Litigation Stays Likely to be More Common with New AIA Post-Issuance Procedures

Scott Daniels | December 28, 2012

Our expectation has been that trial judges would feel more comfortable staying infringement actions to allow for completion of the new AIA post-issuance PTO proceedings, than for completion of reexaminations.  That expectation appears to be correct, if last week’s stay ruling in Semiconductor Energy Laboratory v. Chimei Innolux, et al. (8:12-cv-00021) is any indication of what is to come.

There, SEL sued Chimei Innolux and several other companies, including Acer, Viewsonic and VIZIO, in the Central District of California for infringement of six LCD patents.  Chimei replied, inter alia, by filing petitions at the Patent Office for inter partes review of each of the six patents.  Although the Patent Office has not yet ruled on those petitions, Chimei and the other accused infringers moved the trial court to stay the infringement action until completion of the expected IPR proceedings.

Judge Josephine Staton Tucker has now granted the stay.  She began her analysis by restating the three-part test uniformly applied to reexamination stay motions: the stage of the litigation, whether reexamination would simplify the issues, and whether the patentee would be unduly prejudiced by the stay.  Regarding the first factor, Judge Tucker noted that the parties had not yet briefed their claim construction contentions, favoring a stay.

Regarding possible simplification of issues, SEL argued that only Chimei, who had filed the IPR petitions, would be estopped from relitigating in court the issues resolved in the IPR proceedings.  Judge Tucker replied that the other accused infringers had agreed to be bound by any estoppel created by the IPR proceedings, as if they had filed the petitions together with Chimei.  Moreover, she found that the higher threshold for instituting an IPR (as opposed to the SNQ standard for instituting reexaminations) increased the chances of the patents being invalidated or changed at the Patent Office.  She also commented that if the Patent Office denied the IPRs and the patents emerged unchanged, the stay would be short.

As to prejudice to SEL, Judge Tucker pointed out that SEL had not sought a preliminary injunction, that SEL had not explained in detail how it would be adversely affected by the stay, and that the parties were not direct competitors in the LCD market.

Judge Tucker therefore granted the stay.

Of importance for other cases was her concluding observation that “the delay caused by the new IPR proceedings is significantly less than the delay caused by the old proceedings.”  She is thus much more comfortable staying an infringement action in favor of a Patent Office proceeding that would last only 12 to 18 months, as compared with a reexamination whose length is open-ended.  And although she did not explicitly state, she might also feel more comfortable deferring to a Patent Office proceeding that shares a number of characteristics with traditional infringement litigation, such as motions practice and evidentiary standards.

Other trial judges are likely to feel the same way.

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