Motions to Stay Patent Cases Pending the Completion of Reexaminations by the Patent and Trademark Office

July 6, 2009 | Insights

By Russ Meyer

Notwithstanding predictions of its demise arising out of the TS Tech and In Re: Volkswagen decisions, the Eastern District of Texas continues to be a popular venue for patent infringement cases. Like motions to transfer, requests for reexamination of the patents-in-suit and motions to stay the litigation pending reexamination are also gaining popularity in the Eastern District.

Although most requests for reexamination (91%) are granted by the PTO, the existence of a reexamination proceeding does not necessarily lead to a stay of a case involving that patent. The trial courts have broad discretion to manage their dockets as they see fit, and their decisions regarding motions to stay can only be overturned if they constitute an abuse of discretion.

In deciding whether to stay litigation pending the reexamination of a patent, the trial courts primarily consider three factors:

  1. whether a stay will unduly prejudice or present a clear tactical disadvantage to the non-moving party,
  2. whether a stay will simplify the issues in question and the trial of the case,
  3. whether discovery in the case is complete, and
  4. whether or not a trial date has been set.

Trial courts have noted a number of advantages in granting a stay pending reexamination:

  1. all prior art presented to the Court will have first been considered by the PTO, which has special expertise;
  2. many discovery problems relating to the prior art can be alleviated by the PTO’s examination;
  3. in those cases resulting in the effective invalidation of the patent, the suit will likely be dismissed;
  4. the outcome of the reexamination may encourage a settlement without further intervention by the trial court;
  5. the record of reexamination will likely be entered at trial, thereby reducing the complexity and the length of the litigation;
  6. issues, defenses and evidence will effectively be limited in pre-trial conferences after a reexamination; and
  7. the cost of litigation will likely be reduced.

Nevertheless, courts are mindful of the fact that Congress did not intend for court proceedings to be abated as a matter of course during reexamination. Congress viewed reexaminations as a “useful and alternative” means by which challengers can test the validity of a patent in a relatively inexpensive and efficient matter. It is clear, however, that litigation and reexamination are not mutually exclusive options – they may be concurrent proceedings.

In addition, the courts recognize that plaintiffs could be prejudiced by waiting for reexaminations to conclude because they are extremely time-consuming. The average ex parte reexamination takes 22.6 months to complete and the average appellate process for reviewing such a reexamination takes an additional 24 months. The average pendency for an inter partes reexamination (without appeal) is 34.0 months and, if a patent holder chooses to defend its rights, as long as 43.5 months. With an appeal, the process takes an average of 78.4 months. During this time, witnesses can become unavailable, their memories can fade, and evidence can be lost.

Courts have also noted that stays may deprive plaintiffs of the opportunity to seek the permanent injunctions to which they may be entitled. They have also found that when such proceedings are only undertaken by one defendant (or a handful of them) in multi-party cases, they smack of gamesmanship. In that regard, the courts have noted that in the case of ex parte reexaminations, defendants may be able to file successive requests for reexamination, each on a separate ground, over a prolonged period of time, and thereafter challenge the validity of the patents on the same grounds at trial after the lengthy reexamination process is completed.

Judges in the Eastern District of Texas have gone so far as to note that if they did not deny motions to stay, the reexamination process would evolve into an “administrative” proceeding that had to be completed before a suit for patent infringement could move forward. This would make no sense, since patents are presumed valid and there is no requirement for a reexamination before bringing suit.

Some litigants have urged, and some courts have been persuaded, that ex parte reexaminations may actually complicate cases because they may create as many issues as they resolve, and the full impact of a reexamination on a pending lawsuit is virtually impossible to gauge at the time that a motion to stay is typically decided.

In weighing these competing factors, courts in the Eastern District of Texas have denied motions to stay pending reexamination more often than they have granted them.

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.