In a recent case in the United States District Court for the District of Delaware, the district court stayed a patent infringement case pending reexamination of the patent in the Patent and Trademark Office ("PTO"). Defendant filed a motion to stay the case in light of an inter partes reexamination of the patent-in-suit that was granted by the PTO, arguing that the reexamination will simplify the issues before the parties and the court because "75% of all reexaminations granted from 1981 through June 30, 2009 have resulted in either the cancellation of all claims or at least some claims." Plaintiff opposed the motion as a "delay tactic," contending that "recent trends in inter partes reexaminations indicate that only 24% of reexaminations result in the cancellation of all patent claims at issue and that inter partes reexamination proceedings can last six to eight years."
First, referring to Fed.R.Civ.P. 26(c) and noting that a district court may impose a stay of discovery on a showing of good cause, the district court stated that "[s]pecifically, a court has broad discretion to stay a case pending reexamination." Second, the district court found that granting a stay would not cause undue prejudice to the plaintiff or allow the defendant to gain a clear tactical advantage.
The district court noted that plaintiffs had initiated the action nearly a year before it served its infringement contentions and did not serve any document requests until after the motion to stay was filed. The district court also found that defendant's filing of the request for reexamination only eight months after the lawsuit was filed and filing the motion to stay only three months after that demonstrated that the defendant was not seeking a stay to a gain a tactical advantage since there was not substantial and costly discovery and the request for a stay was not made on the eve of trial.
The district court also rejected plaintiffs' arguments that they would be unduly prejudiced if the PTO, rather than the court or a jury, adjudicated the invalidity issue because Congress had specifically instituted the reexamination process to shift the burden of reexamination of patent validity from the courts to the PTO. The district court also rejected plaintiffs' argument that they would be prejudiced because the defendant was a direct competitor as plaintiffs acknowledged they were not selling a directly competing product. The district court also noted that the plaintiffs had not moved for a preliminary injunction.
Finally, the district court found that the PTO had granted defendant's request for reexamination and rejected all thirteen claims of the patent-in-suit for which the defendant had sought reexamination. Accordingly, "since both the validity and the infringement of the [patent-in-suit] are at issue n this litigation, the Court finds that the parties and the Court will benefit from the PTO's reexamination of these thirteen claims ..." As a result, the district court stayed the case pending the PTO's reexamination of the patent.
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There are a couple of lessons here for both plaintiffs and defendants. For the plaintiff, it is important to prosecute the case from the start, serving discovery, taking depositions and providing infringement contentions are all important to avoid losing a motion to stay pending a reexamination. For the defendant, it is important to seek reexamination as soon as possible after the lawsuit is filed and to move to stay based on the reexamination at the earliest opportunity, particularly once the PTO has initiated the reexamination process.
N Spine, Inc. v. Globus Medical Inc., Case No. 10-300 (RMB/AMD) (D. Del. July 14, 2011)