Stay Pending Reexamination Denied, where Request was Ex Parte

Scott Daniels | October 26, 2010

A recent trend in trial judges’ consideration of motions to stay litigation pending completion of reexamination at the PTO, has been for the judge to be suspicious of ex parte requests, as opposed to inter partes requests.  Judge Stadtmueller of the Eastern District of Wisconsin expressed such suspicions last week, when he denied a stay motion filed by the accused infringer in Adaptor v. Sealing Systems, 09-cv-1070.

Adaptor filed a complaint in November 2009 seeking a declaratory judgment that Sealing Systems’ U.S. Patent No. 5,876,533 was invalid and not infringed.  Sealing Systems counter-claimed, asserting infringement by Adaptor.  In April 2010 Adaptor filed a request for ex parte reexamination of the ‘533 patent, and in May the PTO granted the request.  Adaptor then moved to stay its own declaratory judgment action and Sealing Systems’ counter-claim, pending completion of the reexamination.

Judge Stadtmueller began his analysis by invoking the customary three-part test: the stage of the litigation, possible simplification of the issues by waiting for the reexamination, and prejudice to the patentee.  He acknowledged that the case was still in its early stages, but was skeptical that reexamination would significantly simplify the issues.  Because the reexamination was ex parte, not inter partes, “Adaptor, and this court, will not be held to any findings of validity or modification.”  The possibility of the ‘533 claims being narrowed or canceled did not “justify a potential two-year delay.”

Getting into the meat of his ruling, the Judge focused on the prejudice to the patentee – he assumed from the fact that the parties were direct competitors that a stay would cause the patentee to suffer loss of market share and eroded prices. Significantly, he found that “the circumstances at hand raise a suspicion of dilatory action on the part of Adaptor in filing for the reexamination,” specifically, the circumstance of Adaptor’s filing an ex parte reexamination request. “[I]f Adaptor truly wished to narrow the issues it seems more appropriate to have filed an inter partes reexamination instead, where it could fully present its case before the PTO” (emphasis added).

The fact that it was Adaptor who began the dispute by filing a declaratory judgment action, may have played a part in Judge Stadtmueller’s thinking.  Should Adaptor be permitted to stop a proceeding that it had initiated? The broader message for accused infringers, though, is that their choice of ex parte reexamination over inter partes will be scrutinized by the trial court.

Correction

In our post of October 22, 2010, entitled “Requester Appeals PTO’s Refusal to Reexamine, and Wins,” we reported that NuVasive had successfully appealed to the PTO Board the examiner’s decision not to grant NuVasive’s request for reexamination of U.S. Patent No. 6,969,390.  In fact, the examiner did grant reexamination – it was the examiner’s refusal to adopt certain grounds for rejection that NuVasive successfully appealed to the Board.

We have therefore reposted our October 22nd story, in corrected form.

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