Reexamination Stays: What about Prejudice to Defendant if Stay is Denied?

Scott Daniels | March 13, 2012

The case law on reexamination stays shows that there are two categories of trial judge: those who are attracted by the possibility of the reexamination simplifying issues for trial and who are therefore likely to grant stay motions, and those who are especially concerned about the prejudice a stay might cause patent owner. 

Magistrate Judge Douglas Arpert of the New Jersey District Court appears to fall within the former category, in view of his Order last Wednesday to stay Monosol RX v. Biodelivery Sciences Int’l (10-cv-5695) pending completion of PTO’s reexamination of the three patents-in-suit.  Although the infringement case was in its early stages and the PTO granted the three reexamination requests, the patent owner vigorously argued that the parties were direct competitors and that it would be prejudiced by the stay.  But Magistrate Judge Arpert was unconvinced, noting that “Plaintiff did not seek a preliminary injunction in this matter and [so] the Court declines to impose any restraints with respect to Defendants’ business activities at this time.”

But not only did Magistrate Judge Arpert fault the patent owner for not moving for a preliminary injunction, he raised the specter that denial of a stay could irreparably harm the accused infringer.  Specifically, he quoted from a stay grant in one of the Sorenson cases:

one possible scenario could result in irreparable harm to defendant: if this court finds that the patent is not invalid and the defendant has infringed it, and orders defendant to pay damages to plaintiff for such infringement, then defendant would have no ability to recover those damages if at a later date the PTO determined that the patent is invalid.

The scenario, of course, is from In re Swanson, in which the accused infringer could be irreparably harmed by inconsistent decisions from the court and the PTO, causing it to be forced to pay an unjustified damage award. 

To the extent that other trial judges follow Magistrate Judge Arpert’s lead in considering the potential harm to the defendant from inconsistent decisions, even more infringement actions will be stayed in favor of reexamination.

 

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