Recent Impact of Reexams on Stays in E.D. Texas

A district court’s inherent powers to control its docket and to stay proceedings are well-settled, harkening back to at least Landis v. N. Am. Co., 299 U.S. 248 (1936). Within the Eastern District of Texas, in determining whether a stay is warranted pending reexamination in a patent litigation, district courts typically consider factors such as whether a stay will unduly prejudice one party; whether a stay will simplify the issues in the case; and whether discovery is complete and a trial date has been set. E.g., Soverain Software LLC v. Amazon.com, Inc., 356 F.Supp.2d 660, 662 (E.D.Tex.2005). A survey of 2012 patent decisions rendered on the topic in the Eastern District of Texas has yielded the following:

Ambato Media, LLC v. Clarion Co., Ltd. Judge Gilstrap denied defendant’s motion to stay pending an ex parte reexamination requested nearly 18 months after the case began. The Court ruled that all three of the Soverain Software factors favored denying the stay. Of note as to the prejudice factor, the Court determined that a stay would unduly prejudice the patentee, commenting that the reexam had barely entered its merit stage and that in all likelihood, could take several years and would not conclude until after the trial date. The Court also remarked that when a case is stayed “witnesses may become unavailable . . . and evidence may be lost while the PTO proceedings take place.” The Court found this possibility of witness and evidence loss “heightened” because defendant admitted that it had discontinued some of the accused products. The Court also determined it was “speculative” for defendant to suggest that reexamination might simplify the case, and noted that granting a motion to stay under such provisional grounds would invite derailment of patent cases by reexamination instead of promoting efficient and timely resolution of patent cases. Lastly, the Court noted that extensive discovery, involving millions of pages of documents, had taken place already, and thus found the third factor to disfavor a stay, as well.

Adrain v. Vigilant Video, Inc.  Judge Gilstrap denied plaintiff’s emergency motion to stay where during the ex parte reexamination (initiated by defendant), the PTO had finally rejected all pending claims, and issued an Advisory Action rejecting the subsequently amended claims. Confronting what it referred to as an “atypical” situation, the Court found that the Soverain Software factors still applied, and militated against a stay. The Court found that defendant had a “justiciable interest in the timely resolution of the case” and would be prejudiced by the stay. The Court further noted plaintiff’s chosen timing to file the motion to stay — after Markman briefing was completed — weighed against stay. The Court again held that the possibility that some of the claims may be affected was unavailing, preferring to deal with that contingency if and when it occurred, rather than putting the case on hold indefinitely. As to the discovery and trial posture of the case, the Court found this factor to slightly favor denying the stay, noting that claim construction had shifted and discovery was still on-going.

EMG Tech., LLC v. Dr. Pepper Snapple Group, Inc. Judge Davis denied in part and granted in part defendant’s motion to stay proceedings pending reexamination of two patents. As to the denial, the subject patent had reissued with amended claims, so the reason for staying the case relating to that patent was moot. Regarding the other patent, the Court noted that the reexamination itself arose in another patent action, not with the extant defendant, and the PTO had finally rejected all the claims. The Court thus ruled that a stay would not unduly prejudice the patentee and its ability to enforce its patent. The Court also found that a stay would simplify the issues in the case, which was consolidated with another case for purposes of Markman, and which involved the above reissued patent only. Finally, because considerable discovery still remained, the Court held this factor weighed slightly against a stay, but weighing all the factors as a whole, nevertheless granted the stay as to the second patent.

SSL Svces., LLC v. Citrix Sys., Inc. Judge Gilstrap denied defendant’s motion to stay a 2008 litigation pending ex parte reexamination initiated over one year after the case began. First, the Court found that patentee waited four years to enforce its patent rights, and that the pending reexamination might not finish until well after trial. (Citing Ambato, above.) As to the second factor, regarding simplification of issues, the Court reiterated its reasoning that it was unwilling to adopt a per se rule to stay cases pending reexamination, remarking that “the interests of justice will be better served by dealing with that contingency when and if it occurs, rather than putting this case indefinitely on hold.” (Again citing Ambato.) Finally, the Court found that the discovery and trial factor favored denying the stay, where over four million pages of discovery had been exchanged, substantive pre-trial procedures had been completed and just the scheduled trial remained to be carried out.

Practitioners thus should consider these decisions and their underlying factors when litigating patent cases.