Archive for the ‘stay’ Category

A Tale of Two Patent Litigation Stays

Tuesday, May 14th, 2013

This is a story about not one, but two stays.  The first stay is a district court stay pending the outcome of a reexamination of a patent in suit.  The second is an administrative (PTAB) stay of that same reexamination pending the outcome of an AIA patent litigation proceeding based on that same patent.

The District Court Stay

It started when Encap, LLC filed suit against the Scotts Company on July 18, 2011 (Encap, LLC v. The Scotts Miracle-Gro Company, LLC, E.D. Wis. Case No. 1:11-cv-000685-WCG).  The complaint for patent infringement involved Encap’s U.S. Patent 6,209,259 (“the ’259 patent”) and two other patents.  The ’259 patent relates to a combination seed capsule comprising a viable seed and a coating comprising soil conditioning materials.  On March 9, 2012, the Scotts Company filed an ex parte reexamination request to challenge the patentability of the ’259 patent.  That request resulted in an order for ex parte reexamination (Reexamination Control No. 90/012,183) on April 27, 2012.  The ex parte reexamination resulted in a rejection of claims 1-5, 7-11, and 13-14 of the ’259 patent based on a Great Britain Patent 670,461 to Matthews (1949) and U.S. Pat. No. 4,065,287 to Roth (1977).  The rejection included an obviousness rejection based on a combination of Roth and U.S. Pat. No. 5,019,564 to Lowe.  In response, Encap did not amend claims but instead added new claims 15-44.  Ultimately, the district court ordered stay of the litigation in a decision dated August 31, 2012 (according to PACER).

The Reexamination Stay

The Central Reexamination Unit (CRU) handling the ex parte reexamination issued a second non-final office action on December 21, 2012.  Meanwhile, on January 10, 2013, the Scotts Company filed a petition for inter partes review of the ’259 patent in the PTAB (The Scotts Company LLC v. Encap, LLC; IPR2013-00110).  Shortly after that, Encap filed its response for rejection in the ex parte reexamination on February 21, 2013.  Encap filed a supplemental response on March 1, 2013.  A Notice of Defective Paper was issued by the PTO on April 20, 2103 allowing Encap one more month to correct its response, but Encap won’t need that month because on Monday, May 13, 2013, the Patent Trial and Appeal Board (PTAB) ordered a stay of the reexamination prior to deciding on whether to institute trial in the inter partes review.

Reasons for the Reexamination Stay

The Board noted that even though the claims subject to ex parte reexamination include additional claims that are not the subject of the IPR petition, all of the challenged claims are being reexamined.  Additionally, some of Petitioner’s asserted grounds of unpatentability in the IPR are based on the same prior art references that are the bases of the Examiner’s rejections in the reexamination.  In its Order of May 13th (at p. 2), the Board explained the administrative stay of the reexamination as follows:

The Board will not ordinarily stay a reexamination because, in the absence of good cause, reexaminations are conducted with special dispatch. Conducting the reexamination concurrently with the instant proceeding, however, would duplicate efforts within the Office and could potentially result in inconsistencies between the proceedings. Notably, because all the challenged claims also are being reexamined, the Patent Owner could amend those claims, which could change the scope of the challenged claims while the Board is conducting its review. Further, because of the overlap between the asserted prior art references in this proceeding and the bases of the Examiner’s rejections, the patentability of all of the challenged claims could be determined in both the instant proceeding and the reexamination based on the same grounds of unpatentability.

The Board is required to determine whether to institute an inter partes review within 3 months after receiving the preliminary response from the patent owner.  35 U.S.C. § 314(b).  The Patent Owner’s Preliminary Response was filed April 15, 2013 (according to PRPS).  The final determination of any review instituted will normally be issued no later than 1 year from institution. 35 U.S.C. § 316(a)(1), and 37 C.F.R. § 42.100(c).  The Board found that any decision on whether to institute a review or final written decision with respect to the patentability of the challenged claims will likely simplify the issues in the reexamination.

Patent Owner’s Preliminary Response explains that the parallel district court litigation is stayed pending the resolution of the ‘259 ex parte reexamination.  Patent Owner makes it clear that “time is of the essence” in a decision, alleging that “Petitioner continues to sell hundreds of millions of dollars of infringing products each year.”  (Patent Owner Preliminary Response at page 7).

Summary

Petitioner has used ex parte reexamination and an inter partes review to achieve a double stay; one stay in district court pending the ex parte reexamination and another stay of the ex parte reexamination (Central Reexamination Unit) pending the outcome of the PTAB inter partes proceeding.  If trial is instituted in the PTAB, it will be interesting to see how the PTAB handles the situation where an ex parte reexamination which included an amendment adding several new claims is now handled in the PTAB, where claim amendments are typically limited to a one-for-one replacement (absent permission from the Board to include more).

Progressive Casualty Litigation Stayed Pending Outcome of Liberty Mutual CBMs

Wednesday, April 24th, 2013

Progressive Casualty Insurance Co. sued different insurance companies for patent infringement of 5 of its patents in 2010-2012 in the Northern District of Ohio.  (Cases 1:10CV01370 and 1:11CV00082 against Safeco; Case 1:12CV01068 against State Farm; and Case 1:12CV01070 against Hartford.)  One of the defendants is Safeco Insurance Company, which has Liberty Mutual as its parent.  In 2012 and 2013 Liberty Mutual filed ten covered business method patent review (CBM) petitions (two CBM petitions were filed per patent).  Eight of these ten petitions were instituted for trial and two petitions were denied, but each of the five patents has at least one CBM where trial was instituted by the PTAB.

Liberty Mutual and the remaining defendants moved to stay the litigation based on the CBMs instituted.  Progressive opposed the motion to stay.  The District Court heard oral arguments on April 11, 2013, and granted the motion stay on April 17, 2013.

The court used a four-factor test set forth in the AIA section pertaining to CBMs (AIA § 18(b)(1), P.L. 112-29, 125 Stat. 284, 331):

  • (1) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
  • (2) whether discovery is complete and whether a trial date has been set;
  • (3) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
  • (4) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

It is interesting that the Liberty Mutual litigation was previously stayed pending the outcome of ex parte reexaminations, yet the Court found the benefits of inter partes covered business method review compelling enough to order another stay pending the outcome of the PTAB trials.  Some of these benefits observed by the Court include:

  • CBM proceedings are inter partes rather than ex parte, which allows Liberty mutual “a better platform to advocate its interests.”
  • CBM proceedings are “presided over by a panel of three administrative judges whom are required to have ‘competent legal knowledge and scientific ability,’ 35 U.S.C. § 6(a), as opposed to a single patent examiner.”
  • To institute CBM review, the petitioner must show the claims are likely invalid, 35 U.S.C. § 324(a), which is more onerous than meeting the “substantial new question of patentability” standard required to initiate ex parte reexaminations.
  • The Court also found the short timeline of the CBM proceedings (to be completed within 18 months of institution of trial), to be attractive and likely to decide issues before the Court.

For further information the order for stay provides the details of the Court’s findings and has a detailed table attached at the last page showing the different CBMs and their status.

Declaratory Judgment Plaintiff and Stays Pending Reexamination

Monday, March 12th, 2012

In Interwoven, Inc. v. Vertical Computer Systems, Inc. (Case No. C 10-04645 RS, Northern District of California), Judge Richard Seeborg was less than persuaded by Interwoven’s attempt to obtain a stay after filing an ex parte reexamination of the patents in suit.

BACKGROUND

Vertical owns U.S. Pat. Nos. 6,826,744 and 7,716,629 relating to Internet technologies.  Vertical sued Microsoft in the Eastern District of Texas and settled in 2009.  Later, Vertical informed Interwoven that its products infringed the patents as well.   Interwoven filed a declaratory judgment action in the Northern District of California and Vertical countered with a counterclaim for patent infringement. (more…)

Strategic Use of Reexamination in view of the Patent Reform Bill

Monday, August 22nd, 2011

Last week I had the privilege of speaking on reexamination at the AIPLA Electronics and Computer Law Summit.  The title of my speech was “Strategic Use of Reexam after Patent Reform – Post-Grant Review and Inter Partes Review.”  The powerpoint presentation materials can be found here.  The materials assume that the bill currently pending before the Senate is passed substantially intact.  The speech focuses primarily on post-grant review and inter partes review.  It also touches on supplemental examination and the proposal to provide PGR-like review of “covered business methods.”  We shall see how Congress votes on the bill in September.

Stay of Litigation Pending Inter Partes Reexamination Warranted Despite Possible Lengthy Reexam Pendency

Thursday, July 21st, 2011

District courts are making increasingly detailed and sophisticated decisions on motions to stay litigation pending reexamination.  One example is the analysis performed in N Spine Inc. and Synthes USA Sales, LLC v. Globus Medical Inc., (1-1–cv-00300 (DED)).  N Spine and Synthes USA Sales (Plaintiffs) sued Defendant Globus for alleged infringement of U.S. Patent No. 7,326,210 (the ‘210 patent) on April 13, 2010.  On December 16, 2010, Globus filed an inter partes reexamination request of the ‘210 patent.  The reexamination was ordered by the Patent Office on February 1, 2011.  On March 2, 2011, a motion to stay the litigation was filed by Globus.  The stay was ordered in spite of a 6 to 8 year pendency of the inter partes reexamination.

Globus argued a number of factors to justify their motion to stay: (more…)

Stays Pending Reexamination and Experts Subject to a Prosecution Bar

Thursday, July 14th, 2011

In Interval Licensing LLC v. eBay, Inc., et. al., 2-10-cv-01385 (WAWD),  Interval Licensing (Interval) filed a motion for reconsideration of an earlier order by the Court to stay the litigation pending reexamination.  On July 12, 2011, Judge Marsha J. Pechman denied the motion.

The order states that motions for reconsideration are disfavored in that district and that the court will ordinarily deny them absent a showing of manifest error in the prior ruling or a showing of new facts or legal authority which could not have been brought to its attention with reasonable diligence.  The order found that the facts presented by Interval were not new because they could have been presented in the original opposition to the stay filed by Interval.  For example:

  • Interval chose to rely on its March 28, 2011 brief when filing its opposition motion on June 6, 2011, rather than to supplement the June 6th filing for reasons that are not clear.
  • Interval argued that it performed substantial work on briefing Markman issues and discovery, yet failed to show why this work would be lost pending the outcome of the reexamination.
  • Interval argued that the experts it retained to review source code will be prejudiced by virtue of the stay because they agreed to a patent prosecution bar until one year after resolution of the case.   But the protective order was entered on April 14, 2011 and Interval failed to point out this provision in its opposition to the motion to stay.  Also, the Court found the prejudice to the experts was not a factor.  “Presumably, the restriction to which the experts choose to submit is more than offset by the benefit of generating substantial income by rendering expert services.”
  • Interval also took issue with the Court’s statement that “Defendants have presented a substantial body of prior art that they believe will reshape the four patents at issue in this litigation.”  Interval noted that the examiner granted reexamination on fewer references than the Defendants reported.  However, since the examiner is not precluded from relying on other references, this does not show manifest error.

So what are the takeaways from all of this?

  1. If you want to oppose a motion to stay, present all of your facts in your original motion.  Be thorough.
  2. If you are going to assert that a stay is detrimental due to preparation (e.g., Markman analysis, or discovery), clearly describe how the stay is prejudicial to the case. 
  3. If you are an expert involved in a matter with a prosecution bar, consider the possibility that a stay of the matter may preclude your activities in that technology area for years if a stay pending reexamination is ordered.  Consider the possibility that your exposure to confidential material could be minor at best, yet you could be precluded for the duration of the stay (which may also end in dismissal of the case). 

Patent Owner Stay Motion Successful Based on Defendants’ Reexam Requests Filed on Eve of Markman

Wednesday, May 25th, 2011

In Fifth Market, Inc. v. CME Group Inc, et al., (1-08-cv-00520, D. Del), the Patent Owner/Plaintiff (Fifth Market, Inc.) sued multiple Defendants on two patents (U.S. Pat. No. 6,418,419 and U.S. Pat. No. 7,024,387) in 2008.  Three amended complaints were subsequently filed, the last one on January 10, 2011.  The Defendants answered on February 7, 2011, asserting affirmative defenses and counterclaims to the thir amended complaint.  A Markman hearing was held on April 5, 2011 and on April 21, Patent Owner/Plaintiff filed a motion to stay the litigation pending the outcome of the reexaminations.  According to the Court’s order, the timing of events was this: (more…)

TiVo’s Reexamination Strategy Helps Win a Stay in the Northern District of California

Wednesday, May 11th, 2011

The chronology of the dispute between TiVo, AT&T and Microsoft is complex and so are the digital video recorder (DVR) technologies covered in the patents that are asserted.  All of these complexities seemed to weigh in favor of a stay in the present case.  Some background is necessary to understand these complexities.

Litigation Background

On August 26, 2009, TiVo sued AT&T in the Eastern District of Texas alleging infringement of its digital video recorder patents (TiVo Inc. v. AT&T Inc., et al., Case No. 2:09-cv-00259-DF).  In March 2010, AT&T sued TiVo in the Northern District of California for patent infringement of its DVR patents (AT&T Intellectual Property I, L.P. v. TiVo Inc., No. 4:10-CV-01059-SBA, Dkt. No. 1 (N.D. Cal. Mar. 12, 2010)).  Microsoft moved to intervene in the Eastern District of Texas action 0n January 15, 2010.  TiVo did not oppose and Microsoft’s motion was granted March 31, 2010.  That case is set for trial in October 2011.

(more…)

Patent Owner Reexamination Requests with Parallel Litigation

Friday, March 25th, 2011

You have worked hard and obtained a patent for your company.  You do your homework and believe that your competitor is infringing your patent.  You ultimately engage the help of a litigation team and sue the competitor for patent infringement.  But your competitor is now a defendant and responds with allegations of invalidity based on publication prior art.

Your patent counsel provides some options.  One option is to plow ahead with the litigation and maintain course.   Another option is to file a reexamination request with the publication prior art and ask for a stay of the litigation pending the outcome of the reexamination. (more…)

Factors in Deciding Motions to Stay Litigation Pending Reexamination

Wednesday, March 23rd, 2011

If a patent is in reexamination at the outset of a patent infringement action, there is a possibility of obtaining a stay from the district court.  But motions to stay are not always successful, and they are decided  after consideration of several factors.  One case that demonstrates some of the factors in deciding whether to grant a motion to stay litigation pending reexamination is Quest Software, Inc. v. Centrify Corp. (case no. 2:10-CV-859 TS), venued in the Central Division of Utah. (more…)