Court Stays Case on Basis of Reexamination Grant

Scott Daniels | June 15, 2011

Last Wednesday Judge Ruben Castillo of the Northern District of Illinois stayed the case Chicago Mercantile Exchange v. Technology Research Group pending completion of a reexamination.  What makes the stay interesting is that Judge Castillo did not expressly identify the three-factor standard generally applied to stay motions – the stage of the case, the possible simplification of issues, undue prejudice to the patentee – and then balance those factors.  Rather, he appears to have carefully considered the merits of the reexamination request and then assessed the probability of the patent claims being held invalid in the reexamination.

Chicago Mercantile filed a declaratory judgment action against Technology Research in June 2009 seeking a judgment of non-infringement and invalidity of U.S. Patent No. 5,963,923; and Technology Research counter-claimed for infringement of the ‘923 patent.  A request for reexamination of the ‘923 patent was filed in February, and at the beginning of May, the PTO ordered reexamination.  When Judge Castillo learned of the reexamination, he sua sponte asked the parties for briefing on whether a stay should issue pending completion of the reexamination.

“After careful review of the submissions provided by [the parties], the Court concludes that there is a significant probability that the PTO may invalidate the ‘923 patent or materially decrease its scope during the course of the pending reexamination” (emphasis added).  Judge Castillo added that “a stay … may avoid a potentially unnecessary jury trial, simplify any remaining issues for trial, and conserve judicial and jury resources while providing the Court with the benefit of the PTO’s considerable expertise.” 

Notably, Judge Castillo did not expressly take into account the fact that the litigation had been pending for two years, the fact that the reexamination had only begun, or the potential prejudice to the patentee.  Rather, his stated focus was purely on the likelihood of the ‘923 claims being invalidated and on the expertise of the Patent Office.  

Without taking a position on whether Judge Castillo was right or wrong in this case, we are pleased to see his emphasis on the merits of the invalidity arguments as the primary consideration in determining whether to stay an infringement case.  Where the arguments for invalidity are strong, reexamination helps all the parties, and where the arguments are weak, reexamination is a needless distraction.  Judges need to take those arguments into account in their consideration of stay motions.

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