Court Stays Avery Case

Scott Daniels | July 20, 2009

The impact of an inter partes reexamination on a pending District Court case was demonstrated again today in Avery v. Alien (N.D. Ohio, CA No. 08 CV 795).

Avery filed its Complaint for infringement in March 2008, alleging infringement of seven patents claiming certain RFID technology. Avery later agreed to dismissal of four of the patent claims, and also moved for a preliminary injunction with respect to two of the remaining patents. In the meantime, the accused infringer, Alien, requested inter partes reexamination of all three patents still in the case.

After discovery, briefing and a three-day hearing, Judge Kathleen O’Malley denied the motion for preliminary relief. Judge O’Malley stated that an “important factor in” denying the motion, was “the pending inter partes reexamination proceeding[s] with respect to” the patents-in-suit – the reexaminations indicated a substantial question of invalidity of the two patents that were the subject of the motion.

Alien then moved to stay the law suit pending resolution of the reexamination proceedings. Avery opposed the motion, arguing (1) that discovery was substantially complete with two of the three patents, and (2) that it would be unduly prejudiced by a stay that could last for five to eight years.

Judge O’Malley rejected Avery’s arguments and granted the stay. She explained that discovery was still not complete for two of the patents and had not started for the third, and that no Markman hearing date or trial date had been set. She also said that the reexaminations were likely to clarify the issues to be tried and to avoid duplication of efforts. Finally, she concluded that there would be no prejudice to Avery because Alien had stopped its sales of the accused machine in favor of a new design.

This case demonstrates how an accused infringer can take much of the sting out of an infringement case by adroitly filing for reexamination and adopting a potential “design-around.”

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