Stays/District Courts : US PTO Litigation Alert™

Early August Developments

| August 11, 2010

1.  Special Master Recommends Denying Stay

The Special Master Paul Beck has recommended in Grant Street v. Realauction.com (Civ. No. 2:09-cv-01407-DWA) that Judge Donnetta Ambrose deny Defendant’s motion to stay the case pending completion of reexamination of the patent-in-suit, U.S. Patent No. 7,523,063.  Special Master Beck recites the familiar three-part test for determining whether to grant a stay: whether there would be prejudice to the patentee, whether a stay would simplify the issues, and the stage of the litigation. 

What makes his recommendation interesting is his focus on the fact that the parties are “direct competitors in a two-supplier market.”  Accordingly, the patentee would face a potential loss of market share during the delay created by a stay, with a resulting injury that would be difficult to calculate or prove.  Thus, a stay could “cause irreparable injury [to the patentee] that is not remediable by money damages.”  

Special Master Beck concluded that the potential prejudice to the patentee trumped all other considerations and recommended denial of the Defendant’s stay motion.  
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End of July Developments

| 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.”
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Judge Robinson Reluctantly Waits for CAFC Ruling on PTO’s Rejection of Claims in Reexamination

| July 28, 2010

Last week Judge James Cohn of the Southern District of Florida withdrew a permanent injunction, deferring to a PTO advisory action finding that the patent in reexamination was invalid. On Monday, Judge Sue Robinson – in Sigram v. Cisco, 2010 U.S. Dist. LEXIS 74948 (D. Del. July 26, 2010) – with great reluctance, deferred her decision on patent validity until the CAFC determines whether the PTO correctly rejected the patent claims in two reexamination proceedings.

Sigram (SSBG) had sued Cisco in Delaware for infringement of U.S. Patent Nos. 6,954,453, 7,145,902 and 7,483,431, each related to voice over internet protocols (VoIP).  Cisco replied by requesting reexamination of the ‘453 and ‘902 patents.  (No request was filed against the ‘431 patent).  The claims were subsequently rejected and final rejections are currently on appeal at the PTO Board.  Cisco has now moved for summary judgment of invalidity, citing the same combinations of prior art that it had presented in its reexamination requests.
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Mid-July Developments

| July 22, 2010

1. Board Reverses Rejection of Breed Airbag Patent

David Breed and Automotive Technologies International (ATI) won a victory yesterday at the PTO Board.  In a reexamination of their U.S. Patent No. 6,712,352 for an “arrangement for controlling deployment of a side airbag,” Breed and ATI substantially amended their claims to distinguish over certain prior art.  In doing so, however, they included claim wording that the examiner found to lack written description support in the ‘352 specification.  Although original claims under reexamination are not checked for compliance with 35 U.S.C. § 112, amendments to original claims and new claims are, and the examiner therefore rejected the pending claims.

The Board has now reversed the examiner, finding that the ‘352 specification is “sufficiently clear that the inventors possessed the claimed subject matter as evidenced by explicit identification of the problem of side airbag deployment causing injury to a child when the child’s head is against the airbag module, and statements indicating that the described invention addresses this identified problem.”
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Practice Note on Reissue Applications

| July 14, 2010

People who follow the CAFC will undoubtedly recall the decision Pfizer v. Ranbaxy in which the CAFC found that claim 6 was invalid as an improper dependent claim under 35 U.S.C. § 112, ¶ 4 because it covered embodiments outside the scope of the claim on which it depended.  457 F.3d 1284, 1291 (Fed. Cir. 2006).   The loss was especially painful for Pfizer because the patent – U.S. Patent No. 5,273,995 – claimed its extremely successful cholesterol-controlling composition, Lipitor®.

Pfizer sought to overcome its problem with claim 6 by filing a reissue application where it corrected claim 6 and added two new claims, and by later filing a second reissue application (as a continuation of Pfizer’s first reissue application) where it deleted claim 6 altogether and added one new claim.  In March 2009, the PTO allowed Pfizer’s first reissue application as the ‘667 reissue patent in which claim 6 was rewritten in independent form.  Pfizer’s second reissue application is still pending at the PTO.
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Does an Ex Parte Requester Have Two Bites at the Apple?

| July 1, 2010

A requester in an inter partes reexamination is estopped from arguing in subsequent litigation an invalidity issue that it “raised or could have raised” in the reexamination.  35 U.S. § 315(c).  There is no corresponding estoppel provision against ex parte requesters.  Nevertheless, reexamination practitioners often assert that there is a de facto estoppel against an ex parte requester who later reasserts in litigation the reexamination references.

That may not be true in all courts. 
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Fluxion Biosciences Files Four Reexamination Requests and Moves to Stay Infringement Suit

| June 30, 2010

Earlier this month, Fluxion Biosciences filed reexamination requests against four Cellectricon patents related to microfluidic structures involving cell-based biosensors.  See “Recent Requests” below.  The next day, Fluxion moved to stay a law suit that Cellectricon had filed last summer, accusing Fluxion of infringing those four patents. Cellectricon AB v. Fluxion Biosciences, Inc., 5:09-CV-03510-RMW (N.D. Cal.).

In its motion to stay, Fluxion asserts that each of the three familiar factors – possible prejudice to the patentee, simplification of issues, and the stage of the litigation – favors a stay.  What makes Fluxion’s motion special, however, is that it also explains why the four requests are meritorious.
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Accused Infringer Uses Reexamination to Defeat Willfulness Allegation

| June 14, 2010

A party accused of patent infringement requests reexamination at the PTO to attack the patent as being anticipated or obvious in view of a prior art patent or printed publication.  An accused infringer, however, may also achieve other less obvious goals by seeking reexamination, such as creating an estoppel, creating a disclaimer limiting claim scope, or establishing the materiality of a prior art reference for an inequitable conduct defense.  Or, as in Plumley v. Mockett, the accused infringer may use reexamination to obtain summary judgment of no willful infringement.  2010 U.S. Dist. LEXIS 57254 (C.D. Cal. May 26, 2010).
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Developments in Early June

| June 10, 2010

(1) Attorney’s Assertion of “Good Faith” Waives Privilege

Judge E. Thomas Boyle has ordered the patentee in Pall Corp. v. Cuno Inc. to produce hundreds of documents disclosing attorney-client communications regarding the reexamination of the patent-in-suit.  2010 U.S. Dist. LEXIS 55992 (E.D.N.Y. June 8, 2010).

The accused infringer has alleged that the patentee committed inequitable conduct by withholding certain information during an earlier reexamination proceeding.   The patentee replied by submitting a declaration by the attorney disclosing
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Microsoft’s Stay Request Denied: Reexam “May Actually Complicate” Case

| May 13, 2010

In the Eastern District of Texas, Judge David Folsom denied Microsoft’s motion to stay the District Court proceedings in Parallel Networks, LLC v. Microsoft Corp., 2-09-cv-00172 (TXED May 10, 2010, Order), pending resolution of ex parte reexamination, in part, because the reexamination process may actually complicate the case.

Judge Folsom considered the following factors: (1) whether a stay will unduly prejudice or present a clear tactical disadvantage to the non-moving party (Parallel Networks, LLC), (2) whether a stay will simplify the issues in question and trial of the case, and (3) whether discovery is complete and whether a trial date has been set.


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