End of July Developments

Scott Daniels and Darrin Auito | August 2, 2010

1.  Judge’s Decision to Stay May be Based on Strength of Reexamination Request

When trial judges are asked to stay a law suit pending completion of a reexamination proceeding at the PTO, they almost always apply the three-factor test:  (1) whether a stay would unduly prejudice the non-moving party, (2) whether a stay would simplify the issues in the law suit, and (3) the stage of the law suit.  We have long believed that judges should also consider the strength of the reexamination request – where the request is strong, a stay would greatly benefit the parties, but where the request is weak a stay is unfair to the patentee.

At least one judge may be moving in that direction.  Judge Ronald Whyte of the Northern District of California was recently asked to stay Cellectricon AB v. Fluxion Biosciences, Inc., No. C-09-3150 RMW.  He cited the three-factor test and carefully balanced the facts, staying the case for “at least 90 days to allow the Director of the PTO to determine ‘whether a substantial new question of patentability’ has been raised.”  Judge Whyte then added that if a new question is found, “the court can evaluate the strength of that finding and make a decision on whether to stay the litigation further.”

A number of reexamination practitioners have commented sourly that judges, when asked to stay a case, will not take up the difficult task of evaluating the substantive merits of the invalidity arguments.  Clearly Judge Whyte is one who will.

2.  Who will Finish First?

The patent dispute between ePlus and Lawson Software is running on two parallel tracks.  The patentee ePlus has sued Lawson Software for infringement in the Eastern District of Virginia, with a trial before Judge Robert Payne scheduled for September.  At the same time, reexamination proceedings are well underway at the PTO – the examiner has issued a non-final rejection of the claims of one of the patents, the examiner has issued an action closing prosecution against another, and the final rejection of the third is before the PTO Board.

Last March Judge Payne denied a motion by Lawson Software to stay the case pending completion of the reexaminations, and last week he issued an in limine order excluding the reexaminations from evidence at the trial in September.   If ePlus continues to do poorly at the PTO, but wins the trial, then Judge Payne will face the difficult task of determining the proper remedy for infringement of patents that have been rejected at the PTO.

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