patentability upon which the PTO would grant a reexamination was not unusual. Apparently, a large company accused of infringing has more resources to uncover damaging prior art than the PTO. In a way, this makes perfect sense. The PTO has a limited amount of resources and time it can spend on searching out relevant prior art on a single patent application. The PTO also relies on the inventor to supply relevant prior art through an Information Disclosure Statement. The examiner has an endless supply of patents in his or her queue that must be examined within a set time frame. I do not know the exact statistics and I imagine it would vary according to the technology, but for a simple technology, I have heard that the examiner might spend around 16 hours on a particular patent. Of course, an accused infringer faced with a multi-million dollar law suite will spend a lot more time and resources on searching out damaging prior. And if this new prior art is substantial, the PTO will open a reexamination.
Motion to Stay Analysis
In evaluating a motion to stay, courts generally consider the following three factors:
Some courts also add a fourth factor, whether a stay will simplify the issues in the case. This factor appears to be closely related to the first factor because simplifying the issues would also reduce the litigation burden on the parties.
As with any motion it is always a good idea to argue the facts in light of the accepted law of the circuit or district. This may seem obvious but I have read briefs where the factors are not addressed at all or inadequately addressed. My guess is that the attorneys got caught up in the moment of receiving the good news that their request for reexamination had been accepted by the PTO and that the initial action by the PTO was to reject all or some of the claims under a substantial new question of patentability. The attorneys quickly file a notice of this event with the court, often on the same day, waiving the PTO action as if it were a smoking gun. Of course, the court's reaction, and by court, I mean the clerk who must write the memo to his or her judge, is - not so fast my friend, we still have to do the analysis. As one might expect, the clerk who now must research the law and then assume what the attorney might have applied as facts to the law is not as thrilled as the attorney who received the good news from the PTO. Next are suggestions for addressing the factors.
Reduction of the Burden
Grab the court's attention with this factor. Tell the court how much easier its job will be in deciding the case if the court waits for the PTO to reexamine the claims. If the patent subject matter is complex, point out that the PTO has the expertise to better deal with the subject matter. I might go so far as to detail the areas where the parties' experts are in total disagreement to remind the court of the burden in reconciling these positions. But do not bore the court with too much detail. And do so without challenging the court's intellect.
Here, the bottom line is if the PTO has accepted a request for reexamination and rejected the claims, the court may favor a stay to avoid the risk of proceeding to a decision that would disagree with a future PTO outcome. See Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983) ("One 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)"). Of course, there will be exceptions to this general rule. Some districts and judges are more likely not to be intimidated by patent cases and depending on the subject matter, consider themselves adequately prepared to proceed with the help of the parties' experts.
Stage of the Litigation
The timing of asking for a stay is important. If the request is early in the proceedings, the court is more likely to grant the stay. Courts may look at whether discovery has been completed or whether a trial date exists. A delay in initiating a reexamination request may be viewed negatively. Drussel Wilfley Design, LLC v Youngwerth, 2008 WL 4225851, at *1 (D. Colo. Sep. 15, 2008) ("The selection of an alternative forum more than nine months after the litigation was commenced appears to reflect a tactical preference by the defendant"). This would be a great place to add a time-line of events regarding the litigation and prosecution of the patent. As a clerk, I often provided the judge with a time-line of events covering both the litigation and the prosecution of the patent. Do not expect the chambers to be as intimately familiar with the case as you are. The time-line will visually show any gaps that should be addressed or attacked depending on the party. Identify the gaps and then explain why the gaps are or are not significant. It is also not unusual for a party to ask for a stay that was previously denied. Situations change. Or the judge may have told the party to submit the motion again when the time is ripe. If this is not the first motion for a stay, explain why the others were submitted, why they were denied and why this motion is different and why the time is finally right for the judge to grant the present motion to stay.
Address tactical delays not only in the litigation process but also in the prosecution process. Is the plaintiff dragging its feet in a reexamination but pushing for quick litigation? Is there a possibility that the plaintiff is stalling in the reexamination in order to avoid prosecution estoppel? Did the plaintiff stonewall the defendant's requests for participating in reexamination or did the plaintiff extend reexamination response deadlines? The court will want to know whether the plaintiff is taking two different approaches, one for PTO and one for the court. If it is apparent that the plaintiff is taking two different approaches to the claims, ask the court to continue the hearing and resulting order on your motion to stay until after the plaintiff's submission of reexamination material.
Undue Prejudice to Non-moving party
This factor reminds me a lot of the preliminary injunction factor – irreparable harm. I am always amazed when attorneys submit briefs or argue that their client will be irreparably harmed but do not submit any evidence of the harm. Quantify the harm. Tell the court what is happening in the market place. Better yet, provide the judge with evidence and statistics of what is happening in the market place and how this relates to your client being unduly prejudiced. The court will be interested in whether the patent is about to expire and can the damages be recovered at a later date. If the court can wait and get the benefit of the PTO's expertise without the non-moving party being prejudiced, the court will probably lean towards waiting.
Appealing the Court's Decision
The Federal Circuit has ruled that a stay imposed by a district court to wait for the outcome of a PTO reexamination proceeding is not appealable. Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983) ("When 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 statue is to be preserved"). But exceptions to this general rule do exist. Slip Track Sys., Inc. v Metal Lite, Inc., 159 F.3d 1337, 1340 (Fed. Cir. 1998) ("That general rule does not prevent review of a stay, however, when it is clear that no further action is contemplated by the district court following the stay"). In other words, the stay becomes appealable if the stay is in effect a final decision kicking the non-moving party out of federal court.
It should be noted that some courts administratively close cases that have been stayed for an extended amount of time. The administrative closure takes the case off the court's active list. The case can be re-opened after the stay is lifted.
About the Authors
Jack Hobaugh, Jr. is an associate in Blank Rome LLP's Washington, D.C. office. Mr. Hobaugh concentrates his practice in the areas of intellectual property and intellectual property litigation, with a background of 25 years in scientific and technical experience in the disciples of telephony, software engineering and nuclear physics. Additionally, Mr. Hobaugh served as a law clerk to the Honorable Chief Judge Tena Campbell of the United States District Court, District of Utah, where he specialized in patent litigation support. www.senseient.com. They are the authors of The 2009 Solo and Small Firm Legal Technology Guide (ABA, 2009).Learn More Order Today